Logan gives substantial credit for Trinity's early success to its corporate parent. Thanks to TNE, the spin-off set itself up in a new office building one block from its old home, with substantially more assets than a typical start-up: 21 former TNE employees, $100,000 worth of computer equipment, office furniture, access to the insurer's army of lawyers and accountants, and most important, a $500,000 advance on a $2.2-million contract for 1993. "TNE very much wanted us to be able to survive on our own, like a parent wanting to see a child grow up," recalls Logan. TNE had approved Logan's proposal in September. To ease the transition, the group that would become Trinity moved into its new space in November but remained on the insurer's payroll through the end of the year. As a result, says Logan, "when we opened our doors, we didn't have any problems on our hands other than helping TNE and getting new business. We didn't have anything distracting us from getting it." And a good thing that was, too. By Logan's calculations, without any new business Trinity would have posted a $300,000 loss during its first year. Instead, it picked up its first non-TNE client within 90 days.
Both Trinity and TNE have gone through a period of adjustment, exploring their new relationship. Trinity is learning how to satisfy TNE as a customer rather than as an employer. At the same time, it's taking great pains not to let its ties to TNE jeopardize its efforts to be perceived by its other clients (as well as prospective ones) as a real, open-for-business creative communications company -- a critical task for a young company in an industry in which image is paramount. While it welcomes the financial-services work it gets from TNE and through TNE referrals, the start-up actively courts diverse types of new business: for example, identity work for a small Chinatown restaurant, a handbook on gay and lesbian issues for the Massachusetts Department of Education, and a newsletter for a hotel in Bermuda.
TNE, too, is on a learning curve, adjusting to working with Trinity as a vendor rather than as an employee. TNE executives couldn't argue with the math: breaking out Logan's group enabled TNE's communications department to shrink from a 90-person, $5-million department to approximately 35 people today. Its $3-million budget includes the work it now outsources to Trinity and other agencies.
Clearly, it was in TNE's best interest that Trinity succeed, and the insurer went to great lengths to bolster the start-up's viability. In addition to providing the "dowry" of assets, TNE agreed to pay Trinity quarterly and in advance for its services. However, TNE didn't want to be generous to a fault. Both parent and offspring agreed to split 50-50 any profit Trinity earned on the insurer's work for the first year. Explains Dick Harris, a TNE senior planning consultant and Trinity customer: "Internally, you tend to get a little soft around the edges. Releasing them forced us to get a lot more thoughtful and critical and ensure that we are getting the most for our dollar." TNE's agreement with Trinity also gave the insurer freedom to use other outside vendors, and TNE has steadily reduced the amount of work for which it contracts with Trinity in advance -- from $2.2 million in 1993 to $1.8 million in 1994 and approximately $1 million in 1995. Other business between the two companies is done on a project basis.
The start-up is moving out of its parent's shadow, financially and psychologically. Whereas TNE business accounted for 75% of Trinity's revenues during its first year, it amounted to just half in 1994 and should come to no more than 25% this year. "Within a year that 'insurance department feeling' was almost entirely gone," notes former TNE and current Trinity employee Mary Heissner.
In client acquisition, it helps that the parent doesn't own even a small piece of Trinity. Says Michalowski, "I'm not sure anyone would have taken us seriously if we were a division of TNE." It also helps that Trinity had moved into a different building. TNE's marbled foyer with murals depicting scenes from such events as the Boston Tea Party doesn't project the image a creative communications company would want to cultivate.
The breakaway entrepreneurs have been surprised by the amount of help they've received in the start-up process (from TNE, from friends, from consultants) in the form of recommendations, leads, and advice on health-care and retirement plans, technology, even specific types of Xerox machines and phone systems -- "all that stuff that you have to do but you don't want to do," says Logan. Adds Kerley, "A lot of times start-up companies or small businesses just don't ask for help, but if you try to get it, it doesn't have to cost you a fortune."
