BUSINESS PLANS

Confidence Man

In its January 2000 issue, Inc. began following five fledgling businesses over a twelve-month period. The founder of one, Application Technologies, reveals his lessons and insights.
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Founder: Johann Verheem, 34, CEO

Company: Application Technologies, in San Diego

Original business model: Develop, patent, and license consumer-products packaging

Current business model: Sell the company

Original projections for 2000: $1.2 million in revenues; four employees

Actual 2000: $750,000 in revenues; three employees

Total capital raised from date of launch: $450,000

"My personal goal when starting Application Technologies was to build a company that could be scaled up using pouch packaging as a platform," says CEO Johann Verheem. "We succeeded in establishing the pouch as a breakthrough technology and in making it, but I did not succeed in building the company I would like to own.

"Not that we failed; I would call it an RBI. It wasn't a home run, but it was a successful step. What we really set up was an intellectual-property firm with licensees. We produced a revenue stream from licensing the technology. I was able to replace my income from my days as an executive at Guthy-Renker. And now we have entered into an acquisition agreement to sell the company for $4 million -- not bad for less than 18 months of business. I expect to close the deal within 30 days. It will provide a good return for the stockholders and everyone involved.

"If I knew then what I know today, I would have just sold the technology from the beginning and not tried to build a company around it. But I still have the unfulfilled goal of building a company. So that's what I'm going to do next.


"Now I understand in a much more profound and emotional way what it means to be fully accountable for your own pay."

--Johann Verheem, CEO of Application Technologies

"I learned several lessons. One is that when you start a business, it's very important to do so in an industry you love. This technology was too far away from what I like. I like marketing; this was packaging. That's why I didn't build a company around a bunch of packaging engineers. Another lesson: when you work for somebody else, you don't necessarily know what it takes to get that paycheck to you. When you work for yourself, nobody else takes responsibility for that process.

"You make better decisions than you did when you weren't accountable in the same way. I understood that intellectually before going into business for myself, but understanding that and experiencing it are two different things. Somebody I knew once used the term profound knowledge. That's the difference. Now I understand in a much more profound and emotional way what it means to be fully accountable for your own pay.

"Because of that understanding, I have more confidence and know what it means to be on the 'other side.' Having done it once, I'll be willing to do it over and over again."

Updates on the other four businesses featured in the Start-Up Diaries:
Suspended Animation
Unsentimental Education
That Was Then
My So-Called Life

Read the complete Start-Up Diaries series.


THE START-UP ISSUE

Part 1: Your Way

Part 2: Anatomy Update -- Big Plans

Part 3: The Start-Up Diaries -- Year One


Please e-mail your comments to editors@inc.com.

Last updated: Jan 1, 2001




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