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Building a Strong Foundation for the Future of Our Region
Spring 2013

Start-up becomes major Twin Ports employer, Northland Foundation loan feeds stellar growth

Philip Hoberg and Justin Shatto have been lifelong friends, growing up together in Superior’s East End. Not only have these 20-somethings stayed close over the years but also managed to make the often-tricky leap from buddies to business partners.

Building Entrepreneurial Experience

 

Phillip Hoberg and Justin Shatto

Philip Hoberg (left) and Justin Shatto (far right)

deliver their final loan payment to Northland

Foundation’s John Elden.

In 2006, Hoberg graduated from the University of Michigan and worked in the organizational consulting and marketing fields.

Meanwhile, Shatto was building up years of experience in the telemarketing industry. Starting when he was just 16 years old, he worked his way up the ranks from Team Manager to Floor Manager to Center Manager, and finally, Controller.

In 2007, Phil Hoberg returned to his hometown and set out creating several small marketing concepts, including Mediabillia, Twin Ports Mobile Tour, and Northland SMS, the Twin Ports’ first text-message marketing company. In 2008, Shatto bought into Northland SMS, and the partners began brewing more ambitious ideas. Later that same year, the two friends combined their sales and marketing expertise to establish the Hoberg-Shatto Group (HSG), and the doors of their telemarketing center opened in early 2009.

Substantial Growth Requires Capital

 

“As a mission-driven community development lender, we can take more risk. With HSG, besides doing the usual due diligence for a loan deal, we saw their work ethic and believed in their potential.” —John Elden, Northland Foundation Director of Business Finance

The business has grown rapidly, expanding from 51,605 employee hours in 2009 to roughly 120,000 employee hours in 2012. Gross sales have nearly tripled along with payroll.

A watershed moment came in December 2009 when HSG received its one-and-only business loan. The Northland Foundation’s Board of Trustees approved a $100,000 loan to this upstart start-up, providing crucial capital at a time when the company’s risk profile (new business, young owners, lack of collateral) prevented commercial lenders from touching the project. It was not without hurdles, but John Elden, Northland Foundation’s Director of Business Finance, and the Senior Loan Officer, Kurt Johnson, utilized the Foundations extra flexibility to structure a workable deal.

“We are more than grateful; the Northland Foundation financing allowed us to add an evening shift and really ‘take off’,” said Shatto.

Full Speed Ahead

 

Today HSG is a 49-station business-to-business call center operating day and evening shifts. Clients include the likes of Verizon and AT&T. During election years, HSG kicks into overdrive with the addition of political calling. It is, overall, work that requires more responsibility and independence from the employees than a typical consumer call center.

“One day, our team might be making contacts for Verizon on the West Coast and the next day phoning along the East Coast on behalf of a different client,” explained Shatto.

In an industry known for high turnover, the partners point out with pride that HSG has employees who have been with them from the first. They, like Shatto once did, have opportunities to work their way up. Wages plus bonuses can total more than $40,000 per year, which is significant in this area and within the industry.

 

Going Strong and Giving Back

 

Four years – nearly to the day – later, the Hoberg-Shatto Group repaid the Northland Foundation in full. 2012 was its best year yet, and the business is on pace to hit new highs in 2013. That news is great for the Twin Ports of Duluth and Superior as well: the partners and their business are not going anywhere. They are dedicated to keeping it local.

“It has been an honor to serve the community by employing over 1,300 local people and contributing approximately $4 million in payroll to the Twin Ports economy,” stated Hoberg.

“It’s been quite a ride.”