SOUTHERN CALIFORNIA SPOTLIGHT : Start-Up Firm an Upstart in a Mostly Wireless World : Mobile Planet has snagged impressive customers for its portable computing products. But the mail-order company’s small scale leaves it vulnerable.
Judging by its glossy, 52-page catalogue and slick, full-page advertisements in computer magazines, Mobile Planet could be the L.L. Bean of mobile computing products. But one peek through the tiny mail-order company’s office windows shatters that perception.
The dingy space is littered with scribbled notebooks, cartons of Chinese food and other mementos of long days and late nights. Mobile Planet’s warehouse is nothing more than a set of metal shelves crammed in a small garage in the back of the office. And the owners of the company, two young, bright-eyed entrepreneurs wearing jeans and tennis shoes, work alongside a half-dozen employees, all scrambling to answer phones, collect faxes and pack boxes.
Mobile Planet’s founders have big dreams. “Our intention is to be the source for the world of mobile computing accessories,” said Casey Powers, 32, who started the company with his 38-year-old partner, Matt Kramer. But for now, their company is little more than an emerging sprout.
Powers and Kramer used to work for Reveal Computer Products, a PC-accessory sibling of Packard Bell, the giant personal computer maker based in Westlake Village. But like thousands of others in computer industry lore, Powers and Kramer quit their steady jobs to try their hand at running their own company. In January, 1994, they started Mobile Planet in the spare bedroom of Powers’ West Hills house.
The venture, now located in a Canoga Park office, has shown potential. After lean months early last year, sales surpassed $250,000 in December on more than 1,000 orders, and Mobile’s customer base already includes such heavyweights as Microsoft, TRW Inc. and the U.S. Department of Defense.
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Mobile Planet specializes in selling accouterments of the portable computing age. Its products range from credit card-size modems that allow notebook computers to communicate with other computers across phone lines, to portable desks that snap into place alongside the front seat of a car. The company also sells cellular phones, computer software and dozens of other products with names and functions that are intelligible only to those versed in computer-speak.
But mail order is a topsy-turvy business. And Mobile Planet faces the same potentially lethal problem many start-up companies face: keeping inventory, space and payroll in balance with its sales growth, and getting access to enough capital to finance the company’s growth. Mobile Planet could flourish like a spring weed, but it’s probably just as likely that it will suddenly wither away.
Or so says Richard McCaskill, vice president of technology at Reveal: Kramer and Casey are bright managers who have launched their business at an opportune time, yet McCaskill says he doubts their company will survive. “They went into a new industry. Once it becomes a big industry, then companies like Reveal will get into it big-time, and then mail-order guys are in trouble. It will kill them.”
For now, Mobile Planet claims to be the only mail-order company that sells nothing but mobile computing and communication products, and industry followers say the company has staked out a potentially lucrative territory.
Desktop computers still account for the majority of computer sales, but sales of portable and notebook computers grabbed one-third of the market last year, and could account for 50% of all computer sales in a few years, said Rich Malloy, editor-in-chief of Mobile Office, a magazine that covers the mobile communications industry.
For large mail-order companies, portable computer equipment “is still just a side area,” Malloy said. “For Mobile Planet, it’s their bread and butter. They seem to know the products really well and they give good advice.”
Powers and Kramer said they started the company with just $35,000 from their personal savings, and even though they have spent many times that amount putting together catalogues and placing ads in computer magazines, they said they have yet to borrow a dime.
Much of the company’s early expenses were covered by making deals with product suppliers whom Kramer and Powers know from their days at Reveal. Suppliers have paid Mobile cash to be included in the company’s catalogue and magazine ads, or to have their products mentioned by Mobile’s telephone sales crew, Kramer said. And in the company’s first few months, when it couldn’t afford to buy much inventory, some suppliers were willing to let Mobile sell products on consignment.
Powers and Kramer concede that any further growth will require new financial resources. The company is already outgrowing the cramped Canoga Park office it moved into last spring, and it will soon need money to lease additional warehouse space. To help pay for that and other expansion plans, Mobile is looking for a new investor, Kramer said.
In the meantime, Powers and Kramer are running a bare-bones operation. The two earned comfortable salaries “below six figures” at Reveal, Kramer said, but now live off personal savings and the $9-an-hour wages they pay themselves. During the day, the two answer phones and pack boxes alongside their employees, which means management concerns often have to wait until late in the evening.
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“Casey and I have a good relationship. But sometimes it’s 5:30 in the morning and we’re still here yelling at each other,” Kramer said.
So far, these hardships have been offset by the thrill of rising sales and the joys of running their own company, Kramer said. But as the market for mobile communications products grows, Kramer and Casey will inevitably face challenges from powerful mail-order firms and retail companies, including their former employer, Reveal.
The pair are counting on maneuverability to protect them. At Reveal, the two were responsible for making sure that the company was in tune with constantly shifting demand for computer accessories. Today, they say they’re doing the same thing, but without the burdens of a big-company bureaucracy.
By focusing on their narrow market segment, Powers and Kramer figure they can keep filling their catalogue with the latest gadgets, and the big mail-order houses and retailers will always be a step behind.
“They can come on,” Kramer said, “because I’m going to be doing something different by the time they get here.”
