Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Twenty-Five

As part of our strategy, George was cold calling schools everyday, trying to initiate dialogue with customers. He tried to introduce our company in a positive light, while getting in the loop on the latest gossip.

Fortunately, George 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 daily rounds, he would stretch any newfound piece of gossip into a dozen new phone calls.

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

The truth was that I didn’t envision myself remaining in the industry forever, so I couldn’t feign interest in all of its crap. If it were up to me, I 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 George handled our direct sales efforts with school administrators.

Our value proposition to customers was simple. If a school worked with us, we would pay for EVERYTHING. We 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 even share our revenues with the school. We were doing our best to “buy” our way into the market by taking the risk away from the schools for trying us, while retaining a modest profit for ourselves.

The only problem with all of this was finding a way to pay for EVERYTHING. We had managed to make arrangements with equipment suppliers to finance up to $250,000 per school through capital lease obligations. The equipment would collateralize the loans, but the three of us would still have to personally guarantee all amounts.

It was a risky strategy for us, because this money had to be paid back, regardless if the system made money. It left very little room for operating problems, but we believed our experience with QuakerCard prepared us. We had done so well as an independent program at Penn, with the endorsement of a school it felt like a “no-brainer.”

Within months of our graduation, we scheduled three meetings with large universities located in Kentucky, North Carolina, and Nevada to discuss our potential involvement with their off-campus programs. We were doing everything possible to build our business. We were constantly cold calling schools, sending pitch books to prospective clients, and trying to angle into partnerships with suppliers.

We reasoned it was only a matter of time before we were successful. Unfortunately, the sales cycle in the university marketplace was slow. Literally, it could take years for a school to make a final decision. That pace may have been fine for the colleges, but it was unbearable for a team of young and enthusiastic entrepreneurs, who wanted to charge ahead.

 

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.