Changing the Rules

Inc. revisits two former Anatomy of a Start-up companies to find one a success and one suffering a rough start.

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Two years ago Tim DeMello was grinning from the cover of INC., tossing around play money in personification of his business. Customers for his game got $100,000 in fake funds to buy and sell fake stock through a toll-free number. INC.'s headline: "The Hottest Business Game in Town: Turning a Fad into a Growth Business" (August 1988, [Article link]).
Right around that time DeMello had a minor identity crisis. "I had created this unique service," he says, "but I didn't really know who the hell we were, honestly." Meaning: he didn't know what his business was or who his real customer should be. Wall Street Games (WSG) had barreled into the marketplace, primarily pursuing the normal strategies for game distribution. Trouble was, a $99 game doesn't sell so well in retail stores, and DeMello felt the chill of a fad fading.

Late one night in his Wellesley, Mass., office, DeMello decided that "when everyone comes to work tomorrow they're working for a different company." WSG would instead focus on staging national competitions. Big-name sponsors would underwrite them; cash prizes would be awarded for the largest portfolios.

The difference was subtle but significant. The company pulled the game out of retail and quit trying to convince professors and corporate trainers to incorporate it into curriculums. With The AT&T Collegiate Investment Challenge already in place for students, WSG added a second event for the general public. USA Today and Financial News Network lined up as corporate sponsors, providing most of the promotion. With the new orientation, close to 60,000 people will buy the game as contestants this year, DeMello projects. Add up all the entry fees, cash and in-kind corporate sponsorships, and list rentals, and Wall Street Games is on track for revenues of $8 million. "Thank God we had enough capital to hang in there and reposition," says DeMello. "Another six months, or a year, and we wouldn't have been able to do it." -- Leslie Brokaw

THE COMPANY

Wall Street Games Inc., marketer of a simulated stock market game that teaches people how securities work and lets them compete in building the value of their "portfolios" ("Play Money," August 1988, [Article link])

EXPERTS' CONCERN
Positioning: The target customers are professors who could use the game for teaching, financial institutions that could use it in training, and consumers who could enjoy it purely as a game. Are those the right markets?

RESULTS TO DATE
Projected Actual Projected
FY 9/30/89 FY 12/31/89 FY 12/31/90
Sales $2,125,000 $2,450,000 $8,000,000

Pretax profit 468,000 50,000 675,000 n

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