A Balance of Growth and Timing
Regrouping and pulling back on expansion plans due to bad timing was not an easy thing for Marcy Pettitt and her husband, Todd Wilmot. Their mail-order hosiery catalog business started growing steadily after they shifted the company’s sales to the Internet in 1996. Following the “dot-com” blueprint for success, they raised $1 million in angel capital last year, enabling them to hire a management team and move out of their garage into a West Hollywood office in February--just as the technology market screeched to a halt. Pettitt was interviewed by freelance writer Karen E. Klein.
*
Learning to balance confidence in your business plan, meeting your milestones to secure financing and not extending beyond the company’s near-term financial needs and resources is the challenge we have faced this year. In April 1999 we had some inquiries from buyers who wanted us to sell the business. Instead, we decided it was time to raise capital, hire a management team and take the business to a new level.
Before we raised a dime, we had hired a chief operating officer, engaged a high-powered law firm, chosen our Internet site developer and moved from our garage into temporary office space. We believed not only in our dream, but in the legitimacy of our business model and its chances for real success. Over the next nine months, we raised just under $1 million and hired a public relations firm, a chief financial officer and a business development director. We also persuaded certain high-end designers to give us permission to sell their products on our site. We were assured by several venture capital firms that once we reached the milestone of launch, traditional venture capital dollars would be available.
Still believing in our business model and its chances for success--even with “dot-coms” falling all around us--we persevered and made it to launch in late February, near the time the stock market and e-commerce took a great big hit. By that time, Wall Street was shaken, and we found that the venture capital money we had been promised had dried up.
We continued to search for an infusion of capital until late April. We thought we might be able to raise the additional funds we needed to embark on a realistic but ambitious marketing campaign, but unfortunately, our timing was terrible and we weren’t able to raise another dime.
When it became obvious that we could not continue to pay our employees and that drastic steps would have to be taken to preserve the capital already invested by our investors and ourselves, we decided to move the company back to its roots--our home. Basically, we decided to “incubate” ourselves, hoping that the markets would turn and we would survive the blood bath of slain dot-coms. That was May 5.
We’re still alive. We’ve continued our search for capital, and even though we have not yet been able to ink a deal, we are involved in talks with investors and with other dot-coms, believing that consolidation with another site that targets the same demographic and offers complementary products would be advantageous.
Instead of relying on traditional advertising, we are learning to be creative and make use of guerrilla marketing. I have contacted local professional women’s organizations, participated in their fund-raisers and advertised in their monthly newsletters. When someone e-mails a friend about AlexBlake.com, I send them a personal thank-you note. I’ve built a database of users with whom I stay in regular contact, letting them know about sales and other developments. Every time I’m in touch with our customers, sales spike. I find that the contact is not only rewarding but also necessary and important to long-term success.
If I had this process to do over again, I wouldn’t have hired the management team so early. It’s really a double-edged sword, because investors place so much emphasis on management. Still, by hiring the team before we had the money, the initial capital we raised was eaten up by salaries that the company really couldn’t afford. And, on a personal level, it was not much fun encouraging people to leave secure jobs (although we were always more than candid about the risks) to work for us and then sending them back out to look for new jobs within six months because we laid them off in early May.
Overall, we have taken four giant steps forward and two giant steps back. Getting back to where we started, we find we have to do a balancing act: believing in the big picture and the absolute of success, but pacing our growth at the same time.
I’m still not sure I have the answer to this puzzle, but I do believe that even dot-coms grow by the traditional rules of sound business practices.
If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
At a Glance
Company: AlexBlake.com
Owners: Marcy Pettitt, Todd Wilmot and Trip Wilmot
Nature of business: Online sales of hosiery, underwear and active wear
Founded: 1995
E-mail: marcy@alexblake.com
Web site: https://www.alexblake.com
Employees: 0
Annual revenue: $100,000
