He is the myth personified: he's founded nine companies, he's rich, and he's ready to do it again
He is the myth personified: he's founded nine companies, he's rich, and he's ready to do it again
We're sorry; the 800 number you have dialed has been disconnected. There is no further information available." That's all that remains of Quest Communications Corp., a Vienna, Va.-based company that had an intriguing idea: interactive trivia games. You'd call a toll-free number, listen to a series of multiple-choice trivia questions, and answer them by punching buttons on your telephone. Get enough right and you'd win $100. At $2 a game, Quest thought it would make millions. Instead, undercapitalization caused it to suspended operations within a year.
So why is Quest's chairman smiling?
And smiling he is, as he picks up a visitor at Dulles International Airport on a clear winter workday in Virginia. Dressed in a ski jacket, corduroy pants, and running shoes, the 45-year-old chairman doesn't look like a man whose company had a negative net worth of $700,000 when it shut down. He looks like he's on top of the world.
What he's going to do, the chairman says as he pulls away from the airport and quickly brings the sports car up to 85 miles per hour, is take Quest's phone technology and create a separate company. The new business -- what do you think, he asks, of the name Phone Shopping Systems? -- will use that equipment to take orders for companies that sell merchandise by phone. Two companies, makers of the MultiTrym diet plan and Craftmatic adjustable beds, have tested the idea and liked it. "Do you know how much merchandise people ordered by phone last year?" the chairman asks with a smile. "More than $100 billion." No wonder he isn't dejected by Quest's failure. It's led him to another -- and, he is sure, better -- idea. But then, the chairman always has another idea.
You've heard the apocryphal stories about entrepreneurs who repeatedly start companies that they sell two or three years later for millions. Well maybe they're not so apocryphal after all. Ladies and gentlemen, we give you William F. von Meister.
Phone Shopping Systems Inc., which is scheduled for a May 1 public offering that would not von Meister $3.4 million, is his ninth company. And as the Quest example shows, not all have been winners.
But enough of them have succeeded so that von Meister can live very well, thank you.
He pulls the modified BMW M635 ("I never liked the engine it came with, so I had them put a racing engine in") into the driveway and gives a tour of his house in Great Falls, Va. The Ferrari Boxer sits under a canvas cover in the garage. The tennis court, complete with lights and a machine to blow off the leaves from the heavily wooded lot, is immaculate, and the obligatory heated swimming pool can be covered with the push of a button.
To have all this, von Meister says later as he sips coffee from a Pac Man mug, you can't be an employee. "Nobody will pay you enough. You have to do it out of capital gains."
It was a decision he came to early. The son of wealthy parents -- his father commercially developed the offset printing process still used by many magazines -- von Meister grew up in the horse country of New Jersey and toyed with the idea of entering the foreign service after attending Georgetown University. "When I found out the starting salary was $7,000 a year, I forgot about it." Instead, he got married, moved to Europe, and raced cars. That lasted seven years, until his parents and wife suggested -- in no uncertain terms -- it was time to settle down. After he earned an M.B.A. from American University they thought he might join the Fortune 500, but it was not meant to be. A chance encounter with a family friend turned him into an entrepreneur, and he has never looked back.
The friend, a Western Union Telegraph Co. executive, was complaining about problems the company was having scrapping its old Air Force communications systems. It was switching from vacuum tubes to transistors, and needed someone to haul the old stuff away. Junk dealers wanted hundreds of thousands to do it.
"Could I take a look at the sites?" asked von Meister, then 29.
"Sure," came the reply.
When he did, von Meister realized "the old equipment had tremendous salvage value. You had copper in the communications wires, the vacuum tubes could be sold for 10? apiece, and so forth." He offered Western Union $750 for everything. "Since I was the only one willing to pay them, I got it." Eighteen months later, the old equipment was gone, and von Meister had $250,000 in his pocket.
Was it that simple? "Just about," he says. "The opportunity came about because of the way Western Union phrased their problem. They said, 'How do we get rid of this old system?' Since the equipment had long been written off, they weren't looking to make any money. They just wanted the stuff gone, so they called people who would haul it away and bury it. I knew the stuff had value. I didn't know how much, so I called around and found out what people were paying for things like vacuum tubes and copper wire. Once I did, I worked out the deal with local people who specialized in salvage. They'd cart the stuff, and we'd split the profits."
Von Meister may have entered into the arrangement because it looked like an easy way to make some money, but he discovered business could be almost as much fun as racing cars. "What do people do that is really challenging?" he asks rhetorically. "They race cars, climb mountains, go scuba diving, and that's about it. Most really do live lives of quiet desperation. Well, entrepreneurship can be challenging, too. There are rules, but there ain't many."
His career proves that. The salvage job earned him access to top Western Union officials, an early look at a new concept called mailgrams, and another opportunity. "There were just two ways large-volume users could send mailgrams at first," von Meister says. "They could store up 200 of them on computer tape -- the smallest number Western Union would take that way -- or send them by telex. Well, a company's telex machine is never in a convenient place; usually it's in the basement. And not many companies send 200 mailgrams at a time."
Von Meister's idea, which he pitched to Western Union, was a terminal that could go on a secretary's desk. The secretary would type in the mailgram, hit a button, and it would be transmitted to a central computer that would sort the messages by location and deliver them to a Western Union dispatching operation. Western Union said no. "They didn't think the technology would work, but they gave me permission to try to do it on my own. I went to Xonics Inc., a California high-tech company, and Xonics invested $1.2 million to develop the equipment. We quickly became the largest sender of mailgrams." Three years later, Western Union bought back the idea for $6 million. Von Meister's share: about $1.2 million.
That pattern continues to this day. Von Meister does consulting work until he comes up with an interesting idea he can develop on his own. "There is no secret," he says. "I just look at things and how they can be improved. Can you come up with an idea that will do something better, faster, cheaper -- that's what I ask myself." Those ideas included one of the first companies to supply devices that automatically send telephone calls over the cheapest routes -- he sold the company to Cable & Wireless Ltd. for undisclosed millions two years after start-up -- and a data-retrieval service called The Source that The Reader's Digest Association Inc. bought after 15 months.
Note that in every case the ideas are not original. Von Meister takes an existing concept, such as call routing, and creates a new twist, such as guaranteeing the device will cut phone bills by 22%. Or he takes a common idea and adds high-tech flourishes. His latest venture, Phone Shopping Systems, is a perfect example.
"The initial idea had been to cash in on the trivia craze started by Trivial Pursuit," von Meister says. But when Quest stalled, he quickly seized on another fad -- home shopping -- and converted Quest's phone equipment into a system that can handle phone orders with little human interaction. As always, von Meister spotted the opportunity and had someone else build the prototype. In this case, people will call a toll-free number and a computer will ask questions that can be answered by using either a push-button or a rotary phone. (Customers punch in their credit card numbers, for example.) With the exception of needing someone to transcribe the name and address, the entire process is done without people, reducing the price of processing an order by 35%, von Meister claims. "We don't know of anyone who has tried to computerize their order-taking process to this extent," says a spokeswoman for Direct Marketing Association, an industry trade group. "It sounds like he is onto something, if he can make it work."
Von Meister has no doubt he will. He plans for his own company to do the order taking, for a fee, and the potential is staggering. He is projecting pretax margins of some 30%.
But despite the huge potential, the idea is to sell out quickly. "I don't like running things," he says. "Administration bores me." And after six months, von Meister is already growing bored with Phone Shopping. You see, he already has another idea: a way for individuals to engage in "program trading," a complex investment strategy that tries to take advantage of the occasional difference between the price of stock futures and the value of the underlying stocks. Up until now, only major investment firms have had the resources to play, but von Meister thinks he has found a way to simplify the game. He is already lining up investors. The details are still secret, von Meister explains on the ride back to the airport, but as he drops his visitor off, he is thinking about his next idea and smiling again. "Sure this is all a game," he concedes. "What is it they say? 'He who dies with the most toys wins."
The modified BMW seems to be exceeding the speed limit long before it's out of the parking lot.