Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?
Four years ago, the founders of HDD Inc., the Henderson-based designer and developer of health-care training and educational materials, realized they couldn’t grow as a custom shop if they limited the company to paper. The company, which serves hospitals, long-term care facilities and medical device companies, was in search of a new direction.
Co-founder and CEO Judy Hoff wanted something that was interactive, convenient and fun for health-care workers needing training or continuing education, but also cost-effective for health-care providers. Printed materials, she says, are expensive and become obsolete, and classroom time is costly and time-consuming.
It didn’t take her long to figure out that e-learning was the way to go.
“We knew the Internet was the wave of the future,” says Hoff, a registered nurse and educator, who was a sales training manager for Pfizer Inc. before launching HDD, also known as Healthcare Documentation & Development. Her business partners are her husband, Ron Hoff, a computer scientist, and Peter Anthony, also previously with Pfizer. “We took a step back and decided to leverage our core competencies: medical education and IT.”
The four-year-old company took a big risk and essentially started over, investing three years and an enormous amount of resources to make the shift from print to electronic delivery.
“We jumped off the cliff and didn’t look back,” says Hoff, 53.
Between the Hoffs’ own investment and economic development loans, HDD invested about $500,000, “which for a little company is a piece of change,” Hoff says. “It was a big risk, but I’m glad we did it. If you’re not willing to take a risk, you shouldn’t be an entrepreneur.”
Their business plan included a thorough assessment of effective ways to learn on the Web. “We talked to executives, potential learners and educators about what they wanted,” Hoff says. “We needed a product that intrigued not only users, but executives and educators. Our goal was fun, interactive learning. The more colorful, the more visual, the better.”
While other companies offer e-learning for the medical industry, most just provide “articles under glass,” Hoff says. “Even the most sophisticated learner,” she adds, “wants to be entertained.”
What emerged from HDD’s transformation was HealthcareAcademy.com, an online, interactive health care learning company.
“What’s so intriguing about HDD is they’re addressing an existing niche with new technology,” says consultant Frank Cesario, president of Everest Enterprises Inc., Bloomington. “Like any successful company, HDD is adopting a better delivery of services.
“The old-fashioned way was for companies to bring in a trainer and schedule classes on-site. For companies that couldn’t afford that, they’d hold off-site classes, which resulted in productivity loss. The bottom line is HDD’s services result in net increases in companies’ profitability.”
Finding capital HDD had to figure out a way to make its new business plan work financially. “We looked at lining up investors, but our timing was way off,” Hoff says. “That was about the time when the whole market fell apart; nobody was investing. But that didn’t deter us from our mission. We looked at other resources.”
The Hoffs pursued economic development loans available in their own backyard. Henderson, a town of 1,200, is 35 miles southwest of the Twin Cities, in Sibley County.
HDD worked with Steve Renquist, Sibley County’s director of economic development. “We go out and create opportunities for entrepreneurs with good ideas, but without large amounts of available capital,” Renquist says. “Here you had folks with experience and a top-notch marketing plan, who were looking for significant amounts of capital.”
Renquist says the Hoffs didn’t have a lot of liquid assets, but were willing to put up some real estate they owned. “That indicated to the lenders that they’re making a significant commitment of their own assets. It was more than just a verbal commitment; they had something valuable to lose.”
One problem that HDD faced, however, was lenders took one look at the company and lumped it in with the flailing Internet companies. “We had to take them past that and become an advocate for them,” Renquist says. “The Hoffs had already been working, had a successful idea and wanted to take the next big step. They obviously had business acumen, and there obviously was a market out there.”
With Renquist’s help, the Hoffs received a financial package that included assistance from banks, the city of Henderson, Sibley County, Region 9 Development Corp. and the Initiative Fund.
“The county and city look at HDD as one of the area’s new job-growth companies,” Renquist says.
For three years, HDD delved into developing interactive, online educational materials, hiring designers, writers and artists.
“We had to be willing to let the business coast so we could completely focus on the new product,” Hoff says. The new line was launched in late 2002. Today, the firm has a staff of 10 employees and two full-time contractors and expects to grow rapidly.
The payoff A national conference in Dallas in 2002, sponsored by the American Health Care Association, proved HDD was on the right track with its new product. Nine companies from around the country were invited to show their wares.
“HDD came out on top of the list,” says Rick Carter, president and CEO of Care Providers of Minnesota, which uses HDD to train staff at nursing homes and assisted-living facilities. “There were plenty of big and credible companies. The thing about HDD is they understand the business and have wonderful designers. They’re a small company and maybe that’s one of the beauties. They’re just big enough to do the job, but not too big for their britches. I’m excited about these people; they’re very creative.”
Carter says HealthcareAcademy.com scored high for its fun factor, content, technology and learning management system, which tracks classes completed and test scores.
“The meeting was a turning point for our company,” Hoff says. “We recognized that we had a keen understanding of what the customer wanted and we could play with the big people… One company official talked about how he received $40 million to get his company set up. I didn't have $40 in my pocket.”
Hoff says HDD is on track to do $1 million in sales in 2003. “We’re projecting steady, hefty increases after that,” she says. “This is the time we launch and move. We want to be at $5 million in two years.”
HDD’s clients include University of Chicago Hospitals, Medtronic Inc., Boston Scientific and Rehabilicare Inc.
Users like that they can access the Web site through a password anytime, anywhere they have access to the Internet, Hoff says. Each page, she explains, contains bytes of information and has a visual with meaningful interaction. She describes the programs as “highly graphic and animated.” A big, green germ graphic, for example, is used for the hand-washing class. During the review process, a correct answer leads to the germ getting blown up.
Hoff says providers like that they can get mandatory training completed at lower costs than traditional methods.
“They’ve designed a very creative online learning process for our members, who are required by law to complete continuing education,” Carter says. “It’s like playing a computer game. So many Internet companies are providing online learning, but it’s not fun. I’ve looked at other stuff out there, and for the most part, it’s pretty dull.”
