Adam Roark works on transfering 8mm movies to DVD at Southtree.Name: SouthtreeFounded: 2001Owners: Adam Boeselager and Nick MaccoService: Transform tapes, film, photos, cassettes, and more into DVDs and digital filesRevenue: $1 million in 2012Location: 1301 Cowart StreetPrices: From $8.95 for a budget DVD recording of a videotape, up to $549.95 to process up to 1,000 images into a digital formatWebsite: Southtree.com
College buddies Adam Boeselager and Nick Macco destroyed 37 DVD burners last year.
Not run-of-the-mill consumer models for sale at Walmart. This was professional-grade equipment that they simply ran into the ground.
That's what happens when a business processes nearly 3,000 football fields worth of old reel-to-reel film and more than 12,000 miles of VHS cassette tape, transforming thousands of analog memories into digital files.
The group's new location on Chattanooga's Southside appears likely to become the final resting place for many more DVD burners in 2013.
Southtree's business model is simple. Customers send their boxes full of tapes, slides, photos, movie reels, and audio recordings to the company's Chattanooga headquarters through its website. Southtree burns the material to DVDs and ships it back. This year, the company also plans to allow customers to stream their videos online as part of a service called Forever Files.
Boeselager, Macco's partner, founded Southtree in his bedroom in 2001 as a way to help family members update their aging recordings. His parents tracked his childhood development, from soccer games to Christmas, with shoeboxes full of videotapes that were difficult to store and catalog. So he started burning DVDs.
Since then, the idea has grown into a $1 million company with 17 workers. Though the group's new Southside offices are barely complete, they've already filled up the space and are running two shifts.
"By the time we got set up here, we'd already doubled our staff," said Macco, who handles the company's online presence.
More than 1 billion videotapes alone were sold during the heyday of VHS, and even a small percentage of that market will keep Southtree busy for years to come, Macco said. As a result, Southtree has taken on the character of a logistics business, as the venture expanded to what founders believe may be the third-largest company in the digital conversion business. Managing five or six orders is easy, the partners say. Keeping track of 500 boxes of memories each week is difficult.
Early on, Macco and Boeselager discovered the value of customer numbers and bar codes, and rapidly developed a custom system to give customers automatic email updates on their order.
"For us, it's been difficult to manage the logistics, not so much the technology," Boeselager said. "At the end of the day, it's not that difficult to author a DVD. But it was difficult to build an e-commerce system that customers could trust."
The product of a new online generation, they lean heavily on the strength of their website and their ability to advertise online, they say. Such a robust online presence didn't necessarily require a brick-and-mortar office, and they didn't move out of their shared house until 2009 when they moved into the Southern Saddlery building on Broad Street. Now, there's talk of a separate production center away from downtown if demand continues to grow, Macco said.
"We've eaten at Urban Stack too many times already," he said.