two siblings' innovative approach upstages the industry and gets them clients like the white house. and small business owners are told about the importance of being flexible. we'll have that and so much more coming up next on "your business." >> small businesses are revitalizing the economy. and american express open is here to help. that's why we are proud to

present "your business" on msnbc. hi there, everyone. i'm j.j. ramberg and welcome to "your business" where we give you tips and advice to help your business grow. in a world going paperless, institutions like the post office and traditions like engraved wedding invitations are quickly becoming a thing of the past. a brother and sister team saw there was a need for high-end online stationary. their innovative approach to bringing an offline product online changed the landscape of the industry so much that it's biggest competitor is taking notice. if you're like most americans, your life has gone electronic. you shop, bank, pay your bills and send e-mails all online.

and even though there are plenty of ways to send digital invitations, when it came time to send one for his 21s birthday party, james hershfield was shocked he couldn't find a classy invitation anywhere on the web. >> i was kind of stuck between a rock and a hard place because i didn't have a budget to send paper invitations, but i also found that the existing products for sending invitations online were not as customizable and not as beautiful as what i would have wanted. >> the internet was full of sites that were a little bit more junky and low end. it didn't feel high-touch and have that emotional quality. >> james, a sofhmore in college, went to the web. >> i've got 2200 hits within two hours. >> a thousand. 22,000.

>> i got to harvard in 2006 and there was a really permissive air of opportunity there in the wake of mark zuckerberg starting facebook. and there was a lot of sense that you could, you know, with a little bit of creativity and a lot of work, you could create a company on the web that would really affect people's lives. and i think that that rubbed off on me. >> the idea was simple. create a company that could effectively translate the look and feel of a tangible high-end paper invitation to the digital realm. the first person he shared his concept with was his sister, alexa. >> he kept talking about the tooth of the paper. i didn't know paper had teeth. that idea of starting out with something that had all the visual qualities of something in the offline world that people understand and having it be the most beautiful version of that online. like pipe hyper real, hyper

luxurious, i understood it because that's all he was saying. >> alexa loved the concept. so in 2007 while james was still a student at harvard, they pulled money from their own savings to start paperless post. >> from inception to launch, we had a little bit of a slow road because i was in school for a lot of the time and building a team as a first time entrepreneur was one of the most difficult things we had to do. it took us about a year and a half to get to a place to allow outside users to come on and use the site. >> the idea quickly took off gaining traction and new customers every time someone received a paperless post invitation. jonah, founder and co-founder of "the huffington post" was so impressed when he received a paperless invite he became a mentor to the pair. >> what the company has found is that people are receivers first and then they get a few and say, i keep getting these beautiful

invitations and it is usually from a friend of mine who is a high status friend or a person that i respect. maybe i should go and use the service. and then they come and use the service and then it spreads that way. >> more affordable than paper stationary, environmentally friendly and fast, paperless post quickly attracted high-profile users and institutions, like prince charles, condoleezza rice, the museum of modern art and the white house. >> the website is really simple to use. it's not to send something that is going to reflect all the effort and energy that you put into the party. >> with 50 million invitations sent and a service that is very low cost, everyone is taking notice. even the industry's largest player, evite, recently launched postmark, a site remarkably similar to paperless post. >> there's a lot of examples of big companies trying to copy with the innovative start-ups they are doing. and they have a lot of trouble, more than you would expect. so i think in a way it value

dats the market and what you'll see is paper lest post continue because they are not copying, they are inventing the stuff. you understand the ideas in a different way. >> we only copy something that you think is the standard in the market. you don't copy the abstract, an 11-year-old competitor basically saying that what we are doing is the future. and not just what we are doing but exactly what we are doing. so should paperless post be worried about the 800-pound gorilla in the industry getting into their space? let's turn to this week's board of directors. muak is focused on media, entertainment and technology. michael simmons is the co-founder and ceo of extreme entrepreneur ship tour, a program that brings young entrepreneurs to places like colleges and universities. i love this story because, you

know, as they said in the piece, big companies copy small companies and then fail. >> yeah. >> so evite exists, they have a huge database of people, why is that paperless post can be so confident? >> well, i think, you know, paperless post is an innovative company. jonah said it really well, it's difficult. they came out with an idea novel and fresh. evite, at the time, had become quite stale. not just stale but the products were very clunky and it didn't feel right to people. they came out with something fresh, unique, had a point of view, it was beautiful. and it really caught on. and the beauty of an invitation service on the web is that every recipient is a potential customer. so there's a natural vorality built into the service. paperless post is an example of why young upstart nimble companies can win on the web,

which is they focus on product, first and foremost, and building a wonderful product people love to use. and they really architect, you know, a simple service and a real branded proposition around that product that grows naturally and virally as each person touches it. >> so in cases like these are often no barriers to entry, anybody can do the same kind of thing, copy the same kind of thing, you grow your base. but when somebody comes in with a bigger base, what do you do as an entrepreneur, as the person running this company. so you don't get distracted by the competition? >> i think it varies by industry. you think about the main street business, i think your hugest assets is you as an individual. you'll be more passionate about the area, more closer to the market, and you'll be able to talk to the market more and build closer relationships. so i think with the average main street business, that's a huge advantage. in the case of the online business, you know, jonah and james and alexa really have the understanding of the taste of

the market and to get that virality. i think they have a lot of advantages, but i still would be worried, but at the end of the day i would feel validated that the large companies are making a big change based on our actions. >> and i think you always have to expect, as a young company, as a start-up, if you go into an area that is promising and you have success, you have to assume that the 800-pound gorilla will come into that space at some point. and when -- first of all, you should be paranoid that they are going to and even more paranoid if they don't. if they don't, and most paranoid if they don't but more paranoid if they do. and so i think there's a balance between sort of paranoid, which kind of is lighting a fire under you and distracted. so i think, you know, knowing alexa and james, i'm sure they are looking at it, thinking about it, paranoid about it, but all it does is say we need to move faster, we need to innovate

more, we need to build better product, we need to have more people touch this product. the reality is at this point they have been at this for a couple-plus years, almost three, in market, and people know the brand. the brand of paperless post means something now. when you get an invitation from paperless post, there's a certain, you know, like it feels good. there's a sexiness to it. and it has that higher end positioning. you know, you can come in and rip them off exactly, but it is very difficult to replicate that magic. and i think knowing them, they are going to continue to innovate on that product as much as possible and continue to occupy that brand positioning in the marketplace. nobody is going to come and say i have a bag that looks just like this and the person is going to say, okay, great, that's my bag. and i think they have successfully built a brand. >> thank you so much, guys. >> thank you. if your website is sub par, you're going to lose people's

interest right away. here now are five that in cessties to make your company a great online resource courtesy of "entrepreneur" magazine. number one, a clear description of your business. a visitor to your website shouldn't have to search around to figure out what you do. so sum up your products and services right on the home page. two, a simple, sensible web address. your domain name is like your brand. easy for users to remember and type. three, make your site easy to navigate. consider using drop downs so visitors can see the content under every heading from any page. four, fresh, quality content. add a regularly updated blog or connect your social media feeds to keep things fresh and relevant on your business' website. and number five, know the basics of search engine opt mization or seo. add plenty of links to include images and links throughout your

site. his groundbreaking studio nightclub studio 54 was the hottest ticket of its day. his cutting edge hotel, morgans, reinvented the style for chic boutique hotels. and today etrader is yet again turning heads with a collection of exclusive hotels and restaurants around the world, including the brand new public chicago hotel on that city's gold coast. we caught up with this friend setting entrepreneur to find out how he manages to build buzz and stay ahead of the curve in a down economy in this learning from the pros. ♪ it's an instinct, a feeling that this is what's happening, this is where people are going. this really came about because when we opened up the studio, we had a lot of street people.

we wanted to keep the street people out. so we had that turn into a frankenstein monster. so it wasn't about that for me anymore. it was a good idea when we did it but i think it's time has come and gone. the way we market is just by increasing your presence in the marketplace. we have a very, vy successful restaurant here. it's a kind of new idea because it is very simple food, very low priced and done by a gourmet chef, john george. he came out with a book, because i have no interest in selling a book, i want to sell the hotel. so i thought it would be a perfect opportunity to have a party for that book to introduce jean george and for him to explain his idea directly. ♪ >> nothing matters but the

product. if the product is good, everything else kind of falls into place. you know, you come out with great product, really distinct, really unique, distinguishable from everything else out there in the marketplace, and the buzz and the success of it is a natural consequence of that. it is not about marketing, execution, distribution and in my business, reservation services, no. it's about distinctive product. the restaurant didn't like music during the meal. there's nothing right or wrong about having music, just different customs and cultures and you have to be respectful of that. it is like, when in rome. i think that something in miami you wouldn't work in chicago earn wouldn't work in new york. it's a kind of very distinct

kind of ambience in a city like new york, each borough is different, each neighborhood is different. it's different. it's not hard to find the assigned post, but you have to get out there and figure out what they are. ♪ >> in bad times, in times of turmoil, it's a kind of uncertainty, there were usually voids in the market that you could pick up on and fill. it wasn't about -- the economy is bad, because that will change, but the bad economy is what made me focus on the price. then i realized that i thought that people wanting to get a good price, it's not about the bad economy, it's a pair dime shift. people want value for the money. bad times make people react to the bad times in a certain way.

if you think contrary to that, you can see the number. still to come, how are dating and owning a small business similar? the answers may surprise you. and hopefully our panel has a sweet tooth as today's elevator pitchers treat them to chunky chocolate. you know, those farmers, those foragers, those fishermen.... for me, it's really about building this extraordinary community. american express is passionate about the same thing. they're one of those partners that i would really rely on whether it's finding new customers, or, a new location for my next restaurant. when we all come together, my restaurants, my partners, and the community amazing things happen.

to me, that's the membership effect. valentine's day is coming up and if you want to give some sweet treats to your sweetie, here's a thought. today's elevator pitcher hopes their chocolates will melt our panel's hearts. >> good morning. my name is jerome bertolli and this is kevin smits. we are located in western, massachusetts, where we make all natural chocolate bars. what makes us unique in the market is that although it is the highest quality ingredients, berkshire bark has a fun, unpretentious nature and an excessive price point. our use of ingredients and fun combinations led them to call us

the ben and jerry's of chocolate. >> since our launch foif years ago, we have had total sales of $160,000 in 2011. we have national and regional distribution with product place in the over 150 retail stores. we are seeking investment of $500,000 for facility, improvements, equipment and marketing. in return we are offering a 14% return on investment with a possible equity position. >> wow. if it is any indication these people did not only take one bite, but they were eating the whole thing the whole time. so, mo, you are a venture capitalist, you listen to pitches all day long. how did they do? >> i think they did quite well, actually. it was tight, concise, you made your point very clearly. i have a handful of questions i would ask, but i think you did what's really important in a pitch, which is incaps late what it is you do and what it is that's different about what you

do suck sinlgtly and give people a chance to touch and feel your product, and it is easier to do when you have chocolate versus making a website. but in any case, it is something you can and should and need to do to get people excited for what it is you're doing. >> what about you, michael? >> i loved the sample as well, so i think that was a great element. i would also add that i would love to hear more about the tractions, you mentioned $180,000 in revenue the past few years. i would like to hear more about the story of that and your exact plans for how you get to scale that larger. at the end of the day, it tastes like a really good product but it will come down to the execution. >> moment of truth, i think i know the answer, if this was the kind of industry you invested in, would you take another meeting? >> i would try and make this meeting go a bit longer because my questions really are about, you know, five years is a reasonable amount of time, $18 to $180,000 is still a modest

number of sales. in order for venture capitalist to invest and get return on their dollar, they really need to build this into a pretty sizable entity. so the growth sorry and how you differentiate, specialty foods market is not my day to day area, but it is a really tough category. so i would try to dig in a little bit on what you have done today and how you're really going to be able to cross the chasm. >> they piqued your interest enough. >> i can hang out for 30 minutes to an hour and see where it goes. >> how about, you michael? >> i loved the product and the presentation. kind of the same as mo, i want to see more of the story. are you working full-time during that time? where you working part-time? and then how you can get hired. >> thank you so much for bringing your idea here and your chocolate. and thank you guys for all youred a violence. if any of you out there have a product or a service and want feedback from our elevator pitch

panel on your chances of getting interested investors, just send us an e-mail. the address is yourbusiness@msnbc.com. in the e-mail include a short summary of what your company does, how much money you're trying to raise and what you intend to do with the money. you never know, somebody out there watching the show may be interested in helping you. time now to answer some of your business questions. mo and michael are with us once again. the first one is developing a repoire with customers. >> how do i see the red flags in business? you know how to look for it in dating but how do we know when we're spending time with a potential client if they are really serious about our business or not? >> i love this question because particularly in the beginning you just want to get any customer you can get and next thing you know you spend three weeks on someone who may not sign up or turns out to be an unproductive client. what do you do? >> if your business allows it, i love preorders because a lot of people, just because they don't want the awkwardness of saying

no, they will -- the sooner you get to the point where you have them say, pull out their checkbook and pay for something in advance before it is made, then i know i'm on to something. >> i just want to know how they know how to do this in the world of dating. that seems like a tough challenge to me. assuming they figured that out, let me know. i would say a couple things. one, i think honesty is really, really important. i think as a presenter as well as a resipt yent, meaning it is disarming when somebody comes to you and says here's what we're doing, they give you like a really quick pitch, this may or may not be for you. totally fine either way, but just kind of want to have a sense of where you are and just kind of put it on the table. it disarms the whole thing. like all of a sudden people on the other side are not as worried about hurting their feelings, et cetera, because you own it right there in the

moment. so i think that is incredibly important. and the other thing is just the process thing. you really have to have a tight process for how you do these things. a very brief pitch, a way you follow-up and a very direct way of saying, if you're interested, let's move this thing forward. if you're not, that's okay, too. you can use the simple devices and they are fairly effective, believe it or not. >> let's move on to the next one. this is an e-mail from rona who writes, we are a self-funded online ad agency that's one year old. at what point in our growth should we seek investors? >> i have a simple answer. when you need them. never raise money if you don't have to. there's nothing better than having nobody's hands in your cookie jar. if you get to the point where you wanto grow your business to a certain trajectory and don't have capital to do so, then you start looking for investors. short of that, keep doing what you're doing. >> i would say it really depends on the industry and your personal preferences as well and how much you want to be diluted,

how much is this a lifestyle business and many people do start businesses for that reason. so i would like at those things and whether you have competitors as well. >> you know, if you feel at some point you'll need investors and don't need them now, i ask you this, shouldn't you at least start developing relationships? >> any entrepreneur that thinks they are in a business other than a lifestyle business, if you're in a lifestyle business, the goal is to keep everybody outside of your life. but if you are in a business where you're trying to grow it as big as possible and have big ambitions, either now or in the future, it is definitely important to have relationships in the financing community. just like you would with any other constituency or stake holder, whether it is the press or however to get media on your company or banks to lend your money. >> then you don't go through the first stage of figuring out who the people. >> now work on relationship building. >> let's move on to the next question.

this is how to deal with customers. >> i would love to know how to ideally sort of deal with persons who are really price sensitive, hotels really priced sensitive. >> price sensitivity, that's tricky. because as a small business you're probably never going to be the lowest person there. >> well, i deal in the education market, so one quarter of our price, when we were launching people were complaining about price and now people complain about price. so i think i would be, in the beginning, i like giving away things cheaper to see if there's engagement to see if the idea works, but once the idea works i like to stand firm on the price so you have the price integrity and people don't talk. fundamentally, people who purchase at a smaller price may not be your target market, so you may be wasting your time depending on the customer that's not going to be with you when you raise your price. >> i think that's right. and i also think that generally it's all about value delivered,

right? if you driver deliver the requisite value, people get less sensitive on the price. look, it starts with knowing your customer, right, going at the right customer. if you have a product that costs a certain amount of money and you're targeting bargain hunters, you're going to have an issue. you have to make sure your customer and product are aligned and deliver value for services. >> i love that point, though. as we talk a lot about price, but really what everyone should be concentrating on is value. >> yeah. i think actually when you talk to your customers, you have to speak in that language. you have to frame what you're delivering around. let's talk about the value delivered here as opposed to the price. it's a little bit -- it's subtle and an orientation thing. but i think it does make a difference. >> i find it sort of playing the hard to get. if you say, we may not be a good fit, sometimes people then want to come back to you stronger. so they have more respect for you. >> okay. well, guys, thank you so much for all the advice. very helpful. we appreciate it. if any of you out there have a question for our experts, just go to our website. the address is

openforum.com/yourbusiness. there just hit the ask the show link to submit a question for our panel. again, the website is openforum.com/yourbusiness. or if you would rather e-mail us your questions and comments, the address is yourbusiness@msnbc.com. mo and michael had some really helpful advice on how to improve your company. now let's get some great ideas from small business owners like you. >> my advice to other entrepreneurs is to get your employees to do not just one activity but several activities. when slow times come around you can take advantage of them and keep them working. overall employees appreciate that. >> they have to forget about their country. you have to adjust for the american culture. >> when you own your own business, the first problem is you're running your own

business. stop that. let someone else take care of the little things. maybe push off as much as you can to someone else. not the important things and nothing about money because you want to focus on where your money is going. looking to start your business online but not sure where to start, check out our website of the week. citymax.com is a website build we are no html or web design skills are required. you can choose a design template, customize it and go live. changes can be made any time you want. setting up your own website costs about $20 a month. to learn more about today's show, just click on our website. openforum.com/yourbusiness. you'll find all of today's segments plus web-exclusive content to help your business grow. don't forgt forget to become a fan on facebook. we love to get your feedback. and follow us on

twitter,@msnbcyourbiz. next week we are focusing on starting up a successful restaurant and food services business. you'll meet an entrepreneur who looked at a building and saw not one, not two but three different business concepts. >> i'm pretty crazy but not crazy enough to just open up three businesses that close together. >> we'll tell you how she fit two restaurants and one bar into one space. until then, i'm j.j. ramberg. and remember, we make your business our business. they have names like idle time books and smash records and on small business saturday they remind a nation of the benefits of shopping small. on just one day, 100 million of us joined a movement...