War Stories: Sometimes finding investors means finding yourself

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War Stories: Sometimes finding investors means finding yourself

Thursday, June 01, 2000

By Sanjay Chopra, president and CEO, OnlineChoice

If you can't communicate your core business model to potential investors in the time it takes the elevator to get from the lobby of your building to your offices, you might as well pack it in. (OK, OK, I'll cut you a break it you're on the second floor.)

Sanjay Chopra, OnlineChoice
Admittedly, it takes practice and something of a gift for reducing the complexities of a business plan to a couple of sound bites that resonate. But more important, it is a test of your idea. If your model cannot stand up to brutal simplicity, you're not going to convince a savvy venture capitalist to give you the time you need to make a detailed, cogent case for the millions of dollars you're seeking, especially given NASDAQ's recent performance. Your job at the outset is to capture the imagination.

As president and CEO of OnlineChoice, a Pittsburgh-based Internet start-up, I learned that lesson early and well. Last August I had two business partners and a great idea . . . and that was about it. Our goal was to establish a company that used the Internet to create buying pools of consumers, using their power in numbers to negotiate volume discounts for an array of vital services like

electricity, natural gas, long-distance telephone and home security, to name a few.

OnlineChoice
Founded in 1999, OnlineChoice is an Internet site where consumers can harness group buying power by joining free, no-obligation buying pools to receive volume discounts on a wide range of vital services. OnlineChoice also provides unbiased information to help consumers better-informed choices about services such as electricity, natural gas, long-distance telephone service, and home security. OnlineChoice is backed by Duquesne Enterprises, a subsidiary of DQE, Inc.; Lycos Ventures; Draper Triangle Ventures; and The Hillman Company. Based in Pittsburgh, OnlineChoice was founded by Marshall Cohen, chairman; Sanjay Chopra, president and CEO; and Bill Kirkendale, executive vice president and chief technology officer.

We were convinced that aggregating consumers and engaging suppliers in a reverse auction would drive down prices and save suppliers some of their customer acquisition costs, a portion of which could be passed on to us. Now to convince the keepers of the purse strings...

We wrestled with the concept, created reams of business projections, and conducted a fair amount of research to test and support our conjecture. Necessary due diligence. But there was no spark. Yes, we were about buying pools and discounts and services that chip away at the wallet every month, but we weren't capturing the essence of what got us excited about the concept from the start. It was hard to put into words.

And then one morning, headed up to the fourth floor of the building on the North Side that was to become our headquarters, it came to me in a flash - it was our noble purpose, as we came to call it.

We harness the power of the group to benefit the individual.

At once all the other pieces fell into place, and I had my hook. I was ready to meet the investment community head-on. I had a powerful, succinct concept backed by a strong business plan and the beginnings of a strong team to make our vision a reality. Within weeks, we had the financial backing of our first investor, DQE Enterprises.

I don't intend to suggest that a glib phrase or two alone opens the investor vaults. But finding your noble purpose helps both shape who you are and what sets your business apart from the rest.

But recognize at the beginning of every new investor pitch that there are no second chances.

Despite my bedrock belief in our business model, I always have three contingency plans in the works; it's part of expecting the best, but preparing for the worst.

Earlier War Stories

Dave Nelsen of CoManage on the physical challenges of management in the New Economy

More on OnlineChoice

Internet start-up delivering lower bills (2/29/00)

Sister unit of DQE takes stake in e-firm (8/19/99)

Using the Web to get lots of buyers together - and save (8/6/99)