Spotlight on student entrepreneurs:
Junior Adam Fogel keeps Orange County rockin’
BERKELEY - To be a successful entrepreneur, having a nose for an unfilled market niche doesn't hurt.
When Adam Fogel and his friend Luke Allen wanted to rent a rehearsal space for their high-school rock band, the only place available in their hometown of Santa Ana, California, was a run-down building in a deserted industrial area. "The building had 20-some rooms and they were all sold out," says Fogel, now a junior at UC Berkeley after transferring from Orange Coast College, which Allen attends.
Their band is no more, but in its place Fogel and Allen have formed Gemini Studios, comprising two buildings with 32 rehearsal spaces. Now they're the ones who are turning bands away, to the tune of around $250,000 in revenues per year. (And before you hit Fogel up for lunch, "it sounds like a lot of money, but after paying off expenses and loan debts, we go home with just enough to keep us happy," he says.)
Come as you are
After inspiration had struck, the two high schoolers smartly decided to do a little market research. They posted flyers and ran ads in local music magazines and the Orange County Register saying they were taking reservations for a new rehearsal studio. Their initial hunch proved correct: nearly 50 people called and said they were looking for a room and willing to pay. Now all Fogel and Allen had to do was raise the capital and find a place to lease.
It turned out to be a bit more difficult than that. Southern Orange County's paucity of studios wasn't just an opportunity waiting to happen, it was partly the product of strict zoning laws and high leasing costs. Fogel called real estate brokers and said he was looking for office space in the warehouse district. Lots of real estate brokers.
"They'd do the search for us over the phone, but then when they met us they'd be shocked," recalls Fogel. "They thought we were wasting their time - that the idea would never happen."
Nearly a year later, when Fogel and Allen were college freshmen, they found the perfect place .well, a place. In order to convert the office building into rehearsal studios, they needed to hire a construction crew. In addition, the owner wanted $13,000 as a down payment on the lease - "since we were only 19 and 20 and it was, after all, a startup," concedes Fogel - and a guarantor.
Papa don't preach
Fogel knew of only one place to turn for both needs: his father. He hoped Dad would be a sympathetic ear, since he'd founded his own health-care administration business. "I took him out for dinner alone and showed him our business plan, and promised we'd pay him back monthly with 5 percent interest," recalls Fogel. "It didn't take much to convince him about the loan: he saw the potential. He was a little more worried about being the guarantor on the lease."
Spotlight on Student Entrepreneurs
To make the system as painless as possible to run, they rent rehearsal rooms by the month: bands are issued codes for the security system, instead of keys, to let themselves in for late-night jam sessions. If they fail to pay, their codes get deactivated. Meanwhile, surveillance cameras help ensure that nobody sets fire to their guitars á la Jimi Hendrix. If they do well, Gemini Studios keeps the band's security deposit.
"The beauty of it is how efficient it is," says Fogel. "It practically runs itself." That leaves him and Allen free to enjoy one of the perks of the business: hanging out with the bands. The record companies of several of Orange County's bigger bands, like Thrice and Fairview, pay for their groups to rehearse at Gemini Studios. "At night the studios are packed with musicians, and they're hanging out on the couches in the room with the vending machines. We've really created an ideal workplace," smiles Fogel.
Things were going well enough that Fogel went to Italy to study for a semester. When he got back in December 2001 and saw they had a waiting list of 20 bands, he and Allen decided the time was right to expand.
'The beauty of it is how efficient Gemini Studios is. It practically runs itself.'
They ended up with 3,600 square feet of raw warehouse space not far from their original building. This time, they needed major construction. Fogel and Allen spent almost a month drawing up a floor plan that would maximize their investment; the contractors came and went, and in July 2002 Gemini Studios II opened its doors and had tenants for 13 of its 15 spaces almost immediately. After a brief scare in which seven or eight slots were empty and Gemini was heading into the red, since September they've been rocking and rolling along at a zero-vacancy rate.
That's good, because Fogel's transfer to UC Berkeley has made it more difficult for him to find time to promote the studios. (Allen, still in Orange County, is shouldering most of the day-to-day operations under a shareholders agreement he and Fogel drew up when Fogel secured their start-up capital.) "School takes up a lot more time than I thought it would. It's way harder than community college was," he admits. Fogel is currently enrolled in the College of Letters & Science, but he's hoping to be admitted to Haas and major in business administration.
Unlike the other student entrepreneurs profiled for this series, Fogel wants to work for someone else when he graduates, like a venture capital firm or a real-estate developer - "just to see how they do things."
Already, he's learned a lot from practical experience, and along the way found a new love: real estate. "This business has really inspired, and will hopefully support, my future investment interests, " he says, sounding like a budding Donald Trump.