Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Thirty-Six

In retrospect, my partners and I were completely out of touch with reality. Like many failed entrepreneurs, we saw what we wanted to see and didn’t anticipate many of the roadblocks ahead of us. In many ways, we stopped questioning fundamental assumptions and believed we could mold the world to fit us.

When it came time to write a cover letter for our direct mail campaign, we relied upon our QuakerCard experience and also studied letters from various colleges and universities with whom we planned to compete. We concluded that universities didn’t “sell” their commercial services, but instructed families how best to proceed. As founders of NCRB, we planned to adopt a similar tone.

Unlike the schools, however, we didn’t have an existing brand to leverage. NCRB was meant to convey to the world our legitimacy as a national off-campus services company. Since we knew the off-campus market, we felt uniquely qualified to create NCRB. If our approach had worked we would have been geniuses. If it crashed and burned, it was inevitable that people would wonder what the hell we were thinking. The concept of NCRB and our entire business plan was controversial, so we needed to be cautious. There was no room for error or flying by the seat of our pants. Unfortunately, that was the only way we knew how to fly back then.

Our first fundamental assumption was that the NCRB brand would go unquestioned by our competitors. As 22-year-old entrepreneurs, we had no idea why anyone would object to our creating NCRB. We had convinced ourselves that it was just as valid a source of benefits as those offered by the schools and it was in the students’ best interest to have more choices. Unfortunately, it never occurred to us that school administrators would later criticize our NCRB brand, because it was too “legitimate sounding” and thus created potential confusion.

Our second fundamental assumption was that families would call our offices with questions about NCRB. Unfortunately, that’s not always what happened. Some recipients of our mailer called their schools and the universities were caught completely off guard. They were unfamiliar with NCRB and the national student ID card that offered meal plan, bookstore, and discounts. It was the initial negative response of the schools that doomed us, because people trusted their school’s reaction. Unlike QuakerCard, students couldn’t walk to our offices and meet us for reassurance.

In hindsight, the drafting of our cover letter got worse the more we worked on it. As NCRB, we were trying to adopt a similar tone that the schools used in their marketing materials. The final letter was written over the course of a week and by the time we had a final version, we couldn’t see the problems that had developed. The letter read as follows:

“As the final deadline for school selection approaches, members of the college Class of 2002 can begin registering for their individual student ID cards. The Campus Card is the student identification card issued to all registered college students. It is required for many services and purchasing privileges at whichever college or university your student chooses to attend. Students should also expect to receive a second card when they arrive on campus in the fall for access to school buildings among other functions. Both cards are an essential part of a student’s everyday life and should be carried at all times.

The Campus Card is used by students to pay for meals, bookstore purchases, and campus expenses. Families can use the debit account linked to the card to set aside funds for their student’s daily living needs. It is a way for parents to ensure that their child always has enough money to survive while away from home. The college budgeting program is designed specifically for the realities of campus life.

Students also use their Campus Card to receive hundreds of dollars in savings through the National College Discount Program. College students benefit from up to 32% off textbooks, 20% discounts at over 7,000 restaurants across the country, special airfare and travel packages, two-for-one bus specials, and much more. Students simply present their Campus Card to redeem these savings.

Incoming freshmen need to return the enclosed form along with the one time $25 card fee postmarked no later than May 15, 1998. Prompt registration allows our offices to quickly send your student’s Campus Card and school planning package including a breakdown of anticipated college living expenses. Enclosed is some additional information about how families prepare for the college experience. These guidelines and services are here to provide a helpful way to protect students and create a smoother transition to college.”

We should have immediately clarified for the reader that NCRB was a completely independent program offered by a private company. Instead, we wrote, “[Campus Card] is required for many services and purchasing privileges at whichever college or university your student chooses to attend.” We rationalized that our card was “required” to access our services. I recall Mark and I arguing with George about the wording, but we kept it in the letter.

We also referred to the school-issued identification card as the “second card” students receive when they “arrived on campus.” We rationalized downplaying the schools because we didn’t want to promote our competition, which we considered to be the school-sponsored services. We also described the Campus Card as being an “essential part of a student’s everyday life.” In fact, we believed we were within our bounds, because our program was a viable alternative to many of the school-sponsored services.

We had friends and family read our marketing materials. Although we got some raised eyebrows and even some objections to the NCRB brand, we explained our logic and everyone agreed with us or dropped the subject. I think we bullied a lot of people into telling us what we wanted to hear. After all, we had already committed ourselves and we didn’t want to second-guess our decision.

As young entrepreneurs, my partners and I were incredibly naïve. Maybe if we had just taken a day off, or if we hadn’t been in such a rush, we could have anticipated the backlash we were about to create. We worked so hard to create NCRB that we expected everyone to be intrigued. That’s also why we didn’t draft a generic “disclaimer page” on the back of our brochure. It would have been the easiest thing in the world to do, but it never occurred to us that we needed it. In retrospect, it would have solved many of our problems.

Unfortunately, we never showed the letter to an attorney for approval before sending it. THAT WAS THE DUMBEST THING WE EVER DID! On some level, I think we viewed lawyers as overpriced and overly conservative. We never consulted legal counsel regarding our QuakerCard mailers, so we didn't feel the need to do so with Campus Card. Besides, we weren’t planning on making any mistakes... No one ever does. If we had any corporate experience whatsoever, we would have realized that no company EVER sends out solicitations without having them scrubbed by legal counsel.

When we designed our direct mail campaign, we didn’t realize our drafting mistakes could overshadow the benefits of our services. Ultimately, it didn’t matter how many great discounts we had, or even how novel was the restaurant meal plan concept. It didn’t matter we were giving our profits from the bookstore to the students. We were going to be put under the spotlight because we were challenging a huge industry and we left ourselves open to obvious criticisms. We were going to get raked over the coals because of the lack of judgment we exhibited in crafting our marketing campaign.

Unbeknownst to us, we were about to stir a hornet’s nest in the industry. Although we were a real company offering real services and we even had an existing QuakerCard business, we were going to be labeled a fraud by our competitors. In the end, it cost us much more than the most prestigious attorney ever would have charged to check our work.

 

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.