Qbox Emerges Strong As One Of ARK Challenge Winners In 2012

Editor’s Note: This is the first of a three-part series on the progress of ARK Challenge winners from 2012 and 2013.

Northwest Arkansas was buzzing in 2012 because of its unique startup accelerator dubbed ARK Challenge. The program, made possible from $2.15 million in federal funds, allowed 15 startups from the globe access to mentoring and seed money to try and launch their business ventures following a three-month bootcamp experience.

ARK Challenge was a partnership between Winrock International, the University of Arkansas and NorthWest Arkansas Community College.

Three winners emerged from the competition were Btiques of Fayetteville, StackSearch of Fayetteville and MineWhat of Bangalore, India. Two of these companies are still up and running three years later, but it’s been anything but an easy road, they recently told The City Wire. (MineWhat will be included in the next story in this series.)

QBOX STAMINA
Mark Brandon, co-founder of StackSearch, now known as Qbox, said the path from winner to profits has been a long and arduous journey, despite the fact his venture has been able to raise enough capital ($600,000) to stay afloat thus far.

Brandon’s co-founder Sloan Ahrens who helped build StackSearch’s platform is no longer part of the venture. Brandon said his dreams of building out the entire company in Fayetteville and adding local tech jobs to this region have also changed. His tech team of three developers relocated to San Francisco. He has since added a manager of special projects who resides in Fayetteville, as does Brandon. The company’s head of sales lives in Austin, Texas, and the content curator offices in Boulder, Colo.

“Our original product had some problems trying to cater to e-commerce retailers. Our sales cycle with them was typically about 8 months of trial and tests before they would buy. That is a problem if you only have six months of cash in the bank,” he said.

Brandon said the company retooled its product and began selling the technology further upstream to developers so it could be integrated into the retailer’s websites and e-commerce capabilities.

“We changed the name to Qbox and this platform has been successful in part because of Ben Hundley, whose startup, Mass Vector, didn’t win the ARK Challenge in 2012. Ben shelved his project and joined us. He has been elevated to co-founder of Qbox,” Brandon said.

ALCHEMIST ACCELERATOR
Brandon said Qbox was fortunate enough to be accepted into the Alchemist Accelerator in San Francisco recently. Having fast tracked the program, Brandon has already made his pitch to investors in that market via a Demo Day presentation May 21.

He told investors “Qbox is on fire” with sales rising exponentially over the past year.

“In April, we finished with $130,000 in recurring revenue which was up 30% over March which was up 55% over February. In May, the company was at $250,000 in monthly recurring revenue,” Brandon told investors.

He also told investors that he could confidently predict $450,000 in second quarter revenue, which is already in the books, while he shared the revenue report from the past year:

• $204,000, Q1- 2015
• $162,000, Q4- 2014
• $92,000, Q3- 2014
• $59,000, Q2 -2014

Brandon told The City Wire that he keeps thinking the law of big numbers will eventually catch up to him, but the company continues to sign on more big users of their hosted data base as a service offering. Qbox has brought on clients such as Home Depot, Nissan, H-E-B, Nordstrom, Williams-Sonoma, Trip Advisor, The Dallas Morning News, The Seattle Times, Adobe and CBRE Real Estate, Johns Hopkins University and Columbia University.

WHAT’S NEXT
Brandon said the mother of all trends is Big Data and their service helps a company improve the search capabilities which has resonated with data scientists at prestigious research centers such as Johns Hopkins and other areas outside of retail.

“We said the company is also gaining steady footing in e-commerce retail because its product is being integrated into the retailer’s own sites at the development stage which allows it to run seamlessly while providing better search optimization that allows for speed and precise filtering,” Brandon said.

He told analysts that Qbox is a solution provider in a $40 billion market. While he knows there are competitors, Brandon said there is ample room to grow Qbox to as much as $4 billion in revenue over the next few years.

Brandon said after presenting to investors at the Alchemist Accelerator, his phone and email were busy with potential interest from investors and he is confident Qbox will be able to raise more operating capital and expand its team.

SAN FRANCISCO BASE
Whether Brandon relocates to San Francisco with his family is still up in the air.

“I love living in Fayetteville, but the interest and investment opportunity for my company is stronger in Silicon Valley. I had no trouble convincing my developers to move out there. Their office is next to the Twitter headquarters and the energy around tech startups is so much higher,” he told The City Wire.

That said, Brandon believes Northwest Arkansas has adequate talent to support his company going forward but he said the capital funding and fundamental understanding are still absent. Brandon said the mentoring he received from the ARK Challenge was stellar, but he said the local investors by and large are too dilutive and act too slowly to support entrepreneurial growth around technology-based companies.

He lauded he efforts of Jeff Amerine and Kristian Anderson, active investors in Gravity Ventures and mentors to the ARK Challenge participants. But he said there is not enough interest from investors locally compared to epicenters like San Francisco and Boulder.

Brandon said the recent efforts of John James to try and launch Hayseed Ventures to provide seed money to local startups is notable, but unless the investor base rethinks the way it values companies based in Northwest Arkansas, there won’t be enough money flowing to companies in need.

Valuations here are about one-fifth of what they are in the San Francisco Bay area, according to Brandon. Investors in true tech hubs are willing to pay more, he added.

“Right now Northwest Arkansas does a pretty good job nurturing newborns, but when the kid is growing and needs some reinforcement they are often left to fly the nest to other regions who then reap the benefits of continued growth,” he said.

B’TIQUES INACTIVE
The one winner from 2012 that has shelved her venture told The City Wire the ARK Challenge experience was worthwhile.

“Being a part of the early startup scene in 2012 was really about being a part of an amazing community collaboration; an epic adventure of learning,” said Sara Beck, cofounder of B’tiques.

“Following mobile sales across thirty-five (35) boutiques, we are currently inactive, yet, super accessible to those individuals and seed companies who might benefit from our takeaways,” Beck said.

Beck shelved B’tiques around 18 months after being named a winner in the ARK Challenge 2012 in part because of her growing family and lack of capital.

“I am currently spending time on-the-go with my family, and working on branding and marketing projects with a handful of local small-business owners,” she said.

Her brother and co-founder Will Carter took a marketing position with Sam’s Club and has since moved to Little Rock to be an account manager for the design firm Made by Few.

“My advice to future NWA entrepreneurs is to network with purpose and partner with intention,” Beck said.