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War Stories: Every penny counts
Thursday, July 06, 2000 By Tom Hayes, CEO, eSpotMarket
Creativity comes in many forms. My artistic and musical skills will always be suspect (ask my kids). But running my own business for 10 years - and now running a startup - has forced me to learn that most important of all skills: financial creativity.
We learn these lessons simply because we must to survive.
The most important of these lessons was driven home while balancing precipitously on a narrow stairway, holding one end of a 150-pound steel desk above my head. The lesson was this: every penny counts.
The two battered Steelcase desks were a donation from a fellow entrepreneur who knew how painful it was to pay even $100 for such a purchase, even though our director of marketing had been working from a conference table in the corner of our office. The only hitch was that the desk currently resided up 20 steps and through two small doorways...and didn't come with an offer to help move it (our director of marketing got that privilege).
There have been other examples of extreme budget creativity that would make those used to a corporate support structure scratch their heads (or maybe just shake them sadly). But they point out the depths of our commitment to make eSpotMarket fly.
We purchased corporate phones on a close-out deal for a buck each. Our original office space was graciously donated by my father in-law and came "unimproved" (read: terrible). The roof leaked, and spiders were considered a perk. Even now, as we co-lease our space in a semi-trade deal, we're paying a whopping 35-cents per-square-foot.
A Web-based exchanged designed for small- and medium-sized businesses to quickly and easily purchase commodity-like goods at the best price. The company currently makes markets in computer peripherals and office supplies.
Zoom to the other end of the financing spectrum to see the wisdom that has been all too common in the dot.com industry. People who've worked like dogs building a business suddenly find themselves funded for millions, as they must be to compete.
But rationality often seems to be given up along with equity for that first venture capital check. Suddenly cool office space is a primary concern, and fiscal responsibility takes second seat to the euphoria of a very early taste of success.
Boo.com, a recent flameout, spent $10 million for a kickoff party. That's $10 million of other people's money. And that's the key lesson I want everyone who walks through our door to learn, whether they have to carry desks above their heads to do it or not. We all want the big bang -- headline grabbing success. But we'll do it by holding on to the lessons we've been forced to learn today.
We tripped our way down those stairs unafraid of potential damage to the desks. I understand now that much of the success we plan will come as a direct result of these very moments. The fundamentals don't change. Our burn rate will only increase and no matter what our funding, it's still a painfully finite amount of money.
The argument I hear is that as more people join they will have less and less buy-in to the business, less motivation to succeed. And stock options have become a shakier recruitment tool as of late. Therefore we'll need to do more elaborate things to keep them happy and keep them there. And that gets expensive. Fair enough.
But...
Our team has to be in it for the haul both literally and figuratively. That's a lesson they've got to learn from everyone who's got their blood invested in this business. And it's a lesson most businesses don't have the privilege of learning...to their detriment.
Michelangelo C. Celli of CommerBuilder.com on the value of true networks
Astro Teller of BodyMedia on how Pittsburgh almost lost his business
Sanjay Chopra of Online Choice on finding investors sometimes means finding yourself.
Dave Nelsen of CoManage on the physical challenges of managing in the New Economy
Have a question or comment about War Stories, or have one of your own you want to tell? Contact Ken Zapinski, New Economy columnist, at kzapinski@post-gazette.com.
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