Most of us were not taught how to handle money when we were kids. Maybe some of us had allowances or paper routes or lemonade stands, but even those enterprises did not prepare us for the realities of budgets, credit, and debt.
Ken Damato and David Reim don’t want anybody’s kids to have to figure it out the hard way. Damato and Reim are partners in Midawi Holdings, the parent company for what the pair hopes will be the next wave in financial literacy, OurDoughMain.com. The company hopes to make it big by engaging whole families in an online environment that builds a solid foundation for fiscal responsibility.
Our Dough Main, or ODM, is part video game, part social micro-network, and part life lesson, built around the principle that a child’s online experiences actually can have a positive influence on his offline life. And its purpose is to teach kids the real value of money — just so long as nobody realizes they’re being taught a lesson.
“A lot of people we talk to say ‘This is a great idea, you’ve got to get this into the schools,’” says Reim. “But we don’t want to be in the schools. In school it’s dictatorial. We don’t have a teacher in charge of a class. Our product has to be something people want to do.”
Nevertheless, ODM’s content was designed by teachers. The company has five teachers on staff from the Montgomery and Princeton school districts, who have been building the content since last year. There are three distinct platforms on OurDoughMain.com, each geared toward a particular age range.
The fundamental idea is learning through play. Games built to make players solve problems and engage their reasoning abilities, say Damato and Reim, supply entertainment that reinforces critical thinking. And when the foundation for these games is financial problem solving, kids learn the abstract concepts of money management and fiscal responsibility in ways that spark their imaginations.
Kids aged 5 to 8 can play Flash-based games like “Coins of the Deep” in ODM’s “Fun Vault.” This is one of a few underwater-themed games ODM is setting up. It works like the card game Memory, in which players turn cards over and need to recall where they saw a match.
There also are games designed to teach about wants versus needs. Reim refers to “buckets” into which items that fall from the sky can be placed. Jewelry might drop out of nowhere, but then so might a house. The child learns the difference between the shiny bauble and the place she will live. She will be rewarded with “Dough Points” for stocking up on needs and eschewing wants.
There is also a top score feature that tracks the 30 best scores for that day. This is meant to tap into kids’ sense of competition, by getting them to play again and increase their scores, Reim says. The 8-to-12-year-old set (a.k.a. tweens) gets an interactive, deep sea-themed game that takes place in the virtual world Sand Dollar City. The game’s storyline is: You have just inherited your parents’ candy shop. Now you (or at least your avatar) must go on quests for sources of income and other financial help to keep it running.
The game is similar to Yahoo’s Farmville, in which players construct a virtual farm and build virtual wealth by maintaining and rotating crops and livestock. But it is patterned closely after Disney’s hugely popular “Club Penguin,” a polar-themed online world where kids can play games, make friends, and upload their own art.
The difference between Club Penguin and Sand Dollar City is that the latter is a closed world. Parents determine who is allowed into their children’s virtual neighborhoods and oversee the communities and relationships they build.
The other difference, says Damato, is that “50 percent of the quests are financially oriented.” In the process kids will be exposed to seven categories of financial education material: savings and investment, credit and debt, financial responsibility, income and careers, risk management and insurance, planning and money management, and charitable giving.
Teenagers have a greater interest in independence and disposable income. They also tend to stop listening to adults trying to give them advice, which is why ODM has put teenagers to work on ODM’s teen platform, “I Rule Money.” This platform features peer-to-peer connections, plus a library of video clips that address money issues and questions teenagers have, like, “How can I get money for college?”
The video clips, each roughly 30 seconds in length, feature teenagers in decidedly unprofessional-looking settings. Reim says the original plan was to shoot professional-looking clips, but the test groups balked on the high-end look. “They felt like they were being advertised at,” he says.
When kids talk to each other via video, he says, they do it on programs like Skype, through their own webcams. The lighting is usually poor, the camera angles close and distorted, and the faces large in the frame. ODM tried this approach and “it tested off the charts,” Reim says. “They felt like they were dealing with a real person.”
The game paradigm for teens is different too. There is no direct game with buckets or avatars in I Rule Money. There is, rather, a murder mystery alternative reality game that places clues around different places on the Internet.
Such games are extremely popular among teenagers and young adults, as the players themselves guide and dictate the reality of the game. Only, as you might have guessed, the clues and answers in this high-tech scavenger hunt have to do with financial literacy.
Parents set up everything, which means, Damato says, that they control everything. This includes who their children consort with on the site. ODM is built for families, but kids can build social networks of friends too. However, the parents will know who everybody is. “We are following every security protocol there is,” Damato says. “We’re taking every precaution.”
The effort to bring financial literacy to children is not a new concept, online or off, of course. Several states, including New Jersey (see sidebar on page 30), now mandate financial literacy education as part of high school curricula. And if you were to Google “financial literacy for children,” you would find scads of links including a program by the U.S. Mint that teaches kids about how money works and an online game created by Wells Fargo Bank that allows kids to build their own players and play a game about money.
The challenge, of course, will be how to stand out on the Internet, which allows easy entry but volumes of competition. Damato says ODM is poised to capitalize on advertising and social media promotion, including an effort to try to make the website go viral.
Damato cites Mint.com, a personal finance website founded by Princeton University alumnus Aaron Patzer (U.S. 1, November 24, 2010), as an example of what can happen. With minimal advertising, Mint.com scored 300,000 users within its first six months. Three years later, Patzer sold the company for $170 million.
Damato says ODM is hoping for 500,000 web visitors within six months and to sign up 250,000 members by the end of this year. Within two years, he expects to have more than a million subscribers.
The core of ODM’s business is not the children; it is the parents. It is, says Reim, unethical to market financial services to kids. Besides, kids don’t have money anyway, which is why the games are free.
OurDoughMain.com is engineered for parents to help their children interact with money, and the company makes its money through deals with banking and retail partners that offer services kids can use with their parents’ knowledge and approval.
Everything starts with a real-life bank account that is tied into OurDoughMain.com. Once an account is integrated, parents use organizational tools, from an online calendar to a page for chores, to keep tabs on their kids’ money and help them learn the value of money.
The chores are real, by the way. ODM is looking to replace the piece of paper tacked to the fridge (“our biggest competition at home,” Reim says) with a more potent tool that kids are already comfortable using. Parents can use OurDoughMain.com to assign chores, for which kids get Dough Points. Parents can set up how many points a task is worth — calling grandma to say thanks for the birthday present might be worth 20 points, while raking the leaves might be worth 200, for example.
Dough Points are not just virtual points, though. They can be converted at any time to real money, and parents determine that too. Each point could be worth 10 cents, 50 cents, a dollar, or whatever the parents decide.
In addition to an allowance system, ODM offers a Visa spending card. The company has partnered with Visa to provide a closed-loop credit card account similar to a cafeteria meal card for college students. The card is linked directly to the child’s ODM account, but not directly to his bank account. Only parents can get to the bank account, thereby controlling how much and how often money gets put onto the card.
Like any Visa card, the spending card works like a credit card — except without surprises like revolving interest. “Say a 12-year-old wants to go to the mall,” Damato says. “He can text his parents and they can say ‘Here’s $20.’ They hit ‘approve’ and that moves $20 to the kids.” The spending card is targeted mainly toward teens. Reim refers to it as “a learner’s permit for money.”
So far ODM is partnering with one bank, Ally Bank, but is in talks with another 18. Damato says he and Reim expect to have more bank partners by fall, possibly four or five. The ultimate goal is to have three banks in any given market, Damato says. Put a ZIP code search into Our Dough Main and you would get three partner banks to choose from. “People want options,” Damato says. “But no more than three.”
Our Dough Main will make its money by bringing new customers to banks. You do not need to open an account with a specific bank in order to sign up for Our Dough Main, but if you choose one of the partner banks, there is no fee. Customers belonging to non-partner banks will get three months free and then be charged a fee.
There will also be premium services available to members for subscription fees.
Another way ODM makes money is through gift cards, which Reim says are an increasingly popular gift for and from kids. ODM has partnered with major outlets like Wal-Mart and Target (the two most popular gift cards the company found during its research) that provide gift cards through OurDoughMain.com. Parents and kids can keep track of how much is left on a card through Our Dough Main. The company gets a percentage of each card purchased.
ODM also plans to connect gift cards to its DoughNation platform. DoughNation is the company’s charitable giving arm, and it allows kids to get in on the giving by designating a charity that will take the “chump change” left on a gift card after it is mostly spent, Reim says. Companies love issuing gift cards because they make lots of money on unused sums — either people do not bother to spend that last $2.41 or they apply it to a larger purchase. Either way, the issuing company will always make money on a gift card.
Reim says ODM is setting up a way for members to designate a charity that will receive this excess when ODM does a regular sweep of the system. The sweep will take small amounts from the cards of members who sign up for it and give the money to whatever charities they identify.
A ton of research went into building Our Dough Main, which went live on June 24. The formal launch is slated for the week of July 18, as the company is still working on the interface.
But the company has been more than a year in the making — tweaking and learning, listening to focus groups, and developing content with actual teachers from area school districts.
A ton of money has also gone into the enterprise. Damato says he and Reim have spoken with more than 200 high-net-worth individuals and courted about 30 angels and about 40 venture capitalists. At first they made their approach with little more than an idea and a PowerPoint presentation.
Later the pair sent “money trees” to potential investors on the fence. Money trees are exactly what they sound like — small artificial trees that bear the fruit of 23 rolled up dollar bills. The gift is meant as a play on the first lesson parents typically give their children, that money does not grow on trees; there are 23 dollars on it because 23 was a favorite number of Damato’s eldest son, Micheal.
No one at ODM will say exactly how much money has gone into developing the company, though it has raised about $5 million in equity so far.
Several thousand more dollars have gone into the physical offices ODM operates at Research Park.
The first thing that stands out about the office is that it was designed by people with families. The company’s 16 employees (nine full-time, seven part-time) all have photos of themselves and their families on the wall of the administrative office. Those who were slow to add their family photos, Damato says, were treated to mocked-up images of themselves with other employees’ children planted among them. All of them eventually came around.
Family is the byword here. The idea for the company, in fact, was born when Damato watched his three sons playing an online game. The boys, he says, were immersed in what seemed to Damato to be completely mundane things, such as taking the dog for a virtual walk. The game gave the boys web dollars that could be applied to buy virtual items within the world of the game. “I was interested to know if there was a way to do that with real money,” he says. “Something fun, but real-world too.”
The boys’ gaming proved so pivotal a moment that Damato named his company, Midawi, after them — Michael, David, and William.
Unfortunately, Michael will not get to see the idea he helped spawn. In January, 2010, 12-year-old Michael died from a rare pediatric cancer no one knew he had.
Through the Princeton Area Community Foundation, the Damato family has set up the Michael Robert Damato Memorial Fund, aimed at helping PACF’s philanthropic efforts. Details are available at www.PACF.org.
Damato also has designs for ODM’s profits. “If this business does well, we will put our fair share into the foundation,” he says. It will be one arm of the company’s plans for charitable giving that will fall under the blanket of DoughNation. Damato says the plan is meant to give weight to the company’s motto, “Do good, for good.”
Damato, 39, grew up in Sayerville. His father was “a self-made man” who started small at a supermarket company and retired a vice president from A&P markets.
Damato graduated from Northeastern University with a bachelor’s degree in marketing and business administration. He has been the COO of the Tyden Group, a senior vice president at American Standard, managing director of Intrepid Capital Partners, and the vice president of marketing at GE Lighting, where, at age 28, he was the youngest senior executive in his division.
It was at GE, however, that Midawi Holdings and Our Dough Main were born. Not just because of the game his sons were playing, but because of the encouragement he got to step out on his own. “I did well at GE,” Damato says. “But the HR people always said, ‘You’re good at entrepreneurial stuff.’”
For Damato, inspiration came in 2009, but Reim is far from a newcomer to entrepreneurship — particularly online entrepreneurship. Reim spent much of his youth in California listening to his father rail about the business he owned, an acoustical engineering firm. “I swore I would never be an entrepreneur because my dad came home every night and complained about his company,” Reim says. “I vowed that whatever I did I was going to have fun and be happy in it.”
Reim was the first in the family to graduate from college, majoring in computer science at the University of California at San Diego, Class of 1985, and then working for Apple Computers.
Soon after finishing his MBA at Penn (where he met his wife, Jennifer, a graduate of RWJ Medical School) Reim went to work for Sun Microsystems. In 1993 Reim founded Simstar, a pioneering digital pharmaceutical marketing firm that claimed the first innovative website for a drug brand — for Claritin.
Within eight years Simstar built a who’s-who roster of drug company clients: Bristol-Myers Squibb, Wyeth-Ayerst, Aventis, Bayer, Hoffmann-La Roche, Johnson & Johnson, Pharmacia, Sanofi-Synthelabo, and Schering-Plough.
By 2001 Simstar employed more than 100 and had moved into a lush office in the Carnegie Center. Given the timing, you might expect that Simstar next became a victim of the dot-com crash. But no. “When healthcare dotcoms were rushing to pharmaceutical companies saying give us a million dollars because we have licensed a good name like DrKoop.com, I said, ‘let’s slow down,’” says Reim. “I was concerned that pharmas would spend a lot of money building the dotcom’s equity, rather than their own brand equity.” Amid the rubble of failed dot-com dreams, Simstar still pulled in millions in profits and earned a spot on the Inc. 500 list.
The firm did, however, have one principal competitor — Rosetta. The two firms, both pioneers in digital marketing and both of which experienced meteoric success, talked for years about merging. Reim says he had been looking to get out of the business and spend more time with his wife and family.
In 2005 Rosetta bought Simstar and Reim got his wish. He and his wife bought a shore home with the SimStar profits. After 18 months Reim went back into healthcare consulting for Influence Partners, which had such clients as J&J, WPP, and Recording for the Blind and Dyslexic (now Learning Ally).
Reim returned to the working world after two years, when he went to work for TNS, a healthcare communications company based in East Windsor that was sold in 2008 to WPP. Reim took over a $2 billion division of the company. By the time he left in 2009 to start his own consulting firm he had built the U.S. healthcare division of TNS/WPP into a $12 billion powerhouse.
He met Damato while running his own firm, the now-defunct Investment Partners. When they met, Reim says, it was immediately apparent to both these family men that children get precious little guidance about money. There are lots of financial literacy programs in schools, Reim says, but none engage the family and none get to the roots of financial responsibility.
Damato says he is glad that schools are trying, but laments that there are no national standards for financial literacy education. In 2010 New Jersey incorporated financial literacy requirements in schools, which Damato and Reim praise. But few states have similar requirements, and exactly what financial literacy means nationally is tough to say, he says.
Reim and Damato are playing a game of patience and marketing. Princeton Partners, based at 205 Rockingham Row, has been helping ODM with its branding since last year, and Vault Communications, based near Philadelphia, handles public relations.
Meeting the ever-changing challenges of the digital, wireless, and soon-to-be-cashless America of the 21st century will be a continuous battle, Reim admits. That the company and its platforms are developed does not signal the end of research, refinements, and old-fashioned “let’s see how it plays out” approach to navigating the unchartered waters ODM has cast itself into. There will still be parents and teachers and kids trying things out and making tweaks, and there will still be short doors and gigantic bean bag chairs and pictures of families all over the wall.
Family, after all, can not be separated from finance, Damato says. “The one thing woven through every household is money.”
#b#Midawi Holdings Inc#/b#. (Our Dough Main), 189 Wall Street, Suite 1, Princeton 08540; 609-356-0813; fax, 609-356-0658. Kenneth Damato, CEO. www.ourdoughmain.com