28 Steps to a Strategic Alliance

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Research the idea and the industry. "It was a matter of sleuthing. I went to the library and sat in front of the index and looked up everything -- flowers, florists, marketing flowers, advertising flowers -- to see what was happening in the industry generally, but also specifically with distribution. My first job when I was a kid was in the library, so the research part of any project is fun for me. I think inherently I had a lot of confidence in the idea. What I needed was confidence that it was really possible to do."

* * *

The flower industry, Owades found, is a traditional and essentially unsophisticated one. While over the past decade some growers have moved to become more "value added" -- preparing, for instance, small packages of flowers for supermarkets to sell -- the industry remains dominated by small family growers. Still, it has grown about 10% a year since the mid-1980s to become about a $10-billion business today. Although there had been some halfhearted attempts at selling flowers through mail order, none had taken off. The closest concept in operation was 800-Flowers, a $25-million company that offers centralized ordering but still works within the traditional system of sending out purchases from shops in the FTD network.

Even if it was possible to ship flowers (and how would you transport an armful of spring blossoms? or a potted orchid with a quarter-inch stem? or a bonsai tree?), Owades's idea still presented three clear -- although almost nightmarish in their logistics -- challenges.

First, growers would have to adapt the way they work; they'd be in the upscale-gift business, not just the agriculture business. Instead of crating 500 stems of flowers for wholesalers as they normally did, the growers would be wrapping 12 roses in lavender tissue paper, tying the bouquet with a pretty bow, and attaching a handwritten note and care instructions just so, for a single customer. Owades envisioned hooking the growers via computer to her company. But many of the growers, she'd soon find out, didn't even have fax machines.

Second, she'd need to get an overnight shipper that was used to moving lots of flat envelopes to take on weirdly shaped boxes and accommodate extremely perishable products.

Third, even assuming she could set up a failproof computer system that would enable her to promise exact delivery dates, how could she change the buying habits of potential customers? Could she get them to care?

* * *

Research the needs of potential partners. To growers, Owades would promise sporadically heavy but consistent business. ("We'll get them orders the day after Valentine's Day," she says.) Owades also began to understand how the needs of the shipping industry were shifting in the wake of increased competition and fax machines. "When I was in business school I had studied the Federal Express start-up case. I knew carriers like Fed Ex were having to change their mind-set -- they had filled these planes with lovely flat envelopes and now were having to adapt to the challenges of moving boxes."

Evaluate yourself from your potential partners' perspective. Owades brought to the table knowledge of the catalog industry, access to capital (people had told her to call when she came up with her next big idea), energy, and smarts. "Gardener's Eden gave me credibility. I don't think you could attempt a project of this magnitude without that kind of credibility." But her visibility presented a problem, too. "If nobody's paying attention, you can stumble a little bit. That's one of the reasons I wanted to start big: with so many people watching us, the risk of competition was sizable. If it was going to work, we really had to carve out a niche quickly and establish ourselves." Her early goal: $3 million to $4 million in sales by the second year.

Think about financing. Figuring she'd need an expensive computer system, a splashy catalog, an 800 phone number, and cash to carry the company through several years of anticipated losses, Owades calculated she'd require $2 million. But she felt confident that raising money would, for her, be one of the easiest steps. "The financing didn't come last, but it didn't come until after I was secure, until I had one or two growers lined up."

Consider legal protection for the idea. This was simple: Owades didn't think she could get any protection.

Write a plan. In January 1988 she bought books on business plans, looked at a couple of samples, and decided that "most of them are too long and boring." Reading that the average plan is 45 pages long, she decided to bring hers in at half that. "The process of writing uncovered the logic of the business and brought up smaller questions -- not megasubjects, like what are the risks -- but what happens when the box is delivered and no one's home? Those little operational things needed answers from me."

Start recruiting a management team. In February Owades began mentally lining up her crew. When she called Fran Wilson, a former colleague at Williams-Sonoma who is now Calyx's vice-president of operations, Owades said, "I have this idea. I'm not quite ready to tell you what it is, but do you have any interest at all in doing something entrepreneurial?" Not only was Wilson interested, but she volunteered to sign on, sight unseen, to whatever the "it" was that Owades was plotting. ("I knew I wanted to be in a start-up," says Wilson, "and I knew I wanted a woman mentor.") Owades definitely wanted several experienced people on board from the start. "The hardest part of being an entrepreneur is that loneliness, feeling as if no one is holding a net underneath you. I was very conscious of not wanting to start this by myself the way I did with Gardener's Eden."

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