Start-ups … remember those?

The word doesn't have quite the same cachet as it did three years ago, but despite the economy's downturn and the collapse of public and VC interest in new technology companies, there are still plenty of them on the Digital Coast. Most lie a little lower these days, though, grow a little slower, and operate on a budget that couldn't furnish half a bathroom for DEN.

Beginning this week, Digital Coast Reporter brings you short profiles of Southern California start-ups that have launched in the past year and, despite all the obstacles, are surviving. Each Friday, look for the story of a new start-up here in DCR.

By Ben Fritz

Launching The Newsletter Place was a process of elimination for Jay Goth and Randy Hines.

The two men behind the company, who met while working for Commonwealth Energy in the late '90s, first joined together in January 2000, the height of the dot-com boom, to form a company called eMarket nSights, an agency that offered video email, webcasting, and email newsletters. By the fall of 2001, though, they had a problem. The companies that powered their video email and webcasting services – Radical Mail and WorldStream – were no longer in business. Rather than rely on another company to start those services up again, the two decided to take the one business that used proprietary technology and launch a single company with a single service: The Newsletter Place.

Newsletters hadn't been a big part of eMarket's business though, and the company had only a few clients when it launched in January of 2002. Despite the economic downturn, the two saw an opportunity to present newsletters as a way to maintain consumer interest and drive them back to websites at a much lower cost than advertising.

"A lot of our clients are trying to attract people to their websites on a recurring basis," explains Goth. "But most people only come once and don't return on their own. So we offer newsletters as a good way to maintain interest and, if you have good content, drive revenues."

The Newsletter Place now offers a full suite of services, from simply managing a list and sending the newsletters to graphic design and writing content. Goth says about 70 percent of clients produce their own content. In addition, The Newsletter Place produces paper newsletters for a small number of clients, although it is trying to drive them all online.

One of the prime selling points of The Newsletter Place is its price – just $249 per month to manage a newsletter and $599 if it also produces the content. Costs go up if the number of subscribers is over 10,000, but decline per newsletter if clients want to send more than one each month.

"Most of our clients are people moving from expensive marketing products to a cheap one," Goth says. "It's not too hard to sell somebody who's spending $4,000 per month on our product that costs just $249."

In the nine months since it was founded The Newsletter Place has managed to attract about 50 clients, ranging from a dot-com to a ministry to an M&A advisory company. And with just two full-time employees and the rest of its work done by contractors, The Newsletter Place has managed to keep costs low and reach profitability. Now, though, despite the sluggish pace of the economy, it's thinking expansion.

With many of it clients slow adopters to the Web, The Newsletter Place has begun to offer additional services to them, such as Web design, broadcast streaming, and interactive presentations. It's also in talks with CMI Capital about raising its first round of VC capital to allow additional marketing and staff.

Newsletters, though, remain the core of the business. Goth seems to realize that, even if it was only by elimination, he and his partner have tapped a market with potential not for the future, but the present.

"A lot of what we were doing in the early days was probably too far ahead of the curve," he admits of eMarket nSights. "But now we've got a simple product that can take existing businesses and move them to a more efficient, higher ROI model. Now our expectations and our abilities are coming into line."

The Newsletter Place

Founded: January, 2002

Business: Primarily managing and creating email newsletters

Principals: Jay Goth and Randy Hines

Employees: Two

Capital invested: $250,000 from Goth and Hines

Profitability: Already achieved

Location: Tustin, Calif.

Contact: www.thenewsletterplace.com; 888.550.7460; info@thenewsletterplace.com