A Winning Plan (Georgetown Business Cover Story)
Savvy students create a business out of multimedia tours for the hearing impaired
By Andrea Orr
Karen Borchert and Martin Franklin entered the MBA Evening Program at Georgetown University's McDonough School of Business in 2006 with the near-term goal of acquiring skills to help them advance in their current jobs and the long-term goal of starting their own companies - someday.
That day arrived sooner than they expected in 2008 when their student team won the school's Business Planning Residency Competition with a service offering guided museum tours for the hearing impaired using iPods and other personal media devices. Over the next few months, the two students incorporated the business, assembled a formal management team, and quit their jobs.
Borchert and Franklin now spend their days with two other colleagues in an office in Arlington, Va., where they work without salary on the multiple tasks required to turn their fledgling company, Keen Guides Inc., into a viable business. When they are not fine-tuning the guided tours that Keen Guides offers, they are working to sell the service, identify new markets, and raise the financing that will help the business accelerate its expansion to stay ahead of potential competitors.
And then, they go to class at night.
"I think you can give entrepreneurial people some tools to improve their skills, but there's also just a certain 'nonfear factor' that these people have," says Borchert, who, in addition to serving as Keen Guides' CEO and studying for an MBA, is mother to a 1-year-old daughter. "We don't always know what we're doing, but we took a leap."
Keen Guides was born out of Borchert's friendship with Catharine McNally, a fellow graduate of Wake Forest University in North Carolina, who has been deaf since she contracted meningitis when she was 8 months old. A lover of art, McNally had grown frustrated over the poor access for the hearing impaired in museums and other public places.
After one particularly unsatisfying visit to a museum in Washington, D.C., where she had been offered a 50-page transcript in lieu of an audio tour, McNally resolved to come up with a better solution. Using the transcript the museum had provided, she went home and videotaped her own tour in sign language and then downloaded it onto her iPod.
The next day, she returned to the museum, walked up to the front desk, and showed how she had developed a prototype for a new and improved tour in just a few hours. McNally spent another year working on the project, researching captioning technologies and media players, and talking with interpreters and museums. When she shared the idea with Borchert, the MBA student was impressed with the product and the energy behind it. She told McNally, "What you need is a business plan."
As it turned out, Borchert needed a business plan, too, so she could compete in the residency competition. She and Franklin had already bonded over their shared dream of starting a company. The two joined forces with six other classmates to turn the bare-bones tour McNally had created in her home one night into a plan to provide a much-needed product to an underserved population.
Borchert and Franklin, Keen Guides' chief operating officer, immediately recognized that McNally's guided tour was superior to the options most museums offered. Because the tour was accessible for portable media players, it was less conspicuous than a bulky transcript or a sign language interpreter and allowed users to move through the museum at their own pace, fast-
forwarding and rewinding as necessary.
To help get the rest of the team on board, they invited McNally to come and pitch the project. A polished professional who now can hear with the help of a cochlear implant, but still struggles with the echoes and crowds in museums, McNally put a face to the deaf population and shared a compelling statistic: Between 20 million and 26 million Americans have some hearing loss. Because many people are unwilling to admit to poor hearing, it is difficult to get an accurate count. However, even the most conservative statistics underscore the large size of the hearing-impaired population.
"At first it sounded like a nice feel-good idea," recalls Lejla Alic, a teammate who became excited about the idea when she started learning about the pervasiveness of hearing loss and the shortage of services. "Keen is a nice hybrid between having a chance to make money and helping people." Over time, Alic's conviction grew to the point that she invested $10,000 of her own money in the young business.
After the first-place win in the McDonough School of Business competition, Keen Guides' full management team took shape, with Catharine McNally serving as president and her brother, Frank McNally, serving as chief administrative officer. The team redoubled its efforts. To an outside observer, it may have looked like the successes were piling up with ease. The young business won a social entrepreneurship competition at Wake Forest University, raised about $35,000 in financing from friends and family, and earned glowing reviews when it tested the service at the National Gallery of Art. In April, Keen Guides won an additional $20,000 for earning first place in The George Washington University's Business Plan Competition.
"I absolutely hate guided tours because I spend more time lip-reading the guide than looking at the artwork," says Rachel Dubin, one of the hearing-impaired individuals who participated in the pilot program. "Keen has changed that by providing a seamless museum-going experience. I can walk through an exhibit unburdened by a giant transcript."
Yet for all the friends, teachers, and judges who liked the service, many continued to see Keen Guides as a niche nonprofit. Borchert and Franklin saw otherwise. They already had good jobs. Borchert was the co-founder and director of the Campus Kitchens Project, a nationwide organization that provides food to the hungry, and Franklin ran the U.S. office of Ceenex, a consulting firm headquartered in his native South Africa. They were not about to leave those jobs unless they saw in Keen Guides the potential to go beyond a niche nonprofit and offer a product that could gain the widespread traction needed to help make the world a more accessible place.
Smith Wood, an adjunct professor who worked with the team during the competition, says Borchert and Franklin were always pushing beyond the politically correct image of a nonprofit for the deaf to focus on the top line.
"They had an understanding that if you don't bring money in the front door, the business doesn't make it," Wood says. "It was a matter of looking within the unique characteristics of the business to determine the best potential markets. It looked quite promising."
By the summer of 2008, the newly incorporated Keen Guides Inc. was firing on all fronts: selecting the best technology for distributing its tours, exploring new markets besides museums, and developing tours to suit individual needs.
Accomplishing this while going to school created some time-management challenges, but it also provided a steady stream of useful information. "Starting a business from scratch requires the thoughtful application of everything we've learned, from strategy and accounting to negotiations and finance," Franklin says.
Keen Guides currently offers tours in four formats: spoken word, captioned, American Sign Language, and cued speech, a system that supplements lip reading with a series of hand shapes in various locations near the mouth. The company also plans to expand into multiple languages and is looking into developing tours for other underserved populations, such as those suffering from dementia or autism. Research has found that individuals with dementia, for example, may be able to better follow a guided tour if it contains repetition and shifts back and forth between factual and abstract concepts.
A key breakthrough has been the ex-pansion of its market to encompass both the deaf and the hearing impaired. This vast group, according to most estimates, includes one in 10 Americans and continues to grow as baby boomers age. Many people do not know anyone who is profoundly deaf, but almost everyone has a friend, parent, or grandparent whose hearing has declined. And because many of those with hearing loss are retired people, they are part of one of the main groups who frequent museums.
With the product built and the market opportunity clarified, other pieces started to fall into place. As it fine-tuned its product, the Keen Guides team also realized it could serve people who had no hearing loss at all, but preferred the convenience of an audio tour. It signed up its first paying customer when it persuaded Wake Forest University to offer campus tours so visitors could explore the campus independently when no formal tours were scheduled.
Keen Guides now is eyeing some 34,000 cultural institutions in the United States as potential customers and projecting it will be cash-flow positive within two years. It aims to have 125 paying customers by its third year in operation and is working hard to raise $300,000 in angel financing or venture capital so it can avoid tapping friends and family any further.
Of course, even the best businesses rarely grow exactly according to plan. While Borchert and Franklin had the good fortune to have a friend with a winning idea and a nurturing school environment in which to launch it, they kicked off their first full year of business this year in a challenging business climate.
The two remain as exhilarated and motivated as ever. They know they have to expand rapidly to gain a foothold, but the current market environment is creating challenges. Financing is difficult to come by, and nonprofit organizations, such as museums, are short on funds.
"This is a really risky venture now," Borchert admits. She says Keen Guides has responded by cutting back even further on its shoestring budget and pursuing partnerships with more established tour providers or book publishers that might benefit from a technology upgrade.
Alic, who became an early investor in Keen Guides last year, says she remains so strong a supporter that she is considering making a second, larger investment, tough market conditions notwithstanding.
"If they had started the company a year earlier, they'd probably be having an easier time," she says. "But starting a business in tough times, you learn how to operate in a lean mode."
So far, Keen Guides' management team is finding that the potential to create something from scratch and provide a valuable service outweighs the challenges of starting a business in a tough economy. "I could have continued to work for my old employer," Franklin says, "but it is fun building your own thing and seeing how it grows."