Baby Steps

Creating a family-friendly fitness class won an entrepreneur the mothers' seal of approval.
By April Y. Pennington | December 01, 2005


Vital Stats: Lisa Druxman, 35, of Stroller Strides
Company: San Marcos, California, business offering group exercise for mothers and babies
2006 Projected Sales: $2 million

It's a biz!: After the birth of her son in 2001, Druxman's decision not to return to her position as general manager for a high-end health club brought about a new quandary: how to work part time, spend time with her newborn and stay fit. The former fitness instructor started a small, neighborhood group-exercise class targeting moms with infants. Through word-of-mouth and local TV publicity, 40 people came to the kickoff class of her second location, in San Diego. Says Druxman, "That's when I knew I had touched on something big."

Family Time: Stroller Strides are hour-long classes taught by certified instructors who combine fast-paced walking with several body-toning stops. The classes take place in parks, near lakes or even inside malls, depending on the location. While working out is the focus, Druxman maintains children are the number-one priority. Songs and activities are weaved into the class to entertain kids, and mothers of fussy babies are credited a class if they need to leave.

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Home > Work-Life > Success Stories > Baby Steps
Baby Steps
Creating a family-friendly fitness class won an entrepreneur the mothers' seal of approval.
By April Y. Pennington | December 01, 2005
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Vital Stats: Lisa Druxman, 35, of Stroller Strides
Company: San Marcos, California, business offering group exercise for mothers and babies
2006 Projected Sales: $2 million

It's a biz!: After the birth of her son in 2001, Druxman's decision not to return to her position as general manager for a high-end health club brought about a new quandary: how to work part time, spend time with her newborn and stay fit. The former fitness instructor started a small, neighborhood group-exercise class targeting moms with infants. Through word-of-mouth and local TV publicity, 40 people came to the kickoff class of her second location, in San Diego. Says Druxman, "That's when I knew I had touched on something big."

Family Time: Stroller Strides are hour-long classes taught by certified instructors who combine fast-paced walking with several body-toning stops. The classes take place in parks, near lakes or even inside malls, depending on the location. While working out is the focus, Druxman maintains children are the number-one priority. Songs and activities are weaved into the class to entertain kids, and mothers of fussy babies are credited a class if they need to leave.

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Globe-Trotting: When, a year into the business, one instructor had to move, she convinced Druxman to let her test-market the concept in her new city. Its transplanted success made Druxman realize she had a very special and real opportunity. "There aren't very many careers out there supportive of motherhood," says Druxman. First offering licenses in a few markets, Stroller Strides now has over 100 franchisees nationwide, with 300 U.S. locations and one in Canada. International expansion is underway. New classes are in the works, and products like a Stroller Strides stroller are already available in stores and through online retailers. Druxman is also penning a book on fit and healthy motherhood.

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Natural Instinct

Thanks to Mark Laska, the urban jungle is getting a little greener.
By JJ Ramberg | Entrepreneur Magazine - August 2008


When Mark Laska walks through the streets near his office in New York City, he doesn't look at the buildings and the sidewalks. "I look at the landscape and imagine what was here before and what could be here again," he explains.

The CEO of Great Ecology and Environments, a consulting firm dedicated to repairing the world by restoring habitats, Laska works with developers and corporations looking to offset the environmental impact of their projects, governments looking to restore public lands, and nonprofits focused on saving the environment.

"I have a passion for natural areas," says Laska, who launched his company in 2001. "If we can bring a representation of natural space into an urban area, that will educate urban kids and also provide a place for wildlife to take refuge." His favorite project has been working on Brooklyn Bridge Park in New York City to help create a habitat for fish and wildlife. Other local projects include a stream and lake restoration along a 6-mile stretch of river in Westchester County, reviewing the impact of a marina expansion on Staten Island and working with the owners of a golf course to reverse the effects the course had on an existing stream.

His company has also branched out West, recently opening an office in Grand Junction, Colorado, which led to the restoration of over 10,000 acres of land. "In urban settings, there's a lot less land, so we're restricted in terms of scale,"says Laska. "In the West, we have projects that are many hundreds of acres."

Laska has also launched an investment business in conjunction with GEE called Ecology Venture Partners. He's focusing on creating a fund to invest in degraded habitats. The goal is to generate environmental credits and sell them to corporations and governments to offset any adverse environmental impacts they've made. Says Laska, "This is an emerging market we're helping to build."

GEE expects sales of $2.4 million this year, and there's only room for growth. "When you hear a guy like me talking, you often think he works for the Nature Conservancy or the Forest Service, but we're doing this for profit, as a business," Laska says. "We're trying to demonstrate that market forces can help in the preservation of habitats. We really think we can have a profitable company and do good things by putting together the best of environmental stewardship and entrepreneurship."

JJ Ramberg is the host of MSNBC's small-business program Your Business and co-founder of GoodSearch.com.

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Testing your Values, Living Your Brand

Build your business plan around core values and never forget what those values are.
By Tim Berry | April 21, 2009

Value-based marketing can help you flesh out your business plan with a better sense of what to do and why. You don’t just design your logo. You live it. You become what you say it stands for.

For example, take the computer dealer whose self-image and marketing literature are based on providing extra service for small business customers. The value proposition is about reliability, reassurance, competence and building relationships with clients instead of just selling boxes to customers; there is an implied price premium. That business can’t just assert that position, it has to live it in all phases of the business. For example:

* A business like this needs a visible service area with service technicans behind a wide counter wearing professional-looking long white robes.
* This company needs to install systems -- not just sell them -- and train people to use them.
* They need to live out their pricing strategy, sell the relationship, not the specific product, and charging more. You can’t claim to be about reliability and reassurance and then match the lowest discount price. That’s not credible. It’s also not financially sound.
* Even in the allegedly unrelated areas -- like finance -- the business needs to live out the value proposition. Finance might normally be about collecting late bills from clients who are paying slowly. But with this kind of value proposition, finance should link back to sales, installation, support and training to make sure those foot-dragging clients aren’t unhappy with what they got.

Many businesses are in danger of forgetting what they’re about. You can’t advertise “friendly skies” and not make every effort to have friendly employees. You can’t advertise hospitality and offer hostility. You can’t advertise service and offer long lines and frustration. You can’t have gourmet pricing and bad fast food.

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How does that work into business planning? Frankly, very well.

Start by defining your value proposition. Ask yourself what benefit you offer, what need do you fulfill, to what kind of customer and at what price level. That’s your value proposition.

If you’re going to be good at this, stay skeptical. Test it. Could your competitors say the same thing? Would it be as true for them as it is for you? If the answer is yes, then you don’t have it right yet. When you feel like you have the value proposition right, build your strategy around it. How do you deliver on your promise? How do you get the word out?

This is where most businesses stop. Be better than most. With your value proposition in hand, go department by department, function by function, through your business. Look at every function you have -- all the way from the top and the marketing and sales areas, through your operations, fulfillment and even finance and accounting -- and check for whether what you’re doing supports, ignores or takes away from your value proposition.

Then turn that into concrete action points, steps to be taken, milestones, dates and deadlines – then you’ll have a better business plan.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses. He is the author of The Plan-As-You-Go Business Plan and co-author of 3 Weeks to Startup with Sabrina Parsons, both published by Entrepreneur Press.

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E.W. Scripps

E.W. Scripps 1854-1926
Edward W. Scripps built a media empire that includes daily newspapers in 20 markets stretching from Washington to Florida, Scripps Howard News Service, United Media, and the worldwide licensing and syndication home of PEANUTS and DILBERT.


He started the business in 1878, borrowing $10,000 to launch a newspaper in Cleveland called "The Penny Press." It was aimed at an unserved market of urban workers, and quickly became the model for the nation's first mass medium. He found a successful formula, and started to build the first chain of newspapers under common ownership.

Today, the E.W. Scripps Company is "a diversified media concern with interests in newspapers, broadcast television stations, cable television networks and other media-related enterprises."
Ethics was important to Scripps, and he strived to keep his money, business, and life in proper perspective. Learn the 23 code of conduct that E.W. Scripps used in both his life and his business in excerpts from his essay "Some Outlandish Rules for Making Money."


1. Never spend as much money as you earn. The smaller your expenditures are in proportion to your earnings the sooner you will become rich.


2. It is more blessed to pay wages than to accept them. At least, it is more profitable.


3. Never do anything yourself that you can get someone else to do for you. The more things that someone else does for you the more time and energy you have to do those things which no one else can do for you.


4. Never do anything today that you can put off till tomorrow. There is always so much to do today that you should not waste your time and energy in doing anything today that can be put off till tomorrow. Most things that you do not have to do today are not worth doing at all.


5. Always buy, never sell. If you've got enough horse sense to become rich you know that it is better to run only one risk than two risks. You also know that just as likely as not the other fellow is smarter than you are and that whether you buy or sell, in each case you run the risk of getting the worst of the bargain. By adopting my rule you will diminish by one-half your chances of loss.


6. Never do anything, if you can help it that someone else is doing. Why compete with one person or many other persons in any occupation or line of business so long as it is possible for you to have a monopoly in some other field?


7. If circumstances compel you to pursue some occupation or to follow some line of business which is being pursued by some other person, then you do your work in some other way than that in which it is done by the other. There is always a good, better and best way. If you take the best way then the other fellow has no chance of competing with you.


8. Whatever you do once, whatever way you undertake to do a thing, don't do the same thing again or don't do the thing in the same way. If you know one way to do a thing you must know there is a better way to do the same thing.


9. If you're succeeding in anything you are doing, don't let anyone else know of your success, because if you do some other person will try to do the same thing and be your competitor.


10. When you become rich, as you will become rich if you follow my advice, don't let anyone know it. General knowledge of your wealth will only attract the tax gatherer, and other hungry people will try to get away from you something they want and some-thing you want to keep.


11. One of the greatest assets any man can secure is a reputation for eccentricity. If you have a reputation of this kind you can do a lot of things. You can even do the things you want to do without attaching to yourself the enmity of others. Many an act which, if performed by an ordinary person, would arouse indignation, animosity and antagonism, can be per-formed by a man with a reputation for eccentricity with no other result than that of exciting mirth and perhaps pity. It is better to have the good will than the bad will, even of a dog.


12. Never hate anybody. Hatred is a useless expenditure of mental and nervous energy. Revenge costs much of energy and gains nothing.


13. When you find many people applauding you for what you do, and a few condemning, you can be certain that you are on the wrong course because you're doing the things that fools approve of. When the crowd ridicules and scorns you, you can at least know one thing that it is at least possible that you are acting wisely. It is one of the instincts of men to covet applause. The wise man regulates his conduct rather by reason than by instinct.


14. It is far more important to learn what not to do than what to do. You can learn this invaluable lesson in two ways, the first of which and most inspired is by your own mistakes. The second is by observing the mistakes of others. Any man that learns all the things that he ought not to do cannot help doing the things he ought to do.


15. Posterity can never do anything for you. Therefore, you should invest nothing in posterity. Of course your heirs will quarrel over your estate, but that will be after you're dead and why should you trouble your mind over things which you will never know anything about?


16. A man can do anything he wants to do in this world, at least if he wants to do it badly enough. Therefore, I say that any of you who want to become rich can become rich if you live long enough.


17. After what I have said it goes without further saying that you should save money. But no man can save himself rich. He can only make himself rich. Savings are capital. It is only by doing things that one learns how to do things. It is only the capitalist who handles capital that learns how to handle capital profitably. The more capital you have the more skillful you become as a capitalist.


18. Fools say that money makes money. I say that money does not make money. It is only men who make money.


19. There are two cardinal sins in the economic world: one is giving something for nothing, and the other is getting something for nothing. And the greater sin of these is getting something for nothing, or trying to do so. I really doubt if anyone ever does get some-thing for nothing. (Don't marry a rich wife. Women are what they are. At best they are hard enough to get along with. They are always trying to make a man do something that he doesn't want to do, and generally succeeding. When a woman is conscious of the fact that she has furnished all or any part of your capital, her influence over you will be so great as to be the worst handicap you can carry.)


20. If you're a prospective heir of your father or some other relative, you should also consider that a handicap. I would advise you to refuse to be an heir.


21. Despise not the day of small things, but rather respect the small things. It is far easier to make a profit on a very small capital invested in any business than it is to make the same proportion of profit off of a large capital. It is true that after you have learned how to make a profit on a business that shows small capital, successively, as your capital grows, you learn how to handle it profitably. Then the time will come when the greater your capital becomes in this way the greater your pro-portion of profits on it should be. And, for an added reason, as your wealth and skill grow rapidly, your so-called necessary expenses grow much more slowly and in time cease to grow at all, so that beyond a certain limit all your income and added income becomes a surplus, constantly to be added to your capital.


22. It is far easier to make money than to spend it. As it becomes more and more difficult to spend money, you will spend less and less of it, and hence there will be more money to accumulate.


23. The hardest labor of all labor performed by man is that of thinking. If you have become rich, train your mind to hard thinking and hold it well in leash so that your thinking will all be with but one object in view, that of accumulating more wealth.

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$45 Million So Far--and No End in Sight

This $45 million web-hosting company has grown at a breakneck speed--and it all started in an apartment with no outside financing.
By Amanda C. Kooser | June 17, 2005

Description: Web-hosting and data center infrastructure provider
Founders: Christopher Faulkner, 37
Location: Bedford, Texas
2004 projected sales: More than $45 million
http://www.cihost.com

What's the Score? C I Host commands some impressive figures: 210,000 customers, as many as 5,000 new customers every month, 8,000 resellers around the world, a 37,000-square-foot data center and 9,000 servers. Another interesting number: 15. That's the age at which Christopher Faulkner started his first business selling baseball cards and sports memorabilia out of a small storefront in Bedford, Texas. Now he helps businesses like that one get online.

From Fanzine to Business: There have been a few stops along the way. "I've started 201 corporations, and 197 of them failed miserably, which is a life lesson that I learned. To be successful, you have to fail along the way," says Faulkner. He built his first website as a fanzine for the band Pearl Jam in 1995, and by the end of the year, he was running a fledgling version of C I Host out of his apartment.

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Growth Spurt: C I Host soon outgrew Faulkner's apartment and today has offices and data centers in Bedford, Texas, as well as Chicago and Los Angeles--and soon, London. And Faulkner has done it all without the help of VC financing or loans. "We're debt-free," he says. Bootstrapping and growing at a breakneck pace aren't the easiest things to reconcile.

The Host With the Most: Faulkner keeps the ship sailing smoothly by maintaining 15-hour workdays. Busy as he is, he always has time for his customers. How many CEOs do you know who conduct their own weekly internet chat for all comers? Faulkner's experience and business savvy belie his age. Fortunately for C I Host, he could be at the helm for a long time to come.

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ENTREPRENEURSHIP: A DEFINITION REVISITED

For many, the pros outweigh the cons when it comes to starting a business while still employed.
By Mark Henricks | Entrepreneur's StartUps - March 2009

When injuries from a motorcycle crash made it difficult for Nanda Holz to ride a bicycle, the Petaluma, California, engineer found that pedaling a recumbent-style bike let him get back on the road. When he moved on to crank-forward bicycles and his local bicycle dealer showed no interest in selling the distinctive bikes, Holz, 34, became a part-time entrepreneur. "I saw an opportunity," he says, "and started dabbling."

Today, Holz still works full time as an engineer, but he's also the founder and owner of Spin Cyclz, selling bicycles to Northern California locals and to customers worldwide via his website, spincyclz.com. Selling bikes gives him something to do in his off hours besides ride, he says. It's also starting to turn a profit: Holz brought in 2008 sales of about $100,000, with a $16,000 profit. "I'm starting to turn the corner," Holz says of his part-time venture.

"Entrepreneurs have good reason for working full time at a job and part time on their businesses, say experts."

There may be almost as many part-time entrepreneurs holding down full-time employment as those whose business is their full-time job. In 2002, as part of its decennial survey of business owners, the U.S. Census Bureau found that nearly 9.6 million of the more than 20.5 million business owners surveyed didn't consider their business their primary source of income. Even among the roughly 5.6 million businesses that were substantial enough to have employees, nearly 1.6 million business owners said their enterprise wasn't their primary source of income.

Entrepreneurs have good reason for working full time at a job and part time on their businesses, experts say. "For some people, especially in economic times like these when they're worried about their regular job, starting a part-time business gives them a safety net," says Paula Englis, an associate professor at Berry College and the University of Twente. Part-time startups by full-time employees may also offer a source of extra income when future pay raises are likely to be infrequent or nonexistent, she adds.

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Running a business while still employed can also make good business sense. An entrepreneur with a full-time job to fall back on is under less pressure to make a venture succeed quickly, Englis notes. "It also gives you the opportunity to make a few mistakes and not have that mean the end of the business."

Part-time businesses can also be easier to start because they require less funding and the entrepreneur can raise the necessary funds by diverting earnings from a full-time job. "Given the financial environment now," says Englis, "it's going to be hard to go out and raise capital to start a full-time business."

Before you rush out to start a part-time venture, however, consider the potential downsides. Perhaps the worst would be if your part-time enterprise interferes with your full-time job. "You can't burn the candle at both ends without some risk," warns Bruce Kemelgor, a professor of entrepreneurship at the University of Louisville. If the time and energy you're devoting to the business results in poor attendance or impaired performance, you could lose your job.

Some part-time entrepreneurs find the best way to manage the potential for interference is to get a different job. In 2005, Jewel Ragsdale was working full time in corporate America when she started Classic Calendar Co., a Richmond, Virginia, manufacturer of customized calendar frames and plaques, as a part-time venture. "I was always trying to go to meetings and network [for my business] when I should have been at work," says Ragsdale, 48. "It was too stressful. So I transitioned into a career that gave me a little more flexibility." Her new job with a mortgage broker gives her the time she needs to devote to her business.

Holz takes care to put his employment responsibilities before those of his life as a bicycle entrepreneur. "I try to keep the e-mails down to lunchtime," he says. "I may take a phone call or two, but I keep them brief. As long as I'm on time with my projects, [my boss] is OK."

If you're concerned that your business might pose a problem, Englis recommends consulting with your company's HR department. You may have signed a noncompete agreement as a condition of employment that could influence what kind of business you start. Unless you plan to go into business in competition with your employer, however, few companies have ironclad prohibitions against sideline ventures, Englis says.

Perhaps the biggest problem with part-time businesses is that it's hard for them to reach their potential when they receive only a portion of their founders' attention and effort. While Holz has doubled his annual sales volume since the first year, he says he still feels the pinch of having to work full time during the week.

And what if your business doesn't do as well as you hoped? Be wary of committing too much or you could find yourself in Ragsdale's shoes: The calendar entrepreneur took out a loan to finance manufacturing her initial inventory, but the business has grown more slowly than she anticipated and has only turned a small profit. With sales lower than expected, Ragsdale has been unable to fund marketing to help the business grow faster and she still has to repay the loan. Ragsdale's advice: "Avoid taking out a loan without carefully calculating your expenses." In retrospect, Ragsdale wishes she'd more carefully researched the markets and distribution methods for high-end calendar products to help determine the likely demand. She also wishes she'd considered marketing needs as well as manufacturing costs when deciding how to capitalize her business. "If you borrow only enough to cover one part of [the equation]," she says, "you may have a factory full of product but nobody knows about it but you."

For Holz, his part-time business provides just about the right mix of income and interest to keep him happy. But he still wants more. So he's moved the business out of his home and into a rented storage unit, where he has room for more inventory, custom assembling, home deliveries and a convenient place to meet customers for demos. His next step: possibly renting a small retail space in the same development. With a full-time job to cover the bills, the future of Spin Cyclz all depends on Holz. "I have total control over it," he says. "As much work as I put into it, I get that much reward back."

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.

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Three startups make all the right moves

While venture money dries up for thousands of would-be start-ups, the three young firms who pocketed the most new funding in the last quarter got more than $100 million each — seven times more than the average.

Unlike dot-coms that dominated venture-capital funding in recent years, these startups won over investors because they're in promising sectors, such as biotechnology or broadband networking. Their business models are based on real products and revenue growth. And veteran managers run them.

These firms are showing others how to thrive, even in tough times. And when the market for initial public offerings returns, they are expected to lead the pack. USA TODAY's Edward Iwata in San Francisco looks at the big bets that venture capitalists, who invest funds from wealthy investors and institutions, are making and why.

Sigma Networks

Even as the telecommunications market crashed, Sigma persuaded investors in February to pour nearly a half-billion dollars into the San Jose, Calif.-based firm — one of the first to sell broadband network links to Internet and telecom firms.

How did Sigma do it? It didn't hurt to sign on executives with powerful telecom and Internet ties. Former Federal Communications Commission chairman Reed Hundt and Netscape Communications co-founder Marc Andreessen, both on Sigma's board, gave instant credibility to the start-up.

Two-year-old Sigma sells high-speed, fiber-optic networks that link the Internet to computer networks of businesses in urban areas. That helps firms fill in gaps or shortfalls in telecom networks.

During tough economic times, Sigma's services hold great appeal for cash-strapped telecom and Internet firms who cannot build out or improve networks, analysts say. The market for Sigma's business is projected to grow to $10 billion by 2005. That's up from $2 billion this year, Sigma CEO John Peters says.

When the tech-heavy Nasdaq composite index crashed last year, Peters, 53, didn't panic. The Navy veteran ran computers on a cruiser during the Vietnam War, and he's been an executive at six startups, most recently Concentric Network.

Peters didn't want to repeat the errors of dot-com and telecom firms that grew too quickly. So he shrank his original plan to raise $2 billion and move into 40 U.S. markets. Sigma aimed for $500 million in funding and will target five markets this year. So far, the 50-worker firm has rolled out a network in Washington, D.C. "They're keeping their business model real tight," says analyst Mark Langner at Epoch Partners.

Investors liked what they saw. Sigma got $150 million in venture money last March from Frontenac, Oak Investment Partners and others. About $290 million in loans from Cisco Systems and others should keep Sigma running for 18 months. Peters wouldn't say when he expects Sigma to turn a profit. Sigma also has signed deals with AOL Time Warner, Cable & Wireless and other telecom and Internet giants, adds Andy Rachleff of Benchmark Partners, a lead investor.

"We're moving conservatively in a high-risk field," says Peters, a Stanford MBA who rides Harley-Davidson motorcycles when he isn't cutting deals. "We've learned from the mistakes of others."

Sanrise Group

The explosion of Internet data and complex computer storage systems is driving businesses batty. Sanrise CEO David Schneider estimates there are at least 58,000 possible permutations of hardware and software products and protocols to store information.

Downturn or not, companies are crying for help, and investors see an opportunity. Last month, Sanrise — touted as a simple, one-stop solution to data-storage chaos — raised $115 million in venture funding from Crosspoint Venture Partners, Morgan Stanley, Exodus Communications and others.

Imitating Dell Computer's model of selling built-to-order PCs directly to customers, the Dublin, Calif.-based Sanrise offers data-storage equipment that is preconfigured and shipped to corporations worldwide within 30 days. The model saves customers 30% to 40% in storage costs and spares them from dealing with storage systems that may take months for delivery and setup.

"Sanrise has put together all the pieces of the puzzle into a very customer-friendly package," says analyst David Wilson of the Aberdeen Group.

Sanrise and its 250 employees — including executives from AT&T, IBM and Cisco Systems — are gaining momentum. The company has 600 customers, including Fidelity Investments and General Electric, and it has moved into Europe and Japan.

Schneider predicts revenue of $39 million this year and $94 million in 2002. Profitability? Sometime next year, he says. When the IPO market rebounds, he hopes to go public. "This is just the beginning," Schneider says.

Perlegen Sciences

A decade ago, Perlegen Sciences CEO Brad Margus, 40, was a Harvard MBA running a thriving food-processing firm in Florida. Then his two boys were diagnosed with a fatal genetic disease called A-T, or ataxia-telangiectasia.

It's too late to cure his boys. But Margus' passion to find a cure for genetic ills has led him to raise millions of dollars for medical research — and to head Perlegen Sciences, a biotech firm in Santa Clara, Calif., with top researchers from Stanford University and the University of California at Berkeley.

Perlegen will scan the chromosomes of 50 people and build a vast database to help pharmaceutical and biotechnology firms devise drugs and diagnostic tests.

Perlegen raked in $100 million in April from investors such as Alejandro Zaffaroni, who has founded seven startups, including Alza, a $2 billion pharmaceutical firm. "He's a money-maker who's done it again and again," says John McCamant of the Medical Technology Stock Letter.

It also helped to have a world-class executive and director lineup, including Perlegen co-founder David Cox, former co-director of Stanford Human Genome Center, and Paul Berg, a Nobel Prize-winning cancer researcher at Stanford's School of Medicine.

Another plus: Perlegen was a spinoff of Affymetrix, a firm that makes microchips used to study genes. The close tie helped Perlegen buy $100 million of Affymetrix technology, giving Perlegen ammo against rivals Gene Logic and Celera Genomics Group in genomics, a potential multibillion-dollar industry. Affymetrix owns 45% of Perlegen.

Margus says Perlegen's cash will last 18 months, and he declined to predict when the firm would be profitable. He said the firm, with 48 employees, hopes to go public in a year or two. "Investors are always looking for solid technology and companies with solid valuations."

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