Founders: Kim Kaupe and Brittany Hodak
Year Founded: 2011
Location: New York, NY
You’d be hard pressed to think of two industries more beaten down by changing consumer habits than music and publishing. But that’s exactly what inspired Kim Kaupe, 26, and Brittany Hodak, 28, to start a company that combines the best of those industries in a single innovative product. Their startup, ZinePak, packages music CDs and “fan-centric” merchandise like baseball cards and stickers inside shrink-wrapped, small-format magazines. The company has worked with artists such as Selena Gomez and Scotty McCreery of American Idol fame, and has racked up total retail sales of $4 million since January 2011.
The two partners met at a Manhattan ad agency after each had left respective jobs at Condé Nast and Sony. “We became friends, and through discussing what we saw at our old jobs and our new jobs, we came up with this idea of how we could improve both the magazine and music consumption experience for consumers,” says Hodak. But their idea would never have come to fruition without the support of a heavy-hitting retail partner. Through her work at Sony, Hodak had established a relationship with key decision makers at Walmart. “We asked them if we started a company to make this product, would they be interested in carrying it,” recalls Kaupe. “They said absolutely.”
Walmart requested a product associated with the Academy of Country Music Awards so “we then started working with the team at the Academy, who connected us with Dr. Pepper, one of the main sponsors of the televised show,” says Kaupe. Dr. Pepper agreed to sign on as a sponsor for an ACM ZinePak that would include two CDs featuring the 2011 nominees, plus a magazine, postcards and an awards ballot. “Within six weeks of quitting our jobs, we had our first release in the marketplace,” says Hodak.
To finance that first project, the partners spent $100,000 from their personal savings, including 401(k) accounts, and made good use of their credit cards. But they weren’t out of pocket for long. Walmart put in an initial order for 35,000 ZinePaks and, says Kaupe, “it did extremely well” in the store.
Since then, the partners have released a dozen more ZinePaks, selling more than 350,000 units at Walmart, which is still the company’s sole retail outlet. “Each project we’ve done has been successful and we were profitable our first year,” says Hodak. The company essentially operates as a packager, offering recording companies a way to package deluxe releases. “They send us the CDs, we do the physical packaging at one of our four ZinePak fulfillment centers, and they buy the finished product from us,” says Hodak. All content for the accompanying magazines is original and written by a small army of freelancers.
Their initial success won the partners inclusion in the Make Mine a Million $ Business (M3) program, an initiative of Count Me In for Women's Economic Independence and American Express OPEN. The program helps women business owners grow their companies by providing them with advice, connections and mentoring. Nell Merlino, the founder of Count Me In, introduced Hodak and Kaupe to Ariela Balk, the CEO of Smart and Sexy, a lingerie line carried by Walmart. That connection resulted in ZinePak’s first project for a brand: a small magazine (no musical component) used by the company for promotional purposes. That project has led to requests from other brands for similar products. “Once you play in a space, a lot of people come out of the woodwork and want to work with you,” says Kaupe.
With a May 1 release of a Beach Boys ZinePak on the calendar and more corporate projects with big brands in the works, the partners are expecting revenues in excess of $3 million for 2012. That translates into retail sales of approximately $10 million. Can they continue to bootstrap their company, or will they seek funding? “We’re not ruling anything out,” says Hodak. “We never really know what tomorrow will bring. We’ve only been doing this for 16 months, and we’re doing things that we never imagined doing two or three months ago.”
Illustration by Cannaday Chapman