Founders: Joe McMenemon, Brendan Finke
Year Founded: 2009
Location: New Orleans
As students at Tulane University in New Orleans, Joe McMenemon and Brendan Finke were responsible for running their fraternity, Sigma Phi Epsilon. And that didn't just mean ordering the right amount of beer for a kegger. There were dues to collect, events to manage and meetings to schedule. It was, they discovered, somewhat of a communications nightmare—a problem for which there was surely a more elegant solution than a Yahoo list serve or an Excel spreadsheet. But it didn't occur to them right away that they had stumbled upon an idea for their business, ChapterSpot, a platform for managing group communication.
McMenemon, now 26, graduated in 2008 and went to work at Morgan Stanley's institutional equity sales desk, and Finke, now 24, was at the end of his junior semester abroad in London when misfortune turned into opportunity. "AIG went under, and then Lehman went under, and pretty soon my desk got wiped out, and I was laid off," recalls McMenemon. Finke decided to stop off in New York on his way home from London to check in with his friend. "Brendan's goal is to never write a resume, and I had some free time and a severance," says McMenemon. And so the two decided to start a company that addressed the communications challenges they had experienced at Sig Ep.
The two headed to New Orleans, where Finke would finish up at Tulane. While that decision was initially driven by necessity, the partners are now committed to remaining in The Big Easy, where the cost of living is significantly lower than in startup hubs like New York or San Francisco, and where an increasingly sophisticated entrepreneurial ecosystem is a strong draw for the young and ambitious.
With Finke taking on the CTO role, the two built their platform and launched a beta version in August of 2009. The first stop on their grass roots marketing campaign was a Sig Ep conclave of chapter leaders in Orlando, where they were able to nail down their first few customers. ChapterSpot has a freemium model, which offers fraternities and sororities group communication tools and database management for free, but charges them for creating customized websites, branded social networks and for facilitating dues collection. “We now have 1,450 chapters on board,” says Finke. “And by the summer, we should have over 2,000.” He added that 45 percent of those chapters have upgraded to a paid premium service and that the company has recently signed on seven national partners. While they won’t disclose revenues, the partners say that ChapterSpot is “cash flow positive with zero debt” and that the two still own 100 percent of the company. (Get more tips on managing your cash flow.)
Last autumn, ChapterSpot was accepted into the prestigious Idea Village accelerator program, a local New Orleans initiative that helps entrepreneurs identify and address growth opportunities and challenges. “They take growing companies and introduce them to the right people,” says McMenemon. “We have two advisors, and we meet with them once a week.” As part of the Idea Village program, the partners will also work with a team of Dartmouth College MBAs this spring for some solid advice on how to expand their reach beyond the Greek system. “The big question,” says McMenemon, “is where is the most strategic market for us to go to.”
Illustration by Cannaday Chapman