The

Entrepreneurial

Code

Lessons from an

Ivy League Entrepreneur

Chapter Sixteen

After much deliberation, Johnny and his partners approached Drucker University about working together.  Maverock contacted someone in the school’s College Card office to schedule a meeting.  That person agreed.  Johnny and his partners took Drucker’s interest as a good sign. 

Their contact at Drucker was a woman in her mid 30s, tall and overweight.  They met Mary Blackheart at her office on Drucker’s campus, and spoke with her at length about the benefits of the program for students.  It was the first time Johnny and his partners ever “pitched” their company to a school, so they were overeager to demonstrate their abilities.  That day, they armed themselves with Power Point slides, financial projections, and various marketing ideas for a Drucker card program.  Naturally, they pointed to the Bullfrog Card as proof they could deliver what they promised.

By the end of the meeting, Ms. Blackheart remarked how excited she was by the prospects of working with them.  Johnny’s first impulse was to get up and start hugging her.  If it was an indication of things to come, they were in good shape he thought.  After only a 45 minute meeting, it looked like they had their first university customer.  Naturally, she told them she needed to get approval, cut through some red tape, yada, yada, yada. 

Johnny wondered if it was supposed to be this easy, or if they had missed something.  Maybe it was just beginner’s luck.  Perhaps with the Bullfrog Card such a visible success in the community, Drucker wanted a partnership to make the services available to its own students.  It made perfect sense to Johnny and his partners, because they wanted it to make sense.  That’s why they were so forthcoming with information.  As a symbol of goodwill, Johnny even approached the local merchant community, and recruited a dozen Drucker merchants for the new program.

When it came time to talk about money, Maverock discussed a 50/50 split of merchant fees, whereby University Services Inc. agreed to pay for the cost of new equipment, handle the marketing to students, and manage the merchant recruitment process.  Drucker was expected to run the actual card operations, accept deposits from students, and hold the funds in their account.  As a result, the company didn’t even need an office on Drucker’s campus. 

As a formality, the Drucker administrator requested more details about the nuts and bolts of how the company ran its operations, including sample merchant contracts and solicitation materials.  Johnny felt uneasy about disclosing the information, but he and his partners were afraid to lose the deal.  They reasoned the administrator needed the details to get approval from her colleagues, especially since they were a young company.  Johnny imagined Ms. Blackheart using the information to more effectively advocate for them.  

Ms. Blackheart told them it would take time before she got a final answer back, but she would “be in touch.”  Johnny and his partners waited anxiously to hear from her, but she never called them.  A few months later, stickers for the DruckerCard began appearing around Drucker’s campus.  They first heard about it from a Bullfrog Card merchant, who had been approached to participate. 

Maverock called Ms. Blackheart, but she didn’t return his calls.  Finally, the partners walked over to her office, and demanded to see her.  When they sat down, she said, “I figured I could just do it myself, and that I didn’t need you anymore.”  Why buy the cow when you can have the milk for free?  She wasn’t even apologetic about it. 

It was a big letdown for the partners, because they allowed themselves to believe that Drucker was a sure thing.  When the deal fell apart, it took some of the wind from beneath their sails.  Ultimately, it made them wary of school competitors copying their product.  They also recognized they needed additional ideas that were more difficult for schools to replicate without them.  They reasoned if they could add more features like the discount card, it would be harder for anyone to justify not working with them.

Copyright  2005 by Chris Cononico
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