In the January 2000 issue, Inc. began following five fledgling businesses for twelve months. The CEO and cofounder of one, Fuxito Worldwide Inc., reveals his lessons and insights.
Cofounders: Richard Powell, 21, CEO; Kofi Kankam, 25, vice-president; Sanjeeb Bhuyan, 23, vice-president; Josef Powell, 20; and Daniel Hoffer, 23, former chief operating officer and chief technical officer
Company: Fúxito Worldwide Inc., in Cambridge, Mass.
Original business model: Operate a global recruiting Web site for soccer coaches
Current business model: Operate a Web site for the global soccer community; acquire and market proprietary software, CD-ROMs, and downloadable data for soccer players, coaches, and fans
Original projections for 2000: $5 million in revenues; loss of $4 million; 50 employees
Actual 2000: Less than $1 million in sales; not profitable; 17 employees
Total capital raised from date of launch: $2 million
"The low point for me was probably around June," says CEO Richard Powell, "when we found ourselves in dire need of raising some extremely short-term cash after our financing -- the $10-million round -- fell through due to the turbulence in the market. I had to inform my small team that the deal wouldn't be closing as expected in a matter of weeks. But we didn't just sit down and say, 'Oh, these investors have bailed out, so we're in an inevitable death spiral.' We've since spoken to a bunch of other entities, and we're in talks with two or three who are in the final stages of due diligence, although the valuation that we're going to raise money at might be lower than what we would have liked. We did get a short-term cash infusion, and we could make that last a few more months. We might have to tone down our marketing, restructure, or lay off some people. But we're in it to win it. Our management team's going to be here until the logical end of the company, which we're hoping is a couple more years down the line.
"The stories of companies like Napster perpetuated a myth that growing a dot-com is easy for an 18-year-old kid. It isn't."
"One of the big things I've realized is the importance of inspiring confidence in people as a leader. That's very tough -- especially in hard times. Being late for one meeting or not following up with one person you said you'd follow up with -- any one little event like that can change somebody's perception of you. And it's very hard running around, doing 16 things in one day, to meet every deadline you have to meet, follow up with everybody you promised you'd follow up with, return every phone call, take care of every E-mail. That's a challenge for me. I've seen myself grow in terms of appreciating the importance of other people's time and also in terms of being a model of consistency, which I think is critical. If you say you're going to be there at 5:00, be there at 5:00. If an employee asks you for a day off and he has his own reasons for it, you have to be aware that somebody else might come and ask for a day off. Having people feel as if you are treating them equitably is very important. There are a lot of little internal issues that can come up around that stuff. I have to quote a soccer coach who told me, 'There is no such thing as a small detail.' I've been working on that, and I think I've been doing a pretty good job at it.
"I also think I've done pretty well at entrusting other people with mission-critical tasks. I consider myself a perfectionist in some ways. When the stakes are high, with people's personal lives and careers on the line -- I also have a lot to lose -- it's sometimes hard to entrust people with decision-making powers. Early on, I felt I needed to know everything that was going on. But now I realize I don't have to and that what you can achieve as a team is truly powerful. Delegating is harder to do than it seems to be in management books.
"And hiring -- there have been opportunities on our part to hire more experienced people, but we chose to hire people who were less experienced but had more soccer knowledge and soccer passion. After we raised our round of $1.2 million, last January, for the next couple of months we went on a big hiring spree, and we could have brought in more people with work experience under their belts. The average age of the founders who are active in the company is 23. And the average age at the company is still very, very young. We certainly could have fostered greater confidence among the investors, and among the employees themselves, if they had seen us surrounding ourselves with more experienced people. I think I put too much of a premium on enthusiasm and passion and sacrificed a lot in terms of what people with experience and professionalism could have brought me. With more of that, Fúxito would be a tighter ship and a much more professional place to work -- in everything from meeting deadlines, to the work hours, to the cleanliness of the office.
"The stories of people like Shawn Fanning of Napster certainly perpetuated a myth that growing a successful dot-com is easy for an 18-year-old kid. It isn't, because what you're facing is an increasingly competitive market that has second- or third- or fourth-time-around veterans. You're not competing with a brand-new pool of 19-year-olds all the time. I'm not sitting here trying to discourage 19-year-olds from starting companies, just saying they should be a lot more pragmatic and realistic about what it's going to entail. I've delayed my education by choosing this experience -- or escapade, or whatever you want to call it -- and we as a team have sacrificed a lot of things we could have been doing in the prime of our lives. I generally try not to harp on negative things or feelings of regret or remorse. I'm enjoying what I'm doing right now, and if it turns out successfully, I will have made the right decision for myself. Even if it doesn't turn out to be a $100-million enterprise, what I've learned in the last two years will ultimately produce success down the line. Because no matter how Fúxito turns out, I will do this again soon. It's just going to be easier the next time around and the next time around and the next time around. I have a genuine passion for business, for creating companies and leading people. I've not had the time to sit down and start brewing up ideas. But I know I won't let investors that turned me down this time participate in that next one."
Read the complete Start-Up Diaries series.
THE START-UP ISSUE
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