A college student ditches the sport he's worked his whole life to master for the dream of an Internet start-up
Richie Powell is getting impatient. He's just heard from one of his nine full-time employees that a key recruit has yet to accept what he regards as a generous offer. "He's getting a nice equity stake in this place," Powell proclaims. Let's get the deal signed today, he tells Kofi Kankam, vice-president of business development. By this afternoon, if possible. Before 4, actually. "I want to leave early," explains the cofounder, president, and CEO of FÚxito Worldwide Inc. "I have a lot of homework."
In that regard, at least, the 20-year-old Powell resembles any other college student. But Powell, a junior economics major at Harvard, recently ditched his spot on the varsity soccer team -- his playing skill earned the native Jamaican a scholarship to Phillips Academy, in Andover, Mass., and helped him get accepted by Harvard -- thereby disappointing both his coach and his father. "I have priorities," he says. "I have a company to run."
That's a fact anyone around him can't easily forget. Every few minutes Powell's cell phone beeps out Beethoven's "Ode to Joy," kicking him into high-pitch mode.
The year-old company's new headquarters consists of three freshly painted rooms in Cambridge, Mass., sandwiched between Harvard and MIT, institutions from which FÚxito draws not only employees but also its many interns. Powell wants to have his desk in a corner so that he can gaze out the window, fueling his fantasy of occupying "a big corporate office in New York." For now he's standing there, yakking on his cell phone. "I'm not worried about a couple of extra points in here," Powell announces. "I want to see this thing go public by 2001 or be acquired in nine months."
In a less speculative era -- the Roaring '20s, say -- FÚxito's tender-aged team might have been dismissed as pretenders, merely playing at business until they get called in for a reality supper. But, then, isn't this how a modern windfall-in-the-making is supposed to look? A gang of smart, focused, and energetic young folks (in this case, guys) who have taken an oath to rule whatever Internet "space" they've marked as their own. Sure, they're in a hurry, but they're not rushed. Powell knows, for instance, that it took another recent Cambridge-based entrepreneur, Warren Adams, almost two full years before he could sell his Internet start-up, PlanetAll, for $100 million. Powell has studied the get-rich-click set perhaps as diligently as he's studied anything. "I really should study more," he admits, suffocating a yawn.
But, hey, Powell didn't choose Harvard for its curriculum. A stock trader since the age of 12 who started an export and investment-management company after high school, he spied a more precious, and lasting, commodity on campus: contacts. "Harvard, to me, was all about the networking," says Powell, who spent his freshman year crashing entrepreneur-related events.
The plan for FÚxito is as much the product of Powell's grandiose ambitions for himself as it is of anything he absorbed at those outings. Still, it was a nugget he picked up during a class led by an accomplished entrepreneur -- "know your market," the guru advised -- that got the idea of a soccer-related start-up, appropriately enough, "running around in my head," Powell recalls. Powell knew firsthand that in soccer "a lot of recruiting right now is by chance." His venture, he decided in October 1998, would "drastically improve" that process, using the Internet to enable coaches to view demographic profiles and video clips of players. Two months later, Powell says, "everyone was excited" when he presented his five-page plan to 30 attendees of the Harvard Startups group. Oh, they did suggest that his pricing structure, which called for coaches to pay as much as $10,000 a year for access to an international database, might benefit from further market research. Powell had no trouble accepting their criticism because he hadn't finished his market research. Nor had he really started it.
"Richie understood the soccer market from the point of view of being a very good athlete, but he didn't have a good foundation in business," recalls John A. Clendenin, a senior lecturer at Harvard Business School who attended that presentation. But Powell rightly believes that "the passion I exude is an asset." And one highly valued by Clendenin, who is also a sports psychologist. "There's no substitute for enthusiasm, drive, desire, and determination," Clendenin says. "Richie's idea didn't have any structure, but it was a good dream."
The dream of being part of an Internet start-up, any Internet start-up, has captivated the members of FÚxito's management team nearly as much as its ever-evolving mission has. Sanjeeb Bhuyan, the company's 22-year-old chief systems administrator, joined FÚxito in late June. A month later he was having dreams in which "we had sold the company for a lot of money, and we were all sitting around and talking about how we did it," recounts Bhuyan, who is also earning a master's degree in computer science at MIT. Powell says he'll feel satisfied if FÚxito "gets sold for only $20 million."
Granted, it's hard for anyone involved in such a breed of business to ignore the possibility of what Powell calls a "financial hit," given the stories that are all around: Netscape, PointCast, Yahoo. Last summer those very companies were literally right around FÚxito, near the Sunnyvale, Calif., office that nine of the start-up's staffers occupied -- and more than half of them lived in -- for two months. Once, at 5 a.m., Bhuyan suggested that Powell get some shut-eye. No, Powell replied, I'll go to sleep when we do an IPO. "It felt like we had been taken away from everything and we were living in a FÚxito world," says Bhuyan.
It may have felt that way because FÚxito's mission had expanded so grandly. Three months after Powell's presentation, he contacted Daniel M. Hoffer, a Harvard senior who operated his own technology consulting firm. Hoffer heard the idea -- and the magnitude of the technological challenges -- and "within five minutes I was sold," he says. "He had a great idea." Powell believes that the idea was only part of the allure. "Once again I infected somebody with my passion and vision," says Powell, who gained in Hoffer a cofounder and a chief operating officer.
The two founders' market research made Powell feel even more strongly that the site needed to have broad appeal, since an on-line soccer-recruiting tool was "not something you sell in 15 months for $150 million," he says. What FÚxito needed to be was a venture aimed not at 3 million soccer coaches but at 3 billion soccer fans. (The company's name combines the Spanish words for soccer and success and offers the added bonus of "sounding obscene, if you pronounce it wrong," Hoffer says.) Given the scope of its aim, FÚxito also needed to be in "the heart of the start-up community," as Powell says. So he and his team moved to Silicon Valley -- briefly, anyway.
But after consulting a lawyer, Powell learned that his visa required him to return to Harvard this past fall. Hoffer, who dropped out a semester shy of earning a B.A. in philosophy, theorizes that "it's not bad from a publicity perspective to have this wonder boy in school who is running the company." But from a money-raising perspective, it hasn't helped. "No matter how good the idea is, it's still an idea with a 20-year-old CEO who is a college student," notes Clendenin, now a FÚxito board member. Right now, all that 20-year-old can say is, "We need money. But I try not to worry about it too much."
Like most other Internet entrepreneurs, he and Hoffer do worry about drawing traffic to their site. Live since the end of June, it has attracted far fewer user hits than hoped for. Working with Iconomy .com, a provider of E-commerce services for which Hoffer's older brother David serves as chief operating officer and general counsel, the partners struggled to get the E-commerce component of the site up in time to generate holiday sales. Still, "there's no way any broad-based E-tailer can focus on soccer the way they can," notes Roger Cameron Wood, vice-president of E-commerce and global direct marketing at Reebok International. "FÚxito's secret weapon is its focus."
Wood, who met FÚxito through Iconomy.com, says that Reebok has entered "a broad-based alliance" with the start-up. Clendenin, on leave from Harvard to launch an Internet business, is working to give FÚxito's store "a competitive advantage" by applying principles he developed while managing the supply chain at Xerox Corp. Clendenin's efforts are expected to yield prices at least 20% below FÚxito's competitors'. "We've got some buzz going," Hoffer says.
Not enough, though. Right now, FÚxito's brand-building strategy consists mainly of Powell's dragging a three-by-six-foot banner to soccer matches, and an intern who systematically defiles the purity of chat-room dialogues by planting pro-FÚxito messages. Powell envisions sponsoring tournaments and camps, building kiosks in the United States and Latin America, and parking a multimedia van at matches. "There are a lot of breathless pitches out there, but Richie's passion is not grafted on, and Daniel's intellectual gifts are enormous and obvious," says Wood. "Passion and gray matter on that level usually find a way of willing their way to success."
Which is why, last June, Wood joined FÚxito's board -- despite the circumstances of his invitation from Powell. "I called him in his dorm room, and he was definitely a little foggy," Wood recalls. "I think he was recovering from exams."
Joshua Hyatt is a senior editor at Inc.
Read the complete Start-Up Diaries series.
COMPANY: FÚxito Worldwide Inc.
FOUNDERS: Richard Powell, 20, president and CEO; and Daniel M. Hoffer, 22, chief operating officer and chief technology officer
FAMILY: Both are single
CONCEPT: Create the premier E-commerce site devoted to soccer, including news, free E-mail, discussion boards, contests, auctions, and a database for recruiting
FINANCING: $300,000, mostly from three angels; seeking $8 million in venture capital
PROJECTIONS: First year, $7 million in revenues, $4.1-million net loss; second year, $18 million in revenues, $4.3-million net loss; third year, $46 million in revenues, $1 million in earnings
HURDLES: Given inexperienced management, being fleet-footed enough to raise the money needed to fulfill its aggressive plans. Better-heeled competitors, such as two-year-old Fogdog Sports, an on-line sporting-goods retailer positioned for an initial public offering, may be better equipped to establish market leadership in a fragmented industry.
PERSONAL FUNDS INVESTED: $15,000 from Powell in stock trades and liquidated assets
EQUITY HELD: Together the founders own a controlling interest.
SALARY: Zip for both
SOURCE OF IDEA: Powell's extensive experience with the target market, which came from having played soccer on national teams in his native Jamaica
BOARD OF ADVISERS: Nick Mehta, vice-president of marketing of Chipshot.com, an on-line golf retailer founded in a Harvard dorm; David Hoffer, chief operating officer and general counsel at Iconomy.com, a provider of E-commerce services; Seamus Malin, ESPN soccer analyst since 1979 and director of Harvard University's International Office, formerly a leading scorer and then an assistant coach of Harvard's soccer team; Steffan Berelowitz, founder and president of the Bit Group, a Boston-based Internet developer
WHAT THEY DREAM ABOUT: That FÚxito has been acquired -- first, at a price of exactly $170 millon, and then, in the sequel, for $250 million, says Powell
WHAT THEY'LL DO IF THIS FAILS: "If we don't succeed enough to retire, we'll do it again," Powell says. "I will be a millionaire off the Internet -- if not through this company, then through another one."
SOURCE OF INSPIRATION: Seeing Netscape Communications Corp. cofounder Marc Andreessen, 24-year-old graduate-student-turned-jillionaire, on the cover of Time magazine in 1996 "made me realize I had to accelerate my personal plan" of making $1 million by age 30, Powell says. "I had to step things up."
ROLE MODEL: Bill Gates, for "having the right mix of technical and business savvy to turn Microsoft into a global giant. Every company would like to have Microsoft's position in the marketplace."