In anticipation of a much larger staff, the company now occupies a 30,000-square-foot office space. There, customer decision makers (CDMs), charged with managing customer accounts, are the first to hear customer complaints or suggestions. "They run the company," he says. Around that core, partnership developers hunt for more cosponsors to join the START network; strategic planners study the results of mailings; marketing specialists coordinate public relations and advertising; and information-technology experts track the demographics of START customers.
Andreini, predicting 1,000 calls a day, knows that the pressure on his people will be formidable. So he's set up a GRIN (short for Group Win) room, where people come to settle disagreements, brainstorm, or just relax. A sign tacked to the door reads, "Forsake peacekeeping for truth telling." Every Friday a "town meeting" is called. Without regard to title, everyone breaks into groups to discuss the good, the bad, and the ugly of the week's happenings. Each of START's 40 employees is a shareholder, with stock issued according to the worker's salary and position in the company.
Andreini's attempt to teach "START-ers" (as they've nicknamed themselves) how to cope with the strain of wrenching growth was put to the test early -- just after the company's launch. The phones were ringing off the hook, thanks to an ad in USA Today introducing START. Experts predicted 6,000 calls at most in the first week and 3% enrollment from those calls. As it turned out, there were 11,000 calls, and enrollment was 11%. To prepare for those numbers, more CDMs were hired. "We were ecstatic," Andreini declares. "Finally, after all this preparation, we're ready to roll." But in early April everything came to a halt. Advertising was pulled back; phone calls slowed to a dribble.
What had happened was actually good news. Another insurance carrier was so impressed with START that it offered to upgrade START's deal with MetLife substantially. Unfortunately, for negotiations to proceed, START had to pull out of the marketplace until a decision was made. "It was hard," Andreini confesses. "There was a lot of tension because we couldn't tell everyone why we'd pulled out." Fortunately, there were mechanisms within the company -- town meetings, retreats, the GRIN room -- for venting frustration. Seven months later, Andreini held an even better agreement with MetLife, thanks to the pressure of a competitor, and START was preparing for a relaunch in January 1993.
* * *
"We need to get critical mass, and fast," Andreini says of the January kickoff. START's greatest hurdle? "We have a real chicken-and-egg problem." To attract merchants, START needs consumers to sign up in droves; yet before they sign up, consumers want to be guaranteed an array of desirable merchants. For now, Andreini and Burger take comfort in the 18 studies they've conducted, with MetLife's assistance, showing that consumers are very concerned about saving for the future. And what consumers want, they reason, merchants will provide. Picking only top-tier names helps, too. "People are more eager to sign on when they know the names backing START," Andreini says.
But even if consumers excitedly sign up on day one, will their excitement fade over the years? In a society used to instant gratification, 20 to 30 years is hardly around the bend. One observer says START's plan is comparable "to selling cemetery plots." Andreini admits there's a wait, but he thinks consumers will join and then forget about the money -- much as they would with a college fund. "This isn't grocery money," he emphasizes. But for those unable to hold out until age 59½, the money can be withdrawn anytime, subject to a penalty charge.
Andreini and Burger stress that their projections are conservative. They estimate, for example, they'll have one million subscribers by the end of the year -- a number that seems well within reach. NationsBank, a cosponsor and the fourth-largest bank in the country, has projected that it will sell a minimum of 800,000 memberships. MetLife also bought a batch of 300,000 memberships and agreed to purchase another 4.7 million over 10 years, which it will parcel out to favored accounts.
Still, START's greatest hurdle is its own ambition. The stakes are high. Playing with big names and big dollars does suggest a certain credibility, but it also means big expectations. Unlike most start-ups, START, once it leaves the gate, will have little room for slipups. Working alongside an MCI or a MetLife means falling into rhythm with a Fortune 500 company that's had years -- not to mention millions of dollars -- to work out the kinks, to polish up the act. START won't get that kind of leeway. "This is an all-or-nothing game," Andreini admits candidly. "We have to be all from the beginning."
EXECUTIVE SUMMARY
Company: START Inc., Herndon, Va.
Concept: To create a program that allows consumers to save and spend at the same time. A consumer purchases services or products from START's network of merchants, who in turn pay a portion of the purchase price to START. START then puts a portion of that money into a retirement-savings account for the consumer
Projections: START will lose $20 million on revenues of $52 million in 1993. By 1997 revenues will skyrocket to $1.2 billion, with pretax profits of $308 million
Hurdles: Asking consumers to wait until retirement to reap START's reward might be too much to ask. Company faces a "chicken-and-egg" problem: merchants won't sign up with START unless they see lots of consumers on board, but consumers won't sign on unless they can buy from a wide array of merchants
THE FOUNDER
Larry Andreini
Age: 30
