Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Twenty

“You shall judge a man by his foes as well as by his friends.” –- Joseph Conrad

We hoped our status as Penn students and our success with QuakerCard would be factors in our favor when negotiating a partnership with the school. I was charged with the task of mending old wounds with the university, and I placed several calls to a senior person in the Business Services office, but never could get him to return my calls. I left repeated voice messages.

With time until graduation running out, I began to panic. At that point, experience had taught me to be aggressive, so I tried to go over the heads of the people in the Business Services office. It probably wasn’t the best move, especially since I was trying to mend broken relationships. In my mind, desperate times called for desperate measures, and I was desperate.

I don’t remember how I got the idea, but I decided to “drop by” the office of a distinguished member of the University’s Board of Directors. Dr. Roy Vagelos, the former CEO of Merck & Co., was not only a member of Penn’s Board, but he was also a multi-million dollar benefactor of the University. The fact that I thought I could have a meeting with him was absurd. I must have been out of my mind to think I could get in to see him. Then again, I had somehow been able to push my way into Morgan Stanley’s offices the previous year, so I thought it was worth a shot.

Predictably, I couldn’t get past Dr. Vagelos’ secretary, but I did meet with his assistant and we discussed my company’s situation at length. The obvious question from her standpoint was what any of it had to do with Dr. Vagelos. The answer was not much, but I beseeched her to help me get a meeting with someone senior in the Business Services office. I suggested to her that Dr. Vagelos’ prominence as both a businessman and a leader in the Penn community made him relevant. I even went so far as to suggest that it was important that Penn not only supported entrepreneurship in the classroom, but also in real-life scenarios. The assistant assured me she would try her best. Nevertheless, I walked out of the office pretty pessimistic about our chances of an intervention.

That next day, I had a message on my voice mail from a senior person who worked in Business Services. He was looking to schedule a meeting with me. I promptly returned the call, and set something up for the following evening. Evidently, the woman I had met with was true to her word, and she placed a call on my behalf to the Business Services people. Once again, a half-baked idea seemed to have worked. It was nothing short of a miracle, or so I thought at the time.

Just two days after contacting Dr. Vagelos’ office, I put on my only blue suit and walked from my office at 36th and Locust Walk to the headquarters of Penn’s Business Services group, which was literally just around the corner. Neither George nor Mark wanted to join me. They sensed it would be bloody.

I entered the building and made my way to an office on the third floor. I was already feeling unsettled. A receptionist led me inside the room, where the manager within Business Services sat at his desk. He was a big man, tall and broad and in his late 60s. He had a thick head of white hair, wore glasses, and had a big puffy white mustache. He looked a lot like Colonel Sanders, the founder of Kentucky Fried Chicken. The resemblance put me at ease a little bit.

Ed Potter immediately extended his hand and gave me a forced smile. It was the same kind of smile the runner-up of a beauty pageant might give the winner, after realizing that all eyes were upon her and people were taking pictures. I got the sense he was just going through the motions.

He thanked me for coming, but went on to explain it would be impossible for the school to work with us. His group was intent on extending the PennCard’s capabilities. He saw no reason for students to carry two cards. “Neither do we,” I chimed in. “We would be happy to market our program as an off-campus account that worked on the PennCard.” He forced an even weaker smile.

He was quick to point out they were looking to hire someone part time and that, economically, it wouldn’t pay enough to support the founders of my company. “We accept!” I said without hesitation. He looked at me blankly like he was about to throw up on me. You could see the wheels in his head turning and that he wasn’t prepared for this development.

I went on to explain that money wasn’t our driving factor. We planned to expand our business model to other universities, and we needed the credibility that came with patching things up with Penn. The price we were willing to pay was our QuakerCard business. We would essentially give it to him. We would accept the pittance he would pay us, but we wanted a reference. I thought it was a good deal for everyone.

Ed turned pale. I had backed him into a corner. He gave up trying to feign any form of a smile, and just glared at me. He leaned forward in his chair. The gloves were coming off. He said:

“First of all, I don’t appreciate getting phone calls from the office of Roy Vagelos. I thought that was highly inappropriate. I agreed to meet with you, but I won’t work with you. The name, “University Student Services,” the on-campus address, the name “QuakerCard,” you are trying to pretend you’re the University! Frankly, I question your integrity and your ethics.”

Ed was rattled. He stood over me shaking his fist as his eyes bulged out of his head. Unfortunately, I have the bad habit of smiling when I’m put in uncomfortable situations. This is especially bad at funerals, or when someone tells you their grandmother just died. It’s also bad after someone has just gone on a tirade, venting at you, and is waiting for a response.

When I cracked a smile, it just made Ed even angrier. His face turned four shades of purple before my very eyes. I thought his head might pop off from the pressure building inside of him. Things weren’t going according to plan.

I quickly composed myself and tried to appeal to Ed’s sense of reason. I reminded him that my company’s name was perfectly legal and within our rights. I informed him how the on-campus address was a fluke of luck, and that the name “QuakerCard” was from the class project and it just stuck. You could tell he wasn’t buying anything I was saying. I was wasting my breath.

I attempted one more appeal, but this time to his business acumen. After all, we had spent a lot of time and money assembling the program. It was successful and we were willing to hand it over to him. There was certainly value in what we offered. It didn’t make sense not to work together.

Unfortunately, Ed had already made up his mind. He just couldn’t get past our history. Having regained his composure, he sat back in his chair and nodded his head mechanically. When I finished talking, he stood up and motioned me to the door. That was my meeting with a senior person in the Business Services office that I fought so hard to get.

Although Penn never seemed receptive to partnering with a student initiative for its card program, we hoped QuakerCard could find a way to integrate with the school. In reality, our program was more popular than we ever hoped, but our relationship with the school was awful. Although I’m sure Penn wasn’t pleased that QuakerCard competed with its cafeteria business, I believe our aggressive marketing tactics ruined our relationship with the school.

At the time, we believed using the name “University Student Services” would improve our odds of success, especially with a direct mail campaign. However, by using the name, we also alienated the school. Harming our relationship with Penn was a terrible thing for the future prospects of our company, especially if we hoped to combine QuakerCard with the PennCard in the future.

If we didn’t use the name “University Student Services,” we knew our company could still fail anyway. At the time, we felt pressure to use every marketing nuance to our advantage. If the business failed, our relationship with the school was irrelevant, so staying in Penn’s good graces became a secondary concern. Therefore, we decided to use the word "university" in our name and, if the school had a problem with us, we would to try to fix it later.

Up until now, we had been able to overcome any negative effects that came with our branding choice. After all, Penn’s legal counsel had investigated our marketing tactics, we suffered from some initial bad press in the school newspaper, and the school sent “warning” letters to students about our business. While we hadn’t anticipated any of these events, we were successful nonetheless. We enjoyed a 40% penetration rate from the freshman class, so we viewed the results as validation of our methods. The end seemed to justify the means.

At the time, I considered someone like Ed Potter to be a sore loser and I refused to admit there was any validity in the concerns he raised about our practices. Instead, I wanted to believe he was upset with us for making him look bad, because QuakerCard was successful and his cafeteria business was losing customers. Instead of walking out of Ed’s office questioning some of our decisions, I was angry with the school, and considered it to be my personal mission to make QuakerCard more successful than the new PennCard.
 

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.