Monday, May 21, 2012

The garage story

Every great company has a garage story. Most are embellished, many are made up. My company's garage story dates back to 2000, when I decided to open a business in my dorm room at the University of Maryland. At the time, I had stumbled upon a study aid that had been developed by a Swedish company. Youthful enthusiasm put me on a plane to Lund, Sweden, where, as a 21-year-old kid, I sat face-to-face with the company's head of marketing.

I played my hand big. I explained that, as a college student, I knew better than anyone the value of their product. And who could market it better than me? It was the Wild West days of the Internet, and I used that exuberance to argue my case that the web, still in its infancy, provided the ultimate accountability.

By marketing the product offline -- gaining free access to the campus mail system by donating the product to the libraries -- and capturing the orders online, we could monitor and track our ROI, continually improve performance, and hit the ball out of the park.

They bought what I was selling, and agreed to co-op the costs of the advertising. I returned to my cramped quarters believing myself to be Sean Parker, Mark Cuban, or any of the other masters of the Internet bubble. The delusion popped as hard as that bubble did in 2001. Twelve months into marketing the project, the Swedish company sent an email. It decided to pull the product from the U.S. I was left without a product to market, floundering.

Back then, credit was easy to come by. A kid could build up a credit card limit simply by making monthly payments. I had smartly built my limit in advance of launch and had saved up money by working 20 hours a week throughout college. So I had money for start-up costs, but those disappeared quickly.

Pivoting to something else presented a Hobson's choice once my Swedish partners high-tailed it back to Scandinavia. I could lick my wounds and walk away free and clear, or I could double down. Move home. Dip deep into my credit line. Find a new product to market.

Young, dumb, and unwilling to succumb, I briefly veered from the tenets of online advertising, trying to launch a professional development product that I quickly realized needed to be sold directly to human resource professionals. It went nowhere, and I was in the red.

Then, I happened upon the Pimsleur Approach, which was, and still is, owned by Simon & Schuster. The program allows just about anyone to start speaking a foreign language in as little as 10 days. It is phenomenally effective, but was poorly positioned and marketed. I realized that the Pimsleur Approach could be my route to repaying mounting credit card debt, but also to building the dream, the audacious dream I already had ricocheting in my head.

The dream was to build a billion-dollar, professionally managed business with 500 employees and divisions dedicated to marketing different products, and investing in and acquiring companies. Silly, naïve, it had already congealed in my brain, like a tumor, reproducing wildly.

The risks would be real. Until now, I had been playing business. The Swedes were generous and accommodating. The damage limited. But now, I had to jump and hope the bungee cord would rebound me back. I rolled the dice and went $70,000 into debt.

Was I just another big-talking Internet brat, come to life at the right time and place? Or, was I really onto something? An analytical approach to business that could continually optimize the growth of sales and profits? Time would tell.

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