Illustrations: Julie Teninbaum
By Elaine Pofeldt
May 23, 2013

Whether it’s frozen yogurt, mobile-phone service, or e-book publishing, here’s how three dynamic entrepreneurs are going toe to toe with vastly bigger competitors.

Red Mango vs. TCBY (Mrs. Fields Famous Brands)

The challenge: Finding a niche in the increasingly crowded frozen-yogurt field.

What he did: A former investment banker at J.P. Morgan Chase, Dan Kim ditched finance to study photography and ended up a wedding photographer. Worn out by the stress — “Dealing with brides took years off my life,” he says — he opened a yogurt shop, which he called Red Mango, near Facebook’s Silicon Valley offices in 2007. Fittingly enough, Kim attracted customers through Facebook and other social media and kept them by being what he calls a “quality freak” and offering great flavors (mojito and pomegranate, to name two). Kim, 37, also used his finance know-how, raising $12 million in funding. Red Mango’s all-natural, probiotic-spiked yogurt generated some $68 million in revenues last year, and today the chain, now based in Dallas, has 229 stores.

Bandwidth vs. AT&T

The challenge: Getting customers to abandon well-known wireless phone service providers in favor of an upstart brand.

What he did: Frustrated with his family’s high mobile-phone bills (he has six kids), David Morken, 43, decided to do something about it. His company, Bandwidth, a B2B marketplace for Internet connectivity that he founded in 1999, began marketing a new offering in 2011: an unlimited mobile service that goes for $19 a month, vs. $100 or more for comparable big-company plans. Users automatically tap available Wi-Fi services; if they can’t get a connection, they’re routed to Sprint. “We have challenged the status quo and shocked it,” says Morken, a former Marine who likes to race his bicycle in Death Valley. It’s paying off. Revenues at the profitable Raleigh, N.C., firm reached $120 million in 2012, up from $100 million the year before.

Smashwords vs. iUniverse (Penguin)

The challenge: Finding growth in the digital-books arena at a time when big publishing houses are muscling in.

What he did: After searching in vain for a publisher for Boob Tube, a satirical novel about the soap opera industry that he penned with his wife, tech entrepreneur Mark Coker, 47, took matters into his own hands. He started e-book distributor Smashwords in 2008. It has won over authors by offering an easy-to-use platform for converting manuscripts to e-books, providing distribution through retailers like Apple iBooks and Barnes & Noble.com, and letting writers keep up to 85% of their e- books’ selling price. “Many authors are choosing not to work with big publishers,” says Coker. Despite competition from Amazon and Penguin’s iUniverse, among many others, Smashwords is on track for $25 million in revenues this year.

This story is from the June 10, 2013 issue of Fortune.

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