Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Seventeen

After much deliberation, we approached Drucker University about working together. George contacted someone in the school’s campus card office to schedule a meeting. Surprisingly, that person agreed.
At the time, I don’t think we had any idea how difficult or easy it would be to schedule appointments, so we took Drucker’s interest as a good sign.

Our contact at Drucker was a woman in her mid 30s, tall and overweight. We met at her office on Drucker’s campus, and spoke with her at length about the benefits of our program for students. It was the first time we ever “pitched” ourselves to a potential school partner, and we were overeager to demonstrate our abilities. That day we armed ourselves with Power Point slides, projections, and lots of creative ideas for a Drucker card program. Naturally, we pointed to QuakerCard as proof that we could deliver what we promised.

By the end of the meeting, in an unbelievable turn of events, the Drucker administrator remarked that she was excited about the prospects of working with us. My first impulse was to get up and start hugging her, but I showed remarkable restraint. If this were an indication of things to come, we were in good shape. After only a 45 minute meeting, it looked like we had our first university customer. Naturally, she told us she needed to get approval, cut through some red tape, yada, yada, yada.

I wondered if it was supposed to be this easy, or if we had missed something. Maybe it was just beginner’s luck. We figured since QuakerCard had become such a visible success on Penn’s campus, Drucker wanted to mimic Penn. It made perfect sense to us, because we wanted it to make sense. That’s why we were forthcoming with information when the Drucker administrator requested samples of our marketing materials. As a symbol of our goodwill, I even approached the local merchant community, and recruited a dozen Drucker merchants for the new program.

When it came time to talk about money, we discussed a 50/50 split of merchant fees, whereby we 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, our 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 we ran our operations, including sample merchant contracts and solicitation materials. I remember feeling uneasy about disclosing the information. However, I felt pressure to comply because I was afraid to lose the deal. I reasoned the administrator probably needed all of the details to get approval from her colleagues, especially since we had the stigma of being student business owners. I imagined our contact at Drucker using the information to more effectively advocate for us.

After we provided all of the details, the Drucker administrator told us it could take time before she got a final answer back to us, but she would “be in touch.” We waited anxiously to hear from her, but she never called us again. A few months later, stickers for the DruckerCard began appearing around Drucker’s campus. We first heard about it from a QuakerCard merchant, who had been approached to participate.

Naturally, we began calling our contact at Drucker, but she didn’t return our calls. Finally, the three of us walked over to her office, and demanded to see her. When we 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 us, because we allowed ourselves to believe that Drucker was a sure thing. When the deal fell apart, it took some of the wind from beneath our sails. Ultimately, it made us wary of other people copying our product. We also recognized we needed additional ideas like the student discount program to assemble a package of services that was more difficult for competitors to replicate.

It had been relatively easy for Drucker to mimic our local restaurant plan, but it would have been much more difficult to negotiate dozens of national discounts with large corporations. We reasoned if we could add more features like that to our program, it would be harder for anyone to justify not working with us.
 

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.