Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Twenty-One

"The opposite of bravery is not cowardice but conformity." -Dr. Robert Anthony

When I got back to my office, I recounted the experience to my partners and they shrugged it off like it was exactly what they expected to hear. Working with Penn was not going to happen. Therefore, it was time to make a decision to move forward or quit the business.

Although QuakerCard was successful, we had no partnerships with other schools. We had a new marketing alliance with CMC, but no guarantees of future business. There were also other risks we faced. For example, university customers would wonder why Penn chose not to work with us. As a result, our credibility could be damaged before we even got started. In fact, we feared Penn might badmouth us if contacted by administrators at other schools.

What made us think we could possibly pull this off? We believed we had a great service for students and we knew best how to promote it. QuakerCard made us realize the benefits of managing a closed card system. The higher merchant fees we collected gave us the financial flexibility to operate our system at no cost to the schools, while maintaining a decent margin for ourselves. Unlike the banks offering generic debit cards, this was our only business.  We were willing to cold-call every university customer in the industry and try to customize our service for each campus.

Was it going to be that difficult of a market to break into? It was impossible to know the answer for certain. As we discussed our predicament, it was difficult not to be biased by our camaraderie. We had come so far together that it became difficult to imagine just quitting. We speculated what our lives would be like if we dismantled the business. I would probably be working long hours as an analyst at an investment bank, while Mark traveled around the country as a 1st-year consultant, and George worked as a newly minted financial analyst for a Fortune 50 company. It didn’t sound so bad, but we weren’t jumping up and down about the prospects.

In some of our late-night sessions, we speculated about how much money we could make as entrepreneurs. We entered our financial projections into an Excel spreadsheet, so we could alter our assumptions. We included a formula that applied an IPO multiple to our earnings, so we could calculate our net worth. George would sit behind the computer, plugging in different scenarios. The game was surprisingly entertaining and addictive to play. The more sleep-deprived we were, the more fun it became. There was at least one scenario where we had operations at 500 schools, and we were worth a few hundred million dollars. It didn’t matter how ridiculous the assumptions seemed, because as young business owners, the possibilities brought big smiles to our faces all the same. In contrast, our expected salaries and bonuses in corporate America didn’t have the same allure of possibility. If we accepted regular jobs, we knew our chances of becoming multi-millionaires anytime soon were practically non-existent.

As we sat in the office, deciding the fate of our company, George began playing “what if” scenarios. What if we went for it and we were successful? What if we could get a few schools to give us a try? The “what if” game is dangerous, because there is no correct answer and it makes you focus on the favorable outcomes, not the journey.

I was torn. I knew our business could fail for reasons beyond our control. Yet, it bothered me to consider George and Mark might stay and become multi-millionaires, while I collected my salary elsewhere. It was depressing to think I might have missed my big chance. I stopped asking myself questions about which job alternative was a better fit for me in the long run. I didn’t know what I wanted to do with my life, but I also didn’t want to regret not trying entrepreneurship.

Eventually, both Mark and George agreed to stay with the business. They believed in our product. Once we had a few university customers, they believed our success would be imminent. If we had to set up programs “at cost” for the first few schools, we would do it as a way to build credibility in the market.

I remember speaking with my father, who had made a lot of sacrifices to send me to Wharton. I told him I didn’t know what to do, but I was more excited about staying with the company than accepting my job alternatives. He listened to my explanation and said, “It’s the things you don’t do that you regret in life, not the other way around.” And with that, he gave me his blessing, and I made my decision.
 
 

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.