Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Twenty-Eight

“Nothing is more dangerous than an idea, when it’s the only one we have.” – Alain Emile Chartier

After recruiting dozens of restaurants in Manhattan and designing a website for our Corporate Program, the feedback we received was not what we anticipated. It was 1998 and the US economy was picking up steam. Companies in Manhattan didn’t care about cutting costs or streamlining expenses. Wall Street was making too much money. We found that we’d receive a more enthusiastic reception after the business cycle peaked. So, we put the Corporate Program aside.

With our campus business in a grim state and our Corporate Program on hold, I became even more desperate. That’s when I did something dangerous for any entrepreneur. I began to deny the reality of the situation and I started to make excuses for our “bad luck.” I blamed the schools and their bureaucracy. I blamed Penn in particular. I blamed everyone except for myself. Then to make myself feel better, I decided I needed to fight back. Instead of working with the schools, I wanted to create independent restaurant meal plans at every campus. I wanted to go toe to toe with the universities on their turf just like we did with QuakerCard.

It sounds impossible that a few 22-year-old entrepreneurs could dominate a multi-billion industry, but that no longer mattered to me. Besides, who was to say we couldn’t be successful? Would anyone ever have believed Bill Gates or Michael Dell when they were starting? I wanted to believe the impossible was possible. I wanted to think big and I didn’t want to admit defeat.

Ironically, I was ready to consider the same mass-marketing tactics we shunned when starting QuakerCard. Now, I rationalized them because I felt that I had no alternative. Rather than using a grassroots approach, campus by campus, I considered buying leads from a mailing list company. For example, a list of the names and addresses of 1.8 million high school seniors was for sale from national marketing firms for as little as 10 cents per name. If we used a direct-mail campaign, we’d lose any campus-specific branding, but we’d reach a lot more people faster. It was a tradeoff that I was willing to make.

Further, we could always partner with VISA or MasterCard and use their national merchant networks. We had done research and it was possible to work with VISA to restrict the types of merchants that could accept our card by SIC code. Therefore, if a student tried to use his card at a non-restaurant (such as a liquor store, music store, etc.), the transaction would be declined. It wasn’t a customized merchant base, but it would give us a national presence immediately.

A national version of QuakerCard went against many of core tenets that we preached when starting our local business at Penn. It was generic and lacked a campus feel. Nevertheless, I was able to rationalize my reservations away. By controlling the timing of our direct mail campaign – i.e. before families were inundated with solicitations from their colleges - and offering a free national discount card, I believed we could be successful with our off-campus meal plan. At the very least I wanted to try.

The advice “Fail cheap and quickly!” rang in my ears, but I didn’t care. We needed “critical mass” at each school to generate buzz. Besides, I was tired of waiting around. It sounded ridiculous, but if we launched a direct-mail campaign to 1.8 million students, we could avoid the random scattering of cardholders. It would also justify us sending merchant recruitment teams to each campus and spending money to promote the programs locally. It sounded nuts, but maybe a national program without partnering with the schools was crazy enough to work.

This notion of becoming a national company overnight resembled a Hail Mary pass, but I needed to believe I could turn things around quickly. I refused to give up and I was committed to making my company successful. Sometimes, the most difficult thing about being a good entrepreneur is keeping your objectivity. Unfortunately, I was beginning to lose mine.
 
 

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.