Launching a start-up in a dorm room -- portrayed with Hollywood panache in "The Social Network" -- was a Hormel chili-fueled reality for Justin Kaufenberg and Carson Kipfer, co-founders of Minneapolis-based TST Media.
Kaufenberg and Kipfer were juniors at the University of Wisconsin-Eau Claire when they started a precursor to TST Media, which develops and markets an online organization and event management platform for amateur sports leagues and other groups.
While their collegiate Spam-to-profitability story might not end up in an Oscar-nominated movie, Kipfer and Kaufenberg can identify with the big-screen version of how Facebook founder Mark Zuckerberg got his start.
"From a pure start-up mentality, Carson and I can really relate to it," Kaufenberg said of the Facebook film. "We started literally in the dorm room. One person sat at the desk and the other had to sit on a bed, that was their workstation. One of us would use the computer from 8 a.m. to 5 p.m., then the other one would use it from 5 p.m. to midnight. It was a grind."
TST Media has grown rapidly despite the recession, raising close to $1 million in 2009 to expand from 10 to 40 employees. Revenue reached $3 million last year, said Kaufenberg, the CEO. Increasing numbers of teams and leagues in Minnesota and across the country have adopted the company's Sport NGIN platform to run league websites, process payments and, of course, offer social networking. [TST Media is a business partner with the Star Tribune in the coverage of high school sports.]
When they aren't working with sports organizations, Kaufenberg and Kipfer, the company's chief operating officer, are probably playing hockey or another sport. Just last month, they oversaw the U.S. Pond Hockey Championships, an event they acquired last summer.
The event drew 1,600 players from 34 states plus Canada, Germany and the United Kingdom and attracted close to 20,000 fans to frigid Lake Nokomis over its three-day run, said Kaufenberg, a former captain on his college varsity hockey team. The goal, besides having fun, was to promote TST Media and the event-management capabilities of its online platform.
Surviving on chili
Kaufenberg and Kipfer were college roommates in 2002 when they founded Third North Creative, a graphic design and Web development company named for the dorm floor and wing where they lived. They once borrowed an office to pitch to some potential big clients, bringing in friends who posed as employees in exchange for beer. They went without paychecks for a couple of years, surviving on canned chili and other product samples that Kaufenberg's then-girlfriend brought from her job at Hormel's headquarters in Austin.
By 2005, they had begun making money on their college start-up but pulled the plug to develop what might be called their sequel at TST Media.
"What we would joke about was that if you're always doing client work and you're always working for the next job, how are you ever going to sit on the beach and collect a paycheck?" Kaufenberg said.
The answer was the NGIN platform, which they expanded from a robust website built for a previous client, and the recurring revenue the product would generate in subscription fees.
Joining TST Media as equity partners then were Michael Lewis, as chief technology officer, a Silicon Valley veteran who wanted to return to Minnesota, and Greg Blasko, chief information officer, a former college classmate who had founded an event and sports timing company. Largely self-financed, the online platform went to market in 2007.
The company hopes to raise $2 million to $3 million in the first half of 2011 to accelerate growth. "With funding, we believe we can be a $25 million company in 24 to 36 months," Kaufenberg said.
A growing source of revenue is in the sports data that the platform holds, which online and traditional media outlets buy to provide local content, Kaufenberg said.
"We couldn't be happier with the product and the service," said Ken Pauly, head boys hockey coach at Benilde-St. Margaret's and president of the Minnesota High School Hockey Coaches Association, whose Minnesota Hockey Hub runs on TST Media's platform. "This whole Web thing is a bit like an 'Alice in Wonderland' experience, especially for a coach. This has been a big timesaver."
The greatest challenge now might be staying focused, Kaufenberg said. The platform is powerful enough to work for non-sports organizations such as nonprofits and schools.
"We try not to forget that the sports and event market is truly big enough to spend a lifetime in," he said. "We've identified at least 300,000 unique organizations ... that match our criteria, and we have slightly less than 2,000 clients. ... We've only just scratched the surface."
The expert says: Dileep Rao, president of InterFinance Corp. in Golden Valley and a professor of entrepreneurship at Florida International University, said Kipfer and Kaufenberg were smart to jump on the Internet trend initially and smart again to turn a successful project into a platform for a business that combines their passions for sports and technology.
"By bootstrapping, they were able to build value, gain experience, keep control and keep looking for ideas to leverage their time," said Rao. "As Web developers, they sell hours; as service providers, they sell electrons."
The key for TST Media now is to find the right pace at which to build its business and to stay focused, Rao said. "The decision that they need to make is whether to stick to their business model or get into other areas, such as pond hockey championships, that look like fun and profits but may suck their time and allow competitors to dominate in their core market."
Todd Nelson is a freelance writer in Woodbury. His e-mail address is firstname.lastname@example.org.