The Company That Grew Too Fast

It was a class project that brought it all together for them. "Brian and Ron," recalls Bill Besselman, who was a classmate and for a brief time Le Gette and Wilson's partner, "were like a machine coming up with product ideas: churning, churning, churning." After their first idea -- rotating CD racks made in China -- fell through, it was Wilson who hit upon the magic words: ear warmers.

Actually, he had been thinking about them since college. As an engineering student at Virginia Tech, he had had to walk across its Quad daily -- "and it was just one big wind tunnel." Seven years later, summer had turned to fall, and fall was about to give way to winter, and the idea resurfaced. Le Gette recalls how he would walk through the kids' section at Wal-Mart, buy a toy, and take it home, where he and Wilson would break off whatever piece they thought might work in the evolving design of the ear warmer. "We did a hundred different designs," says Le Gette.

By fall 1994, they had a prototype. And before long, Wilson was carrying a backpack laden with 40 or 50 ear warmers, hawking them on the Penn campus -- where most onlookers assumed they were either giving stuff away or protesting something. "It was embarrassing," says Wilson.

Their breakthrough came in March 1995, when Wilson got the name of a buyer at the then-infant cable station QVC and called for an appointment. He was told he could have two minutes. Wilson and Le Gette took it and drove the 45 minutes from Philadelphia to the QVC studios in West Chester, Pa. The buyer liked what he saw and set them up with a more senior QVC exec, Daphne Howard.

Unfortunately, the sample that Le Gette and Wilson brought with them -- made of collapsable plastic and covered in fleece -- fell apart when Howard went to try it on. "Well, you both went to Wharton, and you both seem pretty smart," said Howard, "so I guess I'll give you a chance." It didn't hurt, Howard says, "that they were two cute guys."

When Brian Le Gette went on the air on Friday night, November 10, 1995, the partners -- having raised close to $100,000 from 18 investors, most of them Wharton classmates -- believed in their hearts that it was now or never. In the first four minutes on the air, Le Gette sold nothing. In the next four minutes, he sold out -- 5,000 ear warmers, with another 2,000 people waiting on hold. During his next two appearances, in January, he sold 17,000. Soon he was a regular on QVC. "You couldn't pay for that kind of time today," he says.

"Brian can sell his ass off," recalls Bill Besselman. "Five thousand units in five minutes one night. After that, the train just took off."

In 1997, Le Gette and Wilson decided to move the company -- which had been known variously as the Gorgonz Group, Gray Matter Holdings, and Big Bang Products -- to Baltimore. There, Le Gette and Wilson were joined by Wharton classmates Bill and Autumn Besselman and by Jim Waring and Ty Matlin, toy designers who had worked for Milton Bradley. The idea going forward was to come up with a seasonal counterpoint to the ear warmer. Eventually, the name would be changed to 180s -- which was meant to emphasize the company's innovativeness. "Over time," says public relations specialist Natalie Van Buskirk, "people take things for granted, accept what they have, whether it is the best solution or not, and simply make do. They develop blind spots to what might be possible. We look at products differently and do a 180 on them."

Backed by a $1.5 million round of financing -- most of it coming from the original 18 Wharton investors -- the new partnership focused on developing what Besselman calls "crazy cool ideas." Some were just crazy: a radio-controlled kite-glider, a collapsable beach mat, a talking children's lunch bag. In late '97, Gib Mason, a Baltimore accountant who would eventually be CFO and later president of 180s, was brought in to help with a second tranche of financing. This one raised $1.97 million. Part of the money came from a private equity fund run by an original 180s investor, Tampa-based Wharton graduate John Touchton Jr., who invested along with three other individuals. In return, Touchton received a new class of preferred equity stock.

The real push began to come up with countercyclical products. Under a separate Kelsyus brand, the company turned to making sunglasses, beach towels, and pool flotation devices. A line of collapsable beach chairs that turned into backpacks became the most successful of these summer products. But the dynamic never changed. "The other products all together didn't deliver nearly as much revenue as the ear warmers," says Golkow.

But behind the ear warmers, revenue leaped from $1 million in 1999 to $7.4 million in 2000, and the work force almost doubled to 17. "We didn't make a dime," says CFO Mason. "But we didn't lose money either." The next year revenue and staffing both doubled, to $15.2 million and 36.

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