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December 3, 2010 by By Vicki Gerson, Small Business Opportunities magazine

Picture of the side of a Games2U Party Van

Owners David and Stu Pikoff playing with Laser Tag guns inside the Video Game Theater.

Carnival on wheels biz makes $20 million a year driving the party right to the clients!

Games2U was founded, in October 2007, by two entrepreneurial brothers, David and Stu Pikoff, who are the company's co-CEOs. Their Austin, Texas-based mobile entertainment company is basically a carnival on wheels - giant party trucks pull up to your house, school, church and other venues and throw kids and adults parties complete with video games and an array of newly invented products. David Pikoff has invented almost all of the unusual games that are available for these parties. In just three years, annual revenue has reached $20 million.

Before Games2U, the brothers owned separate companies in telecom and property management, but they always wanted to work together. For four years, they researched various opportunities and considered different franchises. As they continued their research, the brothers discovered there was a huge void in mobile entertainment, and there was no nationally branded entertainment company in the country. Instead, it was a cottage industry with mom and pop kinds of businesses.

As the brothers worked on the concepts, they each had offices in their own homes. Here they would discuss the business plan and create designs and images. "We decided to fill that void in the marketplace, by starting with video games and laser tag," says David Pikoff. "We wanted video games on the inside and outside of our specialized vehicle. Our goal was to always create unique entertainment."

The brothers always knew they wanted to franchise the business so their first step was to find angel investors. They found people who invested from friends and relatives. In all, they made 50 individual presentations over a six-month period to present their concept and found three angel investors willing to give them one million dollars, which got them through the first year. The brothers do own the vast majority of stock in the company.

The party truck, which cost $170,000, was their first investment. They bought a 32-foot trailer and went to an outfitting company with their design concepts and ideas. A third vendor did the physical outfitting of it. Then, they outfitted a second vehicle. They also acquired a 6,000-square-foot building in the first quarter of 2009 with half of it dedicated to the "Fun Factory," where new games are created by David Pikoff. To know if the games will interest their target market, they bring in control groups of children to test the ideas.

To let parents know about Games2U and be interested in having a party, the brothers would take their two party trucks to where there were large gatherings of people such as baseball and soccer fields, as well as homeowner association events. They would open the vehicles and encourage people to play for free. They did this over a 90-day period so people would know them. "We weren't revenue driven, and we wanted to get the operational expertise. This resulted in us altering the way we constructed the vehicle a little," he says. "After doing this for three months, we realized we had a solid model."

In the beginning Games2U charged $299 for a 90-minute party. Today, there are diverse product offerings and different price points with prices ranging from $299 to $499. Extra hours can always be added. Once again to determine the price, the brothers conducted market research in 2007 and learned that $300 was quite typical for parties at laser tag facilities or bounce houses.

To let the community also know about the party trucks, they experimented with door hangers, put up a rudimentary website in the November 2007 and did all kinds of paid search Internet marketing. In the first quarter of 2008, they improved the website, and even today considers it a work in progress.

Each Games2U specialized vehicle offers either a patent-pending 4-D movie theater or an interactive video game theater. The 4-D movie theater can accommodate six people for a 3-5 minute movie experience with electronic glasses, moving seats and wind, water and tickling effects. The video theater includes multiple flat screens inside and outside with laser lights, surround sound and smoke machines. Games allow up to 24 children to play at one time and high-tech laser tag guns function in the daylight or dark.

One of the first products David Pikoff invented was a 7-foot-tall, human-operated green robot named U:Bot (patent pending) at a cost of $300,000. The robot has voice modulation, shoots nerf balls and moves its arms. The back door opens and a child hops inside with an electric platform that moves up or down to meet the child's height requirements.

Another popular product for kids are the Human Hamster Balls, which lets one child fit inside and roll. Booger Wars (patent pending) is a hybrid between dodge ball and capture the flag with one giant nose on each side of the field. Wearing Velcro vests and protective eyewear, kids throw bean bags at each other. If one sticks to you, you're out. Many of his other inventions have patents pending. Today, there are 12 different games and events that are offered. But each franchisee does not have all of them.

The first franchise was sold in March 2008 in Austin, Texas, as a result of going to parties and people calling to ask if they could purchase a party vehicle. At this time, the brothers ahve sold 138 franchise territories. Most people who purchase a franchise buy multiple territories, which range from 150,000 to 200,000 in population.

A franchise costs 105,000 to $200,000. That fee includes a fully loaded new vehicle, the training and the franchise fee. The prices vary depending upon the options and features the franchisee purchases. Comprehensive training includes webinars, workbooks and coming to the corporate office.

As in the very beginning, the brothers have the same roles in the company as they did at the start. Stuart's role is handling the legal, sales, banking and accounting, while David handles operations, marketing, the customers and the inventions. Together, they do the strategic planning and also discuss the design of the vehicles and a growth strategy.

Now, to find franchisees, the brothers have incorporated a broker network that refers franchise leads to them. Other leads come from their website.

Games2U just agreed to a test program with McDonald's. Because Tuesday tends to be the slowest day of the week, party vehicles will come to their parking lots from 4 p.m. to 8 p.m. and kids can play for free.

Before Games2U inked this deal with McDonald's, the company was hired by Whataburger to send their franchisees to about 100 locations in the 4th quarter of 2009. It was quite successful.

Early in 2009, Games2U inked its first deal with on eof the largest school fundraising companies in America. Now all five major fundraising companies do business with all their franchisees. Games2U is the prize. A party vehicle comes on campus for a few hours and either the top 50 kids who sold the most or the class that sold the most gets to come and play. "It's a win-win for everyone," says Pikoff. "In some schools, sales have doubled."

This company's growth is quite amazing. In 2007, there was no revenue. In 2008, there was only two million, but revenue jumped to four to five million in 2009. Revenue increased to $20 million in 2010. "I believe what accounts for this tremendous growth is the void in the market segment, as well as our tremendous amount of hard work and unique product offerings we have."