Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Twelve

When the freshmen class finally arrived at the University of Pennsylvania for the new school year, my partners and I were scrambling to commence operations. A reporter from the school newspaper contacted us a few days prior about the possibility of writing an article about our company. We were excited for any free publicity we could get, but it didn’t go as we expected. The article appeared in the Daily Pennsylvanian in September of 1996. It was a harbinger of things to come. An excerpt follows:

“Throughout the summer, Dining Services and Penn Student Agencies have received dozens of phone calls from students and parents who mistakenly believed that the QuakerCard was university affiliated… General Counsel Shelley Green said the University is investigating the corporation. She explained that when something is presented to the public to create the false impression that it is sponsored by the University when it really is not, there could be a problem.”
The article then went on to quote me.

“Cononico said that he and his colleagues were responding to students dining preferences. He added that the corporation’s name was not meant to mislead students or parents.”

The reporter then countered my statement with another quote from the University Counsel.

“It would depend on how the information is presented – whether they use the Penn name is not the only factor the court would look at. If people are getting the wrong impression about a product, it would be of interest to the University.”

My partners and I read the article that morning and knew the timing couldn’t have been worse. It was in the first newspaper of the semester, printed on the day incoming freshmen and parents were arriving. I crumpled the paper and threw it away as I walked down Locust Walk. We certainly didn’t need bad press on our opening day.

I walked over to the freshmen orientation, which took place in an auditorium, where students signed up for their school-run services. With my PennCard, I was welcome to walk into the auditorium freely. I planned to spend the day talking to new students about the benefits of our QuakerCard program. I stood next to the table for Penn Dining Services and as students passed, I talked with them about QuakerCard. If they were interested, I directed them to our offices. This infuriated the Penn Business Services people, and they immediately had me escorted out of the building.
Warnings among the Business Services staff were spreading through campus like the squawks of birds through the treetops. Before we knew it, the campus police were patrolling the area, chasing away our volunteers, and closing down our information tables. As they explained, Penn was private property and they had the power to remove us.

We were prohibited from handing out flyers, and anyone who refused could be arrested. Even our giant banner that helped people to find our office was taken down. Although one end of the banner was tied to our building, the other was tied to a phone booth that was grounded in University property.

The Business Services office also circulated letters in student mailboxes, warning that the school didn’t endorse QuakerCard. In retrospect, it was a completely understandable move by the school. After all, our company was holding student deposits and Penn needed to try and distance itself as much as possible if something went wrong. Unfortunately for us, these notices stuck out like a sore thumb. It made people wonder why the school went to the trouble of making such a statement. After reading it, some students got spooked and asked us for refunds. My partners and I had already met with Penn and agreed to use a stronger “disclaimer” in our future advertisements, but the Business Services department insisted on issuing its own statement to students.

I’m not sure how many customers were lost, but I am sure our saving grace was our on-campus presence. If parents and students had reservations about us, they simply walked over to our office and spoke with us. In general, most people who came to learn more about us also became customers. Our office was in a church, our parents were handing out information in the lobby, and we were clean-cut students. It was obvious we were offering a legitimate service.

We explained to each customer why we started the program and how much time we’d invested. After hearing our story, most people wanted to support us. In some ways, the bad press backfired because students and parents came to our office to investigate, and we put a face to the product. Once they saw the lines of people being issued QuakerCards, it only added more credibility to our services.

In fact, the lines stretched down our hallway and onto the sidewalk in front of the building. It was a miserably hot day and the building didn’t have air conditioning. The card printer machine caused the long wait. Even if students already filled out their forms and had their pictures taken, the whole operation was paralyzed until our printer finally spit out the card. You could hear it slowly melting the colors onto the plastic as everyone waited. We hadn’t foreseen the throughput time as such an operational glitch.

George, always a big believer in customer service, ran out and purchased bags of ice, cases of soda, and boxes of pizza for everyone on line. We did everything we could to make the best of a bad situation, and people really appreciated it. They also waited in long lines to sign up for the school’s services, but no bought them lunch and apologized like we did.

Understandably, once students activated their cards, they were anxious to use them. They began presenting them to merchants as payment for purchases. We had been preparing our merchants all week to accept our cards. Mark had gone around and showed everyone how to use the terminal, and practiced transactions with them. We even placed a sticker on top of each terminal with basic instructions. As a back up plan, we distributed clipboards, so that in a worst-case scenario, merchants could simply write down the card number and the dollar amount of the transaction, and we would pay them later for it.

Unfortunately, one of our merchants immediately began turning away QuakerCard customers, and demanded cash instead. It was a huge embarrassment for us. George was the first person to run over and speak with the manager. Twenty minutes later, he stormed back in a rage. The merchant would not accept the card, because he said the machine “took too long” and was “too much of a pain in the ass.”

I went over to speak to him next. When I arrived, the manager was busy with a long line of lunchtime customers. He ranted and raved about how the terminal was too slow and would ruin his business. Speed was everything for him, because he needed to cram as many customers through his lunch lines as possible. Evidently, he had never accepted any type of card before and he was afraid it would take too long. The open wires and buttons on the terminal spooked him, and he was convinced QuakerCard was going to be an operational hazard.

I reminded him we had a contract and had already printed thousands of brochures advertising his restaurant as part of the program. His refusal to accept the card was making us look bad. He looked like he thought I was going to sue him. I went on to assure him the terminal was going to be “faster than cash” and if that weren’t the case, I would cut off a certain piece of my anatomy and let him drop the program… I had nothing to lose at that point.

The self-mutilation comment surprised him and he started to laugh. He was ready to listen to me. I climbed behind the counter and ran through sample transactions with my card. After the demonstration, he smiled at me. “Wow!” he said. “That’s it?” Ironically, as time went on, he became one of our biggest advocates. My partners and I even had dinner at his home with his family.

Because the first day of student orientation was during the weekend, we were the only tenants in our building. Essentially, we had access to the entire place. The lobby was filled with cardholders waiting to pick up their cards, and if anyone needed to use the bathroom, we sent them up to the second floor to use the facilities. This didn’t go over well with our building manager, who had no idea we were using the facility that weekend. It never occurred to us to inform him, because we assumed, as tenants, we could use the building as we pleased. Unfortunately, that was not the case, because if anyone was hurt, or if there were any sort of theft, we would have been liable.

The Monday after that first weekend, we received a note from Reverend Michael saying we needed to discuss some “very serious matters.” We were obviously concerned, because getting kicked out of our office space would have destroyed our business. Both George and Mark refused to go, so I went to see him alone.

I recall entering his office and he put on a stern face like he was preparing to yell at me. I saved him the trouble and proceeded to tell myself off, and assured him it would never happen again. He nodded, smiled, and said he was glad we had that talk. We just called it a misunderstanding, and the issue was never raised again.
 

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.