The

Entrepreneurial

Code

Lessons from an 

Ivy League Entrepreneur

Chapter Nine

Since Johnny, Maverock, Abe, and Joe were living in different places for the summer, working for different companies, they divided tasks among themselves to prepare for the launch of their new business.  Maverock was going to find office space, Abe was going to coordinate their equipment installation, Joe was going to spearhead their mailing campaign, and Johnny was going to finalize details with the merchants.  The four agreed to talk on the phone every day, and to reapportion the workload accordingly.

Maverock swore he could find plush office space in a government-subsidized building somewhere.  Before the semester ended, they trailed out to visit a government building.  The rent might have been dirt cheap, but it was quite a hike from campus and in a terrible part of town. They knew they would have a difficult time getting students to visit them there.  Other locations that Maverock was considering were also considerable distances from campus. 

To fund their start-up, they each invested $10,000 into the equity of the business (which they got from their families) and signed a capital lease for approximately $120,000 worth of equipment.  They were trying to use as little cash as possible because they had none.  Abe was able to get them pro-bono legal work from his girlfriend’s father, who drafted their customer and merchant contracts.  At the same time, Joe’s mother, who was an accountant, made sure they had a suitable accounting system in place to manage expenses and daily cash flows.

Johnny would finish his work at Morgan Stanley, where he was interning, every night at around 8 P.M., and then start his other job, which was working on their business.  New drafts of their direct mail campaign were constantly being circulated amongst them.  Johnny would speak with Abe intermittently throughout the day, and Abe complained that his coworkers were suspicious of him.  Eyebrows were raised because even though he wasn’t staffed on anything yet, he kept sending large jobs to the printer. 

Unfortunately, Abe’s office was an open room, where you could hear everyone else’s conversations.  Despite his attempts to muffle his voice and speak quietly into the phone, someone stopped him once by the water cooler and asked how the Bullfrog Card was coming along.  It was more than a little awkward for Abe.    

Their few months of corporate experience only made the four of them more excited about self-employment.  For Johnny, the novelty of wearing a suit everyday faded quickly.  It was a drastic contrast to work as intern by day and as entrepreneur by night.  As an intern, he was the low man on the totem pole.  He was delegated everyone’s grunt work, and received very little credit for anything he did.  As an entrepreneur, he felt empowered.  Whether his new company succeeded was impacted by his decisions.

When Johnny evaluated his internship, it was only natural to highlight the bad things about corporate America, and contrast them with the benefits of self-employment.  In reality, there were a lot of good things about corporate America that Johnny took for granted.  For example, he had the safety and security of a coveted internship at a top tier investment bank.  He was paid well, and the experience was improving his credentials in the job market.  By working as an intern and an entrepreneur, he experienced both the highs of being self-employed, and the safety of corporate America.  Ultimately, it would be a very different feeling to choose one path to the exclusion of the other.

Throughout the summer, Johnny and his partners worked diligently to launch their new business.  Unfortunately, a few weeks prior, the Bullfrog Card hit a major obstacle when Maverock’s plans for office space collapsed.  Their equipment provider was flying an engineer to Philadelphia to set up the system, but they still had no office.   Abe couldn’t leave his job to find a real estate broker because he was already too close to getting fired, so Johnny began calling around to local brokers in Philadelphia.

The first broker he called didn’t have any spaces available near campus, but recommended Johnny call the Christian Center, which was a church located in the center of the school’s campus.  The Reverend Angelo rented office space in the building mostly to university professors, and used the money to fund his ministry.  He had a love/hate relationship with the school’s Business Services people, who were pressuring him to sell the building back to the school at what he considered to be below market value. 

Johnny spoke with the building manager, and there was a vacancy on the first floor.  It was the right size, the right price, and it was the perfect location.  Johnny agreed to rent it immediately.  It all happened within two hours of hearing the bad news from Maverock.  It was amazing to Johnny how their office space turned out better than they ever could have planned.  Now, when they sent a mailer to students, it would have an on-campus return address. Their office couldn't have been more centrally located.  In fact, you had to walk by it to get to the U-Card office.

Other components of the business began to come together in a similarly quirky manner.  For example, they were able to stop a new competitor, College Cash, from starting its business.  At the advice of Abe’s girlfriend’s father, they inserting “non-compete” language in the contracts with restaurants.  Basically, each participating restaurant agreed not to work with any competing programs that targeted students.  Since the group was making significant investments in the Bullfrog Card system, the restaurants agreed it was only fair to be exclusive.

Refusing to give up without a fight, College Cash did something unexpected.  They changed the name of their company to “University Food Services,” and tried to adopt the same meal plan focus.  It was futile because the restaurants were true to their agreements, but the use of the name “University Food Services” shocked Johnny. 

He was amazed they could use the word “University” in their company name.  Abe immediately called his girlfriend’s father and discussed the legality.  Apparently, as long as the name was relevant to your business and the proper state authority approved it, the use of the word “University” was perfectly legal.  Each of them immediately grasped the strategic importance of what College Cash had been trying to accomplish with their name change.  They were trying to create a brand for themselves that seemed more appealing and relevant to students and restaurants without having to get an endorsement from the school.

It would never have occurred to Johnny, but by inserting the word “University” in the company name, University Food Services sounded more legitimate.  In many ways, their branding was brilliant, because they leveled the playing field with the school just by incorporating the word “University.”

Johnny and his partners believed their company was at an enormous disadvantage by not having a school endorsement.  To be successful, they had to get students and parents to open their mailers.  If it was legal, using the term “University” in their company name seemed like an easy way to ensure their envelopes were opened.  And so, at the final hour, they got permission from the proper state authorities and changed the name of their company to “University Services, Inc.” from Bullfrog Card Inc.  However, the name of their product was still going to be called the “Bullfrog Card.” 

Copyright  2005 by Chris Cononico
All rights reserved. No part of this manuscript may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the author, except by a reviewer who may quote brief passages in a review.