The

Entrepreneurial

Code

Lessons from an

Ivy League Entrepreneur

Chapter Twenty-Four

As part of their strategy, Maverock was cold calling schools daily, trying to initiate dialogue with new customers.  Fortunately, he was a natural at breaking the ice with administrators.  If you walked by his desk, you’d always hear him on the phone yapping away about the “big game” that week, or what was going on with some local team.  He tried anything to make a connection with the voice on the other end.  As he made his rounds, he would stretch any newfound piece of gossip into a dozen phone calls. 

The other reason that Maverock was leading the charge with the universities was that Abe wasn’t a salesman, and Johnny didn’t have the patience to do the sort of relationship selling Maverock did.  Johnny didn’t want to make half a dozen phone calls and talk about college sports before he was able to set up a meeting.  He didn’t want to gossip with university administrators about industry politics. 

The truth was that Johnny didn’t envision remaining in the industry forever, so he couldn’t feign interest in all of its crap.  If it were up to him, Johnny would bulldoze into a dozen campuses and set up the best card systems in the country.  Unfortunately, it didn’t work that way and that was why Maverock handled their direct sales efforts with school administrators. 

 The company’s value proposition to its university customers was simple.  If a school worked with them, the company would pay for EVERYTHING.  Johnny and his partners would buy up to $250,000 worth of equipment, staff a local office to manage it, recruit the local merchants, market the program to students, and share a portion of their revenues with the school.  They were doing their best to “buy” their way into the market by taking the risk away from the schools for trying them out.

 The only problem with all of this was finding a way to pay for EVERYTHING.  They made arrangements with equipment suppliers to finance up to $250,000 per school through capital lease obligations.  The equipment would collateralize the loans, but Johnny, Maverock, and Abe would still have to personally guarantee all amounts. 

 It was a risky strategy for them, because this money had to be paid back, regardless if the system made money.  It left very little room for operating problems.  However, they believed their experience with the Bullfrog Card prepared them.  They had done so well as an independent program at their University, with the endorsement of a school it felt as if their success would be a “no-brainer.” 

Within months after graduation, the company had meetings with large universities located in Kentucky, North Carolina, and Nevada to discuss off-campus programs.  Johnny and his partners were doing everything possible to build a business.  They reasoned it was only a matter of time before they were successful.  Unfortunately, the sales cycle in the university marketplace was slow.  It could take years for a school to make a final decision.  That pace may have been fine for the colleges, but it was sometimes unbearable for a team of young and enthusiastic entrepreneurs, who wanted to charge ahead.

 

Copyright  2005 by Chris Cononico
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