Dustin S. Klein

Monday, 22 July 2002 09:57

Y2K indemnified

If you haven’t already heard from your insurance company about Y2K, the next rude surprise is as near as your renewal date. Insurance providers across the nation are trying to exclude Y2K-related problems from policy renewals.

Fearing a repeat of the underwriting mess of the 1980s from a run of pollution and asbestos claims, insurance companies have begun an aggressive effort to inform companies that conventional coverages — property, business interruption and directors and officers insurance — won’t help them if monetary damages result from the millennium bug.

Business owners who want protection from Y2K-oriented damage can get it, but at a price. Premiums for such policies are running about 10 percent of coverage — that is, a $1 million policy will cost $100,000. Even then, coverage is available only after a lengthy paperwork process that tells the insurance underwriter precisely how much you’ve done to prepare for Y2K.

But Brad Norrick, a senior vice president at Cleveland-based J&H Marsh and McClennan, the world’s largest risk and insurance services firm, says you don’t have to pay a ransom for coverage, nor do you have to remain exposed.

Marsh & McClennan, for instance, used its muscle to avoid the coverage exclusions that underwriters were creating.

“We asked them to tell us what it would take to keep the policies in place and cover any Y2K related problems,” explains Norrick. “We also told them that if they wouldn’t work with us, we’d move all our business to underwriters who will.”

With assurances in hand, Marsh & McClennan then turned to its clients. “We’re working with (them) to make sure their compliance programs are enough,” he says.

That’s done through analysis reports, which detail how each client company is preparing for Y2K. The report covers issues similar to what underwriters ask on the questionnaires, but Norrick says there’s a difference. “We’ve recommended that our clients not fill out (questionnaires) because they could be used against them as a warranty. The report answers the main concerns underwriters have, without that risk.”

Those concerns include:

  • What resources are dedicated to the problem;

  • When the company expects to be Y2K compliant;

  • When the company began addressing the problem;

  • Whether the company has met target dates so far.

Norrick says smaller organizations may find they have the same flexibility with underwriters if they talk to them and proactively address concerns.

“All underwriters are interested in what companies are doing to prepare themselves,” he says. “If they look at the exposure and see the effort merits it, most will continue to provide coverage under their separate existing policies.”

How to reach: J&H Marsh and McClennan (216) 523-3661

Monday, 22 July 2002 09:57

Visionary in obscurity

Charles Stack may be the first person to ever sell a book on the Internet. It’s not a stretch to call him the Ferdinand Magellan of e-commerce, exploring the very edges of the online world at a time when the Internet was text only, security encryption was still military technology and people trying to sell stuff were as welcome as a 16th century Spaniard in the Pacific. Stack courageously ventured into those inhospitable waters in 1992 when he founded the world’s first online bookstore — Book Stacks Unlimited — long before the World Wide Web existed.

What Stack remembers most about that first online sale was the waiting. Interminable waiting. He first got word out about the bookstore by placing ads in magazines dedicated to the esoteric world of online bulletin board systems — BBSs in computerese.

Then, day after day, Stack and his small staff passed time at the office, waiting for someone — anyone — to see one of the ads and dial the phone number that would let their computer log on to the bookstore.

“BBS technology lets you watch the guy navigate through the site,” Stack explains. “So we sat there and watched the modems, with the ringers turned up loud.”

After a week of nervous fidgeting, a modem finally hissed and lit up. Stack and his staff huddled around a single monitor to watch the historic transaction unfold.

“I remember watching this person typing very, very slowly,” Stack recalls in an uncharacteristic chattiness. “He navigated so slow.”

The minutes dragged; the staff waited for the visitor to make a purchase; Stack tried not to interfere. But a mix of excitement and frustration got the better of him. “We couldn’t stand it anymore,” Stack says. “Finally, we broke in on his session and told him he was our first customer.”

Stack had spent a year painstakingly programming the BBS for ease of use — an unusual nicety at the time — and he wanted to ask the customer what was taking so damn long. Instead, he prudently typed the more open-ended message: “Why do you like this service?”

He waited through an abnormally long pause, and waited still more as the answer appeared on the screen in front of him, one painstakingly typed letter at a time:

A...s... ... a... ... b...l...i...n...d... ... p...e...r...s...o...n..., the response began. Several minutes later, Stack understood what the technology meant for his first customer, who had a computer that read ASCII text aloud and a Braille keyboard for input.

Charles Stack may have been the first true online retailer, but his venture was grossly undercapitalized and outmatched by those who followed. “My dream was to have a bookstore that had every book ever published. To feed my own habit,” says Stack, whose own bookish personality is more like the reference section than, say, new fiction.

The selection eventually reached more than 500,000 titles under Stack’s ownership, but for all his vision about the impact of the Internet on consumers, Stack failed in one critical area: He didn’t anticipate the excitement it would generate in the financial community.

If his goal from the start had been to take the enterprise public, Book Stacks today might be the premier online book store. But Stack’s entrance into the world of Internet finance came before the impossibly high multiples achieved by one high-tech stock after another.

Instead, he sold the business in 1996 for $4.2 million to the company that has since become Cendant Corp. (At the time, its sales volume apparently had already been eclipsed by the months-old Amazon.com, though Stack has never revealed any meaningful clues about the finances of his businesses.)

It was an unquestionably profitable payday for Charles Stack — but nothing compared to the $32 million that Amazon’s IPO attracted just a month after the sale. All of which made the transaction seem rather familiar to Stack, who has spent the last 20 years a step ahead of the mainstream and a step behind the big money.

But in the mind of this reclusive entrepreneur, that is about to change.

After quietly undermining the foundation of the retail book trade, Stack has now taken aim at the software business. His latest venture, Flashline.com, sells software components online, and Stack believes it will change the way businesses acquire and build their software applications. This time, his plan includes remaining the market leader.

When Charles Stack graduated from Case Western Reserve University law school in 1982, he was already familiar with computers; he owned the fabled Radio Shack TRS-80 Model 1 — the first true personal computer. In 1980, as a student law clerk, he computerized the products liability division of Nurenberg, Plevin Heller & McCarthy Co. LPA.

“Then IBM came out with the first real PC,” recalls Stack. “And I computerized the entire law practice.”

Stack soon branched out on his own to take his computer know-how to other law firms. “I wrote time and billing software and case management software,” he says. “I realized it was more fun than practicing law.”

In 1984, he founded Parallax MicroSystems Inc., which designed and implemented custom software for law offices. That business plodded along until late 1988, when opportunity knocked. Stack says simply, “The Wellington Group broke up.”

It was a consortium of law firms that handled asbestos liability claims across the United States — one firm in each city. Suddenly, Stack says, defendants were forced to find new representation, and Parallax software was in the middle of the gold rush. “We wrote our first asbestos case management system that year and grew 25-fold overnight.” he says.

For the next three years, Stack crisscrossed the country, hawking his product.

By the time asbestos business slowed down, he had stumbled across computer bulletin board systems. In the days before the graphic capabilities of the World Wide Web, BBS’s were the first online communities, allowing people with a shared interest to post messages and create conversations, regardless of their geographic location.

Though his background wasn’t in retail, Stack made an immediate leap in understanding that the power of this new medium was not in idle conversation, but rather in applications.

“All we ever did was database technology,” he says. “So I thought it would be cool to combine a BBS with a database — and sell stuff.”

In 1991, Stack wrote a simple program for Book Stacks. Two years later, it became a telnet dial-up service. “That created global access to the bookstore and tapped into the power of the newly developing Internet.”

In 1994, when most people were looking for “@” on the keyboard, Stack developed Book Stacks’ Web site.

The business was a success. It received national awards for content, innovation and design. But Parallax never provided enough cash to market the “store” effectively, and by 1995, Stack believes, it was too late.

Though he says he lined up venture capital, the deal never closed. Stack blames the overbearing headlines generated at the same time by the Amazon.com start-up. But Stack’s reclusive nature may have played a role, too.

“He was right out there with the first practical use of the Internet. Anybody that was doing Web technology back then knew of him,” offers Ron Copfer, of Copfer and Associates, who first tapped the emerging Internet at the same time and for the same market as Stack — using it to do research for courtroom attorneys.

The community of Internet-savvy entrepreneurs was small then — perhaps no more than five or six people in Greater Cleveland. Oddly, none of them know Stack personally.

“I’ve never spoken with him or met him to this day,” Copfer says.

“I dialed into his telnet store,” recalls Mark Geyman, founder of Netforce Development and another member of that pioneering clique. “Everybody did back then. But I’ve never met Stack.”

Even Stack admits that he’s an inside guy — more interested in building an infrastructure than promoting a business — though he’s not quite ready to concede that may have been why he failed to raise capital for Book Stacks.

So when he got an offer to sell the business outright, he took it. Even then, he wouldn’t talk about himself or his ideas. The book store, he told SBN at the time, “is the real story.”

After selling the business, Stack stayed on to develop new ideas. “I’d been doing Internet retail for a few years and saw the next big thing was going to be digital products,” he says. “If not packaged products, then services.”

As soon as he figured that out, he signed a noncompete agreement and in early 1998 left Cendant to open Flashline.com.

“I saw a great opportunity,” he says. “And it was best to do it as a start-up.”

In a large whiteboard behind Stack’s desk is a three-year plan for anyone to see. He’s scribbled a flowchart depicting his vision for the future of the software industry. Not surprisingly, Flashline.com is in the middle.

“That’s about three months worth of work,” Stack says. “I had to determine things that don’t even exist yet. We’re about a good year ahead of everyone else. We will be well-poised when this industry does take off.”

But Flashline had to start small. Stack’s only rule: It had to sell a downloadable digital product.

He settled on typefaces. The company offers more than 720 fonts, most for less than $39. While nobody at the company will offer even the slightest hint about sales volume, Stack says traffic has been good enough to let him develop Beans By Design — the product that he thinks will change the software business.

Beans By Design, which is based on the Java programming language, allows software developers to upload original programs to the Flashline server. The idea is to create a marketplace where software designers and companies come together to commission, buy and sell reusable software components that simply plug into existing software.

For instance, a company that doesn’t need an entire ERP program could buy just an inventory control module — or commission a designer to create a specialized module.

More than 200 software developers worldwide have signed on, according to David Goebel, Flashline’s director of business development.

Contrast that to today’s software design, which offers two choices: Buy an expensive custom package for your business or buy an off-the-shelf package and pay consultants to adapt it. Either way, the bill is likely to be tens of thousands of dollars for a system that still falls short 12 months later.

In Stack’s model, users buy components that generally sell for less than $500 apiece, and drop them into existing software.

“This is the outsourcing of customized software components online,” says Goebel. “And no one else is doing it. What happens is that people find components that fit 80 percent of what they needed [that aren’t] exactly what they’re looking for. With Beans By Design, they can provide specs and have the designers bid to develop the specific customized component in an auction setting.”

As new components are developed, they are added to Flashline’s database, creating a cafeteria-style system for customized software. That, says Stack is the revolutionary aspect: “Reusable software components will finally move software development from craft to science — and with it bring faster development, lower costs, bug reduction and reduced maintenance.”

“In my most optimistic moments, I think Flashline’s model will change the way software’s made,” Stack muses. “On a more realistic level, we’re trying to make a fundamental change in an industry.”

One of Stack’s lesser-known enterprises was the early registration of nearly two dozen high-profile Internet domain names, including books.com (Book Stacks) and cleveland.com — which he sold to Cleveland Live.

“We sold all the best ones ,” he says. Disney paid Stack $25,000 for movies.com. Brokering domain names has become a lucrative (if not well-regarded) business. But Stack never made out that well. “We got between $15,000 and $25,000 each,” he says.

That begs the question — Why does Stack think he’s about to hit the jackpot this time, after a history of visionary enterprises that have only performed well enough?

First, he says, “I’ve been in the custom software business since 1984 in one way or another. This is a more natural fit for me.”

Second, the experience with Amazon.com taught him the importance of promotion. For Flashline, Stack has sought and received publicity among the half-dozen or so leading trade publications in software development.

He has beefed up his PR and marketing staff, and no matter how uncomfortable it makes him, he allows himself to be prodded into public appearances and handshaking opportunities.

Stack’s usually grim countenance has been replaced by a warmer facade. Though he’s still likely to answer questions with the kind of short, uncolorful phrases that brand him “a tough interview” among the journalists he needs, you can at least see the effort in his face. He has accepted the need for a more public profile.

He’s been featured at several Internet software conferences, and slowly is gaining the national reputation he might have earned years ago.

As a result, Flashline is starting to develop the elusive and all-important “buzz” that is central to success on the Internet. A simple keyword search for Charles Stack and Flashline turns up dozens of glowing references from software developers and purchasers.

But most important to his success — and the success of anyone who dabbles in Internet businesses — is the one thing Stack seems to have today that he never had before: an appreciation for the money.

He says he will raise capital (he met with prospective investors the day before his photo shoot with SBN and termed the meeting a “nightmare” that went well). And he will eventually take Flashline public — even if it means smiling ’til it hurts. Perhaps then he’ll finally earn his place in the history of Internet exploration.

How to reach: Flashline.com — (216) 861-0471, www.flashline.com; Bookstacks — www.books.com

Monday, 22 July 2002 09:57

Deflation revisited

In a special report in February, SBN told you about the threat of deflation and how it could affect your business.

In March, the “D” word popped up again, this time at an economic briefing by Harris Bank.

Sherry Cooper, a former Fed economist now with Nesbitt Burns Economics of Canada, and Don Coxe, a Harris Bank economist, said inflation has become essentially nonexistent during the current economic boom. Prices of durable goods, commodities and computer-related products continue to head downward, which means deflation has arrived.

“There’s too much capacity chasing too few buyers,” Coxe says. “There’s going to be a squeeze on corporate margins this year. Manufacturers are going to feel it.”

But Coxe is quick to point out that deflation isn’t necessarily a bad thing. The kind of deflation that made the Great Depression so depressing only arises if wage rates are sucked into the downward spiral, and Coxe says that isn’t likely to happen.

Driving the decrease in prices are a slew of technological advancements over the past decade that have resulted in lower production costs. That, in turn, has caused a surge in supply — thus pushing down prices for durable goods, commodities and computer-related products, Cooper says.

A new wrinkle in the formula is the involvement of foreign manufacturers, who are mired in their own regional economic woes. These companies are trying to export their way out of trouble, Cooper says. That’s turned the United States into “a port of last resort.”

But both economists agree that the U.S economy is stronger than it’s been in more than 40 years, and should remain that way. Why the prosperity? According to Cooper, it has a lot to do with the end of the Cold War.

“In the late 1990s, there has been a massive transfer of technology from the military to the private sector,” she says. “That’s resulted in widespread use of the Internet, which has really driven this latest surge.”

Coxe is a bit more wary. Although he doesn’t expect the economy to lose ground, he isn’t so confident about the stock market’s recent love for Internet-related companies. Coxe expects economic reality to eventually step in and make those companies accountable for their lack of profits.

“Day players and those who keep buying tech stocks have seen the equity in their accounts grow tremendously,” he explains. “But their focus on the idea that you can grow by hundreds of percent on a regular basis will get blown away soon.”

But that, he says, should only be a minor correction in an otherwise strong economic year.

Monday, 22 July 2002 09:56

Last man standing

At the April Corporate Club Breakfast, the regional head of the former Star Bank (now Firstar) told local business execs that his financial institution was well-positioned to survive any merger and acquisition shake-out in the banking industry.

“There are more and more consolidations occurring as banks try to cover the U.S. from coast to coast,” said Andrew Randall, executive vice president and regional chairman. “Firstar could be part of that consolidation.”

But unlike Key Corp and National City Bank, both considered by industry experts to be prime future targets for consolidators, Firstar most likely would be on the acquiring end of any deal. That’s because the recent merger between Star Bank and Milwaukee-based Firstar not only strengthened its assets (from $17 billion to $39 billion) and reach (from four states to eight), but also allowed the new company to retain Star Bank’s high performing stock ratio (53 times earnings last year).

That high earning multiple made Star the top performing bank stock in the U.S. last year and provides Firstar with a powerful bargaining chip in any merger talks.

But, says Randall, the stock’s strength has forced Firstar to make its acquisition strategy a very calculated equation. “We view the price of our stock as an asset. It gives us a very strong currency to acquire or merge. But it has to be a complementary bank, and finding those opportunities is really a matter of finding the banks who want to be a part of what we do. And it has to be able to avoid dilution of our stock value.”

That said, Randall said Firstar views Cleveland as a growth market and expects the bank to continue its upward surge along with the city.

SBN is a sponsor of the Corporate Club breakfast, which is conducted in an interview format and is followed by a question and answer period. The events are held Tuesday mornings at Executive Caterers at Landerhaven, with breakfast at 7 a.m. and the speaker at 7:30. Cost is $25 per person.

Monday, 22 July 2002 09:55

Ups and Downs

Ups to Dick Jacobs. The venerable owner of the Indians is looking for a buyer. With professional sports franchises valued at an all-time high, it’s a good time to sell. Besides, Jacobs isn’t getting any younger and he gets to choose his successor. If you’re interested in forming an ownership group, give us a call — and bring your portfolio statement.

Ups to TRW. The aerospace giant is investing $250 million in a $3.6 billion Internet satellite venture with Lockheed Martin and Telecom Italia. The high-speed, high-capacity link-up will be through millions of tiny satellite dishes. Maybe we’ll finally answer the question: Is there any intelligent life out there?

Ups to McDonald’s. The burger boys couldn’t make their home-grown pizza formula a success, so they bought their way in through Donato’s Pizza. We’d like one large pepperoni with a Happy Meal toy on the side, please.

Ups to Lubrizol shareholders. They voted against the wishes of management and approved a resolution asking directors to alter the company’s poison pill takeover defense. It’s not often the guppies get the last bite in room full of big fish.

Downs to Diebold. Plans for the North Canton company’s new ATMs include commercials that pop up while you wait for cash. It’s a windfall for marketers, but for consumers, it’s one more sales pitch while you’re a captive audience. If they toss in a few coupons and waive the transaction fees, we may change our minds.

Ups to National City Bank. Its probe into buying Key Corp. signals good news for the Cleveland banking system and local landlords. A merger would end speculation about outside buyers and create a strong financial institution that could set its sights on other acquisitions. Besides, with the flight of BP, the city doesn’t need any more available office space.

Monday, 22 July 2002 09:55

A world of innovators

For as long as I’ve covered business, I’ve written about companies that succeeded and others that failed. Despite their eventual fates, there was one common theme among many of the business owners I interviewed — they claimed to have great ideas.

When I was a recent college graduate, I probably didn’t examine that notion as closely as I should have. Perhaps I didn’t understand the fine line between those two extremes — success and failure — well enough. Or maybe I just falsely assumed the difference was as simple as the ones who succeeded had the good ideas they claimed to possess, while the ones who failed did not.

Unfortunately, as I have learned in the years since from speaking with hundreds of business people from a wide spectrum of industries, it’s not that simple. Good ideas do drive success, but there’s a lot more to it. Success depends on a delicate balance of many factors, including a strong management team, reliable employees, a forward-thinking business plan and solid financial backing.

But I’m still drawn to the fact that at the root of any successful business is that singular idea. The one innovation, be it a product, process or service, that makes a company better than its competitors. Those are the brainchildren of innovators. Since success is what most people are judged by, rarely are people recognized purely on the basis of their innovations.

That’s why I’m excited that SBN has joined with Anthem Blue Cross and Blue Shield to create the Innovation in Business Conference, which will be held in October.

The conference is designed to bring together Northeast Ohio’s best innovators and recognize them for their smart business ideas. You may be one of them. We’ll honor innovators in three categories:

First, the Rising Stars. You may not have heard of these people, but their ideas are steps ahead of the competition. Listen carefully to what they have to say because one of them, if not several, may very well lead the next great IPO.

Next are the Visionaries, who own or work for established companies. They integrate smart ideas into their businesses every day. The companies may not have revenues or assets in the billion-dollar range, but they are helping pave the way for change.

Finally, the Master Innovators. These are those rare breed of business owner who have the innate ability to turn every innovation into a successful business venture. We’ll bring these honorees together at the conference for a unique panel discussion, where they’ll explain how they take smart ideas and apply them to their operations. And you’ll learn about them in the pages of SBN.

The end result of the evening should be an eye-opening experience where everyone leaves with a better understanding of how smart ideas can be applied to growing businesses — just like we write about every month in the pages of SBN.

Winds of change

It’s common for people to view change with a hint of skepticism. But for most companies, change is good.

SBN is no different.

Recently, we’ve undergone several changes to our editorial staff. As you look through this month’s issue, and the next few issues, you’ll see those changes. But what you’ll quickly notice is that besides a few new names, we’re not much different than we were before. We’re still committed to providing the type of stories you, as business decision makers, can use to make your own companies better.

So glance through the magazine, and if you have any thoughts about what you read, or ideas concerning business issues your company faces, let us know. After all, we write this magazine every month with you, the readers, in mind.

Monday, 22 July 2002 09:54

Polishing the diamond

For Lou Joseph, owner of Brewer-Garrett Co., these are the salad days. Business, he says, is fun.

“This isn’t a job; this is a sport,” he says. “Work is play.”

And if Joseph — a former college wrestler — is the proverbial ace pitcher who controls the pace of the game from atop the pitcher’s mound, then his 350 employees at the Middleburg Heights-based mechanical engineering firm are the trustworthy teammates who ensure that victory is always within reach.

“Everything in my business is about people,” explains Joseph. “We bring in high quality people and provide them with an environment for success.”

That environment includes a 50,000-square-foot facility tucked neatly away in a four-and-one-half acre wooded lot. The building, designed with interior glass windows instead of walls, includes all the amenities and atmosphere of a posh health club. Joseph says it creates a family atmosphere where employees view the office as a home away from home.

Louis Joseph was named an Ernst & Young Entrepreneur Of The Year in the business services category.

Joseph is modest when discussing Brewer-Garrett’s success under his leadership, crediting his employees for the company’s growth. Last year, Brewer-Garrett’s sales increased 29 percent as profits skyrocketed 40 percent. Over the last six years, since Joseph took the reins, revenues have increased more than 300 percent.

Much of that growth is due to long-term relationships and repeat business, explains Joseph. Some can be attributed to an active sales force that doesn’t wait for the phone to ring. The rest comes from the more than 600 service contracts that provide a constant source of recurring revenue.

It’s a long haul from when Joseph was hired away from Honeywell in 1981. Then, Brewer-Garrett’s mechanical system service maintenance division was not the company’s primary focus, and Joseph peddled $3,000 service contracts out of a dismal basement office while his co-workers chuckled behind his back.

“They did construction contracts for $50,000,” says Joseph. “But what I was doing was building relationships through the service contracts. I was thinking a lot longer term.”

Joseph’s instincts were sharp — he saw where the construction industry was headed and beat his competitors there. By 1987, the perseverance paid off and Joseph was promoted to vice president. He bought a minority stake in the company and began to fervently implement his vision for success into the company’s culture.

Four years later, Joseph was president of Brewer-Garrett. Two years after that, he controlled a majority of the company, founded in 1959, which was now mostly devoted to facilities management. “I saw a diamond in the rough and knew what I wanted to do to polish it up,” he says.

One of factors driving the company’s high profit growth is that Brewer-Garrett doesn’t rely on outside help on its projects. “We’re an inverted company,” Joseph says. “We’re a mechanical contractor, but we don’t subcontract anything out. We do the sheet metal work, the planning, the service and the applications all in-house.” All of which lowers overhead.

Another factor is the expanding demand for construction projects. Joseph was ahead of the curve there as well. Two years ago, Brewer-Garrett opened offices in Akron, Columbus and Cincinnati. Joseph’s goal at the time was to put key people in place and establish a market presence. Results have exceeded expectations and Joseph’s expectations have shifted.

“I want to capture all the mechanical systems down there,” he says. “Heating and cooling, electrical, the whole thing.”

At the root of Joseph’s business philosophy is relationship building. It is what he believes Brewer-Garrett is all about. “If we do one job for you, we did something wrong,” Joseph claims. “We want something long term. We want to be part of your budget and part of your process.”

That down-to-the-bones thinking starts at the top, but doesn’t just trickle on its own. Joseph actively instills it within every employee he hires, and has made great efforts to provide his staff with a vision that caters more toward team building with clients than focusing on landing one project at a time.

And rather than espouse the usual catch phrase — if you don’t take care of your customers, someone else will — Joseph subscribes to a different, more practical, credo: “Take care of your people,” he says. “They will take care of your customers.”

So far, the philosophy has paid off.

Judge’s comments: “This was an individual who started as an employee and was able to (show a) vision in a relatively mature industry. He worked with the owners over time to convince them that his vision was the right vision for this company. And they bought into it. And he was able, over time, to buy the company.” Kathryne W. Dindo

Monday, 22 July 2002 09:54

Java for two

Since Mike Green founded Lunch Date in 1994, he hasn’t followed any of the conventional rules of business that dictate how companies are usually run.

He had no experience in the business of matchmaking; he regularly turns away business; he doesn’t actively pursue repeat customers; and his business model is designed in such a way that he only receives a one-time flat fee.

That said, Green has turned Lunch Date — which links white collar professionals for casual dates over coffee or lunch — into a success over the past five years. “I realized it was difficult to meet other single people in Cleveland,” he says. “I’m filling a real need.”

The company’s client list has grown from 20 of Green’s friends and acquaintances to more than 1,200 active clients from all over Northeast Ohio. They range in age from 25 to 72.

Green’s practices aren’t really all that different than other business owners; he’s just tailor-made them to fit the matchmaking business.

Learn on the fly

There’s an old writer’s adage that says, “Write what you know.” The same usually holds true in business. People who found engineering firms are usually engineers, not architects.

Green’s background, however, is in medical sales, not dating services. And he readily admits he’s never even tried a dating service himself.

So what qualifies Green as a matchmaker?

“I’ve become a good judge of character over the past five years,” he says. “It’s a matter of reading people and making the right matches.”

Intuition, he says, drives the entire process.

“You get a feel for it.,” he says. “We do face-to-face interviews and get a comprehensive view of each person. Then, when we’re ready to match two people up, we call and give them each an accurate description of the other.

“As the process goes on, we learn more and more about people.”

It’s hard to argue with Green’s results.

More than 70 couples have gotten married after meeting through Lunch Date, many of whom have already had children.

“We call those Lunch Date babies,” Green says.

Be choosy about your clientele

“We only take people that we feel we can match and are consistent with the rest of our client base,” says Green.

That’s drastically different from other dating services, where an entrance fee may put your video or photo on file with hundreds of other people looking for Mr. or Ms. Right.

“We do all the leg work and we’re narrowing the field for them,” says Green.

Legwork involves comprehensive interviews with Green or his staff, where dozens of topics and interests are explored and background information is gathered. The staff makes physical notes about the person and observations about their personality.

Then, a rigorous background check begins. Green verifies the applicant’s age, marital status, education, occupation and criminal background. He says only three times have there been discrepancies between what an applicant told him and what the background report showed.

“We’ve never had a problem in six years,” he says.

Green says Lunch Date only accepts white-collar professionals, and does turn away people who don’t fit that profile.

“All our clients are corporate people who are ground in what they do,” he says. “Or new transplants to town who simply don’t know how, or don’t have time, to meet people. We bridge the gap. People you meet through us you won’t meet anywhere else.”

Charge a one-time flat fee

Green’s business model is designed to provide one payment from each client — a flat $595 fee to participate in the service. For that, each client receives six dates over six months.

While that may not sound like much, those six dates are only the ones Lunch Date provides. For example, two people are brought together downtown for coffee after work. They hit if off and plan three more dates before coming back to Green to pursue someone else. That still counts as only one of the six dates, explains Green.

“It’s six different people over six month.”

And Green hasn’t buttonholed himself into pushing clients away after they’ve exhausted their six dates in six months. If they wish to continue, a practice Green doesn’t actively chase, they can renew for $395.

Discourage repeat business

“Our goal for the clients is to hook them up and never hear from them again,” Green says. “I don’t want someone to come back and say they had a bad time.”

Realistically, though, that doesn’t normally happen on the first lunch date. And since the service provides six dates over six months, it may be a few dates before two people click.

“The biggest challenge is making sure everyone is happy,” he says. “We want to hear from both sides. That’s how we modify our approach for the next date or match.”

But nothing is more satisfying to Green than when it truly works out and he loses his clients.

“A couple walked in a few weeks ago (in May) and knocked on my door. They met a year ago and had just got engaged. They wanted to stop by and show me the ring and thank me for having this business.”

While Green would rather not have his customers renew after their initial six-month membership, he does hope his clients pass along the word about Lunch Date.

“If someone’s made happy, they’ll tell two of their friends about it and they’ll join,” he says. “That’s the kind of repeat business we do look for.”

Monday, 22 July 2002 09:52

Ups and Downs

Ups to Ohio legislators. They finally bit the bullet and passed electricity deregulation. Consumers will be able to choose their power supplier by 2001. The move leaves just one unanswered question: Who’s going to pay for those stranded nukes? Unfortunately, it’s the same question that’s been around since Day One.

Downs to Hechinger Co. After promising former Builders Square employees severance pay for sticking it out to the bitter end, Hechinger filed for Chapter 11 bankruptcy protection and shut the workers out. It’s a serious blow for other employers who ask workers to show loyalty during tough financial times.

Ups to doctor unions. It’s about time the other side of the health care industry started flexing its collective muscles and demanded a larger voice in managing health care costs. Could this be yet another shift in the ever-moving insurance pendulum?

Downs to J.C. Penney. Sure, it pulled the offensive AND1 T-shirts from its shelves after complaints that the T-shirts’ messages were demeaning to women. But that’s not the point. We want to know what marketing genius advised the department store to put them on the shelves in the first place.

Ups to LTV Steel. Its decision to remain neutral while the United Steelworkers of America tries to unionize the Trico steel mill in Alabama goes a long way in assuaging the long-running battle between LTV management and its workers. Now if only the company’s stock price would start rising again, too.

Ups to Invacare. The Elyria health care product manufacturer is at it again, trying to buy Danish rival Scandinavian Mobility International A/S. You have to admire A. Malachi Mixon’s straight-forward business philosophy: If you can’t beat ’em, buy ’em!

Monday, 22 July 2002 09:47

Designing hopes

If you’ve received holiday cards over the past few years from the Salvation Army, Greater Cleveland Literacy Coalition, Cleveland Sight Center or the Alzheimer’s Association, you’ve probably seen Marcus Advertising’s work.

That’s because each year, the Beachwood-based advertising agency leverages its expertise to design cards which assist nonprofit organizations, solicit donations and round up volunteers.

“It helps bring professionalism to not-for-profit organizations which are competing in a very competitive environment for money, attention and volunteers,” says President Harvey Scholnick. “If you can help them have a more professional and exciting look, it suddenly becomes an organization that more people pay attention to, both for donations and volunteerism.”

Marcus Advertising accompanies those cards with a financial donation. Last year, it donated more than $40,000 in pro bono services to 25 organizations, including the American Cancer Society, Big Brothers/Big Sisters, the Jewish Community Federation, Menorah Park and the Juvenile Diabetes Foundation. It served as the volunteer agency for the Junior League of Cleveland, and designed a new letterhead and identity system for the group.

Marcus Advertising also created a radio campaign and new logo for Cleveland Reads, a United Way agency.

But the agency’s longest continuing commitment has been to the Cleveland Chapter of the Alzheimer’s Association. Since 1986, it has helped create and produce public service commercials and ads; designed brochures, logos and posters; and created a variety of invitations and announcements for fund-raising events. In 1998, its television commercial “Words,” was a Telly award finalist, and this year, it created and produced the materials to support the Awareness Week Campaign.

The company’s annual tradition of designing holiday cards is only one way the group gives back to the community, says Scholnick. This past summer, Marcus Advertising collaborated with the Cleveland Ad Association and participated in Colin Powell’s “Work America” program by providing a summer job to a minority high school student. It also established the Donald H. Marcus Scholarship Fund at Cleveland State University, which awards tuition money to deserving students studying communications.

The agency and its employees raise money each year for the United Way and Harvest for Hunger, and a number of the staff members serve on a special task force for United Way’s Small Business Campaign. Employees are actively involved in Junior Achievement, the YMCA, March of Dimes, Boy Scouts of America, Meals on Wheels, the Jewish Community Center, St. John’s Westshore’s Mental Health Program and PASS (People Actively Supporting Schools).

Don Marcus, company chairman, is a member of the development board for Cleveland State University and a board member of the American Cancer Society. Scholnick is chairman of the Cleveland Chapter of the Alzheimer’s Association Advisory Committee, a trustee and chairman of the PR and marketing committee of Menorah Park, and is on the Executive Committee of the Community Service Planning Committee for the Jewish Community Federation of Cleveland.

“We lend counsel in other areas, such as volunteering our time on a consulting basis to organizations where we feel we can be of the most help,” says Scholnick, “But if we can also help through the creation of materials organizations can use to solicit donations and volunteers

themselves, we do.”

How to reach: Marcus Advertising Inc., (216) 292-4700

Dustin Klein (dsklein@sbnnet.com) is editor of SBN magazine.