He hopes to write about the "near-failure experience" someday, from the perspective of a survivor. "I get scared of failing," Ronstadt says, "but it's a question of not flying off the handle. There are great uncertainties. You have to learn to live with them." So too do employees and investors. It's very easy for them to lose their resolve. I've seen the fear expressed in deep depression, and I've seen people panic."
Ronstadt himself has felt much humbled. "If you need to find humility, go start a high-growth venture that requires a large capital investment and a long pre-start-up time," he says. "I think we are misled and deluded by the success stories. People have to be made aware that the line between success and failure at a certain point is very thin."
Robert Ronstadt is walking that thin line. He has mortgaged his house and given up a job that offered lifetime employment. If he's lucky, Lord Publishing will post sales of $750,000 this year. But given its current financial base, CFO Barry Abrams says, "the company will have to grow very, very slowly."
Avoiding failure, Ronstadt believes, involves holding the fears at bay, just keeping the business afloat for another day. "The game is survival because next week may be the breakthrough," he says. "People say to me, 'How could you fail? How could you not be incredibly successful?' I feel some pressure. But because I've studied this, I know there are no universal rules or principles.
"Maybe someday I'll be able to write something that will help the teachers teach entrepreneurship better. I knew a lot about it when I started; I know much more now. That's not surprising. After all, nobody denies that experience is still the best teacher. The problem is that in this case, it is an expensive teacher."
PROFESSOR RONSTADT STARTS A BUSINESS
The chronology of Lord Publishing Inc.
1975
Robert Ronstadt receives a doctorate from Harvard Business School; he begins teaching at Babson College, in Wellesley, Mass., in September.
1976
Ronstadt, with his wife, Rebecca, founds what will become Lord Publishing.
1978
As Babson's director of planning, Ronstadt develops graduate and undergraduate courses in entrepreneurship.
1979
Lord starts publishing books and case studies for professors around the country. Lord's revenues: $100,000.
1983
Ronstadt takes a six-month sabbatical from Babson to write Entrepreneurship: Text, Cases and Notes, which Lord will publish.
1984
An 18-wheeler drops 11 tons of Entrepreneurship textbooks at the Ronstadts' suburban Boston home. Lord sells 4,000 copies.
1985
Thanks to its new textbook, Lord revenues jump to about $250,000, netting roughly $70,000.
1986
January: The Ronstadts take the first step in turning their "lifestyle" venture into a fast-growth business requiring full-time management. They commit roughly $30,000 to designing a software program, Ronstadt's Financials, and bring in two independent programmers.
May: Robert Ronstadt takes a leave of absence from Babson. The Ronstadts commit another $123,000 to Lord's software venture and begin raising money to write product code -- eventually securing $150,000 through relatives.
1987
March: Regis McKenna Inc. researches the market for Ronstadt's Financials for about $50,000.
April: Four investors put up $400,000 for 16% of the company. The product coding is still unfinished.
July: The Ronstadts move their business out of their house and into a 3,000-square-foot office.
May: Ronstadt resigns from his tenured position at Babson to run Lord.
September: Lord hires a CFO. The Ronstadts figure they need at least $2 million in additional capital, mostly for sales and marketing. They begin writing documentation.
1988
March: The investor group, expanded to eight, puts in $1.3 million for 22% of the company and takes an option to put in another $1.1 million for an additional 18% in the fall.
August: Lord starts advertising Ronstadt's Financials, slashes the price from $499 to $199, and provides rebates for early buyers; 175 units are sold, much fewer than anticipated. The company spends about $165,000 on marketing.
September: Though sales rise to more than 370 units, monthly revenues of $75,000 fall well short of the $190,000 in expenses, Lord's highest monthly outlay ever.
November: The investor group declines to exercise its option, citing lack of sales. Faced with a cash crunch, Lord slows advertising considerably and starts revising its business plan to raise money. Expenses are cut to $120,000 per month. Revenues: $62,000.
December: Ronstadt lays off three of Lord's four salespeople and cuts expenses to $80,000. Unit sales fall.
1989
March: The Software Publisher's Association names Ronstadt's Financials a finalist in three categories of the 1988 Excellence in Software awards, and the program appears in 189 Egghead Software stores. To support retailers, Lord raises sales and marketing expenditures to $43,000, bringing total expenses to $90,000, an $8,000 increase over February. Monthly loss: about $40,000. A Canadian group signs a deal to invest some $500,000.
April: The Canadian deal collapses. Lord bleeds another $40,000.
June: The Lord staff now numbers 8, including the Ronstadts, down from a high of 16. Cost cutting has reduced expenses to $45,000, yielding a slim profit on revenues of $63,000. Lord says it has opened negotiations with three possible strategic partners.
