The art of the start-up Featured

9:34am EDT July 22, 2002

Looking back, it probably wasn't that difficult to figure out where Stu Fishman would wind up.

He was the kid on the corner hawking cool, refreshing glasses of lemonade on sweaty summer afternoons. He was the guy who bought, sold and bartered comic books. While other kids enjoyed the thrilling adventures within those flimsy, ink-stained pages, Fishman saw dollar signs.

And, he was the enterprising student who earned spending money -- and quite a bit more -- by selling bugs.

"I used to sell insects for a living," Fishman recalls. "In junior high, all the girls had to make collections. I was the supplier. I made a lot of money. In fact, I made so much that my mother made me return some for gouging."

It may be difficult to determine whether mothers or legislators are harder on emerging entrepreneurs, but one thing is quite clear: Stu Fishman was destined to run a business. He practically bristles at the notion of joining a corporate culture, preferring instead the unpredictability of building his own operation from the ground up.

It didn't take long for the adult Fishman to venture into his first entrepreneurial enterprise.

"I was working for some guys in a ring company, Ringco, selling costume jewelry," he says. "I did real well, so I said, 'Gee, if I can do it for them, I should probably be able to do it for myself.'"

He started selling all types of costume jewelry except rings ("I didn't want to rip them [Ringco] off," he says) and sold it to drug stores, department stores and card shops. Clearly, he was in his element.

With each business he has founded, the 46-year-old Chagrin Falls resident has tucked away bits of wisdom and applied them to later ventures. The lessons came hard and fast. In his first 18 months in business, he sold $200,000 worth of jewelry. But, as he painfully learned, creating revenue streams was only part of the battle.

"I ended up tanking the company because I couldn't collect," he says. "I bought all these goods, sold all these goods and couldn't collect. Nobody would pay me."

At the same time, his personal life was dealt a blow. A gas line under his home ruptured and an explosion destroyed the house. With his business falling apart and his home blown apart, he recalls the situation with a bit of understatement.

"Totaled the house; totaled the business," he says. "Not an auspicious start."

Losing the jewelry business is the one blemish on Fishman's entrepreneurial record and it set his plans back a few years. He knocked around a bit before ending up at AT&T, where he spent five years before the itch returned.

Simply put, "I wasn't a good fit for corporate America."

Since the failure of the jewelry distribution business, Fishman has started three other businesses. Two have been unqualified successes. The jury is still out on the third, but early returns look promising.

In his most recent venture,, Fishman and his partner, R.K. Khosla, sell furniture over the Internet. They combine the bricks-and-mortar world with the online one through the use of Temporary Internet Mobile Showrooms, traveling exhibitions of furniture that open at shopping malls around the country for a few weeks at a time. (See "Clicks and temporary bricks" SBN July 2000.)

But there's something else about Fishman that separates him from the pack. He doesn't fit any traditional entrepreneurial mold.

Some entrepreneurs suffer from a dearth of viable ideas or from undercapitalization. Others don't have the ability to turn concept into reality. They struggle. They beg. They pray. And, with a little luck, the business starts bringing in a profit and the owner eases comfortably into the new role of successful owner.

It's at that moment, however, when life is supposed to get a bit easier, that Fishman begins to squirm. For him, start-ups are a thrill ride, a jazz improvisation. And he is the artist, the one who sees the finished masterpiece where the rest of us see only a blank canvas.

"It's almost a love-hate relationship," he says, describing his view of start-ups. "You have a huge fear of failure. Your gut grinds at night. You wake at 2 o'clock in the morning and you can't fall back asleep. It just makes you absolutely wacky, but it's like riding a roller coaster.

"Coming down the slope is so damn thrilling and so energizing that you put up with the gut-wrenchingness for the chance at success."

Getting started

"There's never a good time," Fishman says about starting a new venture. "There is never a time that you aren't scared to death."

That's because time, unlike money or good ideas, is the most precious of commodities. Explains Fishman, "You never have enough time to do everything that you want to do. You always have to prioritize your tasks because you're never going to get to your 'B' tasks. Forget about them."

Uncomfortable in the traditional office environment, Fishman left AT&T when a friend pulled him into a new consulting company, Software Support Group.

"I came on with those guys a couple of months after they started," he says. "I did the marketing side of the start-up."

Within a few years, he owned half the company. But, he just wasn't happy.

"I had gone through a period where I was a couple hundred pounds and was a two-and-a-half-pack-a-day smoker," Fishman recalls. "I wasn't enjoying what I was doing. I recognized that this was not how I wanted to spend the rest of my life, so I started running and gave up smoking."

Fishman also sold his stake in the consulting firm and decided to take a year off so his family could take vacations. It was on one such vacation that opportunity presented itself.

"We were supposed to take off a whole year, but we took off the whole summer. We had reservations at 11 national parks. We spent nine weeks on the road," he says.

In late July or early August 1994, Fishman and family stumbled across a small store filled with wind-up toys. It was loud and flashy, with dozens of toys and gadgets spinning, flying, crawling, chattering and clacking across the floor. As he watched, the old entrepreneurial desires returned with a vengeance.

So Fishman and his wife began discussing a new venture -- All Wound Up.

"We got back here in September," he says. "I said I'd like to do it. On Sept. 24, I was incorporated. We had the first store open by Nov. 1."

The mental make-up

Navigating a start-up through the often rough early waters takes a lot more than simply finding financial backers and putting a good idea into action.

"It's like testing yourself," Fishman says. "It's sort of like the ultimate test if you aren't six-foot-four and can't play basketball. For short, uncoordinated guys, it's the absolute best test."

It's a test he has passed with flying colors. Two years ago, shortly after he sold All Wound Up to Borders Books & Music, Fishman was named a Northeast Ohio Entrepreneur Of The Year by Ernst & Young LLP. Not surprisingly, his award came in the emerging entrepreneur category.

Kathryne W. Dindo, one of the EOY judges that year, says Fishman's skills were the right blend of mental make-up and perseverance.

"He understood what it took to get it to the next level," she says. "And that was unique. He was an entrepreneur that knew when the business had the opportunity, but he didn't have the resources. He's a true entrepreneur because even now, he begins to think about, 'What's my next step in life, my next business?'"

As part of his sales agreement with Borders, Fishman was supposed to continue overseeing the operations for two years. But he didn't last that long. Working for Borders, even if it was running All Wound Up, was still working for someone else. And for Fishman, that just wouldn't do.

"You're out there a little bit on a limb every time you do it," he says. "And I think what drives you is your fear of failure more than anything. The idea of losing is not a palatable thing."

Fishman recalls the jewelry business fiasco with a mixture of anger and disappointment. So why, then, does he risk it happening again?

"Because I do love the thrill. I love the chase," he says. "Some days, you're so excited with the results you can't believe it. Other days, you're so worried about something you might have done wrong. Did you order enough of this? Are you hitting the right price on that? Did you forget to order this? Will the goods come in on time to do the shows?

"Will you be able to get all the pictures done? There are so many things you have to consider. You worry because you want it to be a success and your name's on it."

Even with two successes under his belt, Fishman isn't one to rest on his laurels.

"That's yesterday's news," he says. "You're only as good as what you're doing right now."

The investors

No matter how much Fishman likes to play master of the house, he's not nave enough to think he can deliver a successful business on his own. One of the most impressive aspects of his operations is the collection of investors he has assembled.

The list reads like a who's who in Cleveland business circles. Among the investors are John Shields, Don Gustavson and Boake Sells, the former CEO of Revco Drug Stores and COO of Dayton Hudson (now Target).

Sells is known for his colloquial approach to giving advice. Fishman, by his own admission, has been the recipient of much of it.

"Sometimes, he'll come to you and say, 'Are you ignorant or are you stupid? Because if you're ignorant, I can teach you. If you're stupid, there's just no help for you.'"

There may have been moments where Fishman was ignorant, but he was never stupid.

"It makes a lot of sense," he says. "A guy like (Sells) will teach you how to do things and make you a lot better. He'll stretch you. But if you don't listen to his advice, he won't waste his time giving it to you. He's not going to put his money where he's not putting his experience and knowledge to work."

This is a classic problem for fledgling business owners. They think they know more than they do, and, they don't want to tap into the experience and knowledge of the people who have been through the wars before them. Fishman, says Sells, doesn't fall into that category.

"He's scrupulously honest," Sells says of his protege. "He's the kind of person who is always searching for new and better ways to do his business. He is very eager to tap the brains of other people. He doesn't have the 'not-invented-here' syndrome at all."

And, as good as the ideas are, it is Fishman for whom investors are putting their cold, hard cash on the line. One of his first investors in All Wound Up was a neighbor, David Weiss, president of Lucerne Asset Management.

"It wasn't the business," Weiss says. "Really, retail is not the best way to make money. But the thing about Stu is that he's probably more concerned about his investors' money than his own. That's what keeps him working hard.

"He works unbelievably long hours to make sure everything works."

Weiss points to Fishman's days at All Wound Up.

"At the time of the toy store, if you went by his house at 10 o'clock at night, he'd be taking phone calls from all the stores with their daily sales. Part of what makes Stu successful is not only the idea, it's really more the effort he puts in."

And, while Fishman certainly welcomed investors' money, for Weiss, buying in wasn't that easy.

"I used to live a couple doors down from him, so I knew him," Weiss says. "During the toy store phase, he was looking for money. He didn't want to take my money because I was a neighbor. I kind of pushed him to take money, so he did."

Weiss initially invested $100,000 and put another $50,000 in the next round.

"I think I grossed back a little under $600,000," he says. "I believe the first investment was in there about three years. The second 50 was in there for about two years."

Money is clearly important, but Fishman recognizes there is a larger picture at work.

"For R.K. and myself, it's like having the other half of our brain there," he says. "We know what they've taught us, but we don't know what they haven't taught us yet. We've got a whole new series of questions to learn. And it's really a treat."

The people

It's not just the money people that help Fishman. Like most entrepreneurs, he is quick to credit his staff and partner for corporate success. He once described the staff at All Wound Up this way: "We have a great staff here. That makes it a lot easier. We've got a bunch of 12-cylinder engines. I try and hire everybody smarter than me."

That includes Khosla, who worked with Fishman on All Wound Up.

"We have a kick-butt core," Fishman says. "We're very fortunate that all of them were available to be picked back up by us. We have R.K., who I absolutely love to death, and myself. It's like having a brother you get to work with."

Fishman and Khosla brought back as many of the former All Wound Up workers as they could for the new venture.

"It's all the same old gang, which is sort of nice," Fishman says. "It's difficult to say how important it is when you know people that work well together and always do good work. You can go out and find other people who have those skills, but it's not family."

They feel the same way about him.

"What I like about Stu is he has energy to burn and he does what he says he's going to do," says Bill Skerl, who retired from All Wound Up but agreed to come back to help make OneWorld a viable enterprise. "When he first started with the business, I teased him. I said, 'There's no way in hell you're going to open up all those stores.' As I went along with him in the program, he met every objective.

"He really puts the time in and the effort. I respect him because he's good with all his people and he does a lot for everybody."

The two met while Fishman was at AT&T and sold Skerl, who worked in the operations department at Picker International, a new phone system. Over the years, they became friends. Eventually, Fishman convinced Skerl to join All Wound Up as a regional manager.

"I don't think a whole lot of people could do what he does," says Skerl, who thought he had retired last March. "I know I couldn't. I just don't have the energy level that you need. He works harder than anybody else. As hard as we work, we know that he's doing even more than that."

The lessons

Success never comes easy. Entrepreneurs pay the price several ways -- failures, broken marriages, bankruptcies and other tragedies. Fishman has avoided the worst of the worst, only facing one failed business and little more.

Still, he's learned numerous valuable lessons along the way, such as to keep ideas in the pipeline and learn to recognize the wheat from the chaff.

Before Fishman and Khosla settled on, they kept a list of more than 30 business ideas. And, when this project is complete, you can be sure the two will glance at the list again. Where it will take them, however, even Fishman doesn't know. But, he does recognize something his mentor, Boake Sells, told him.

"You have to honestly evaluate what you're doing," he says. "If you're doing something stupid, you can't blow smoke up your own ass. That's from Boake Sells -- never blow smoke up your own ass. It's the truth. If you're doing something that doesn't make sense, stop doing it."

Fishman says it's taken him a long time to recognize that.

"Sometimes, I'll see somebody's business plan and it's a dumb idea," he says. "People should be able to do that for themselves. You just have to take a good, hard look at what you're doing and determine what your strengths and weaknesses are. And make sure you've got a kick-butt team around you to make up for your weaknesses."

The second lesson he learned was to move quickly. When you finally make the decision to start a business, speed is of the essence.

"It doesn't make any sense to take it slowly," Fishman says. "It doesn't give you any advantages. You have to seize your opportunity when it's there because it's not going to be there tomorrow."

A third lesson is that business decisions must fit in with the core competencies of the strategic plan. The people who invested their time and money in Fishman recognized that he understands that.

"There are some ideas that are adjuncts to this business," he says. "We use something that John Shields taught us to test it. He says, 'Do the test. Is it tactical or strategic? If it's tactical and it's going to divert you at all from your strategic mission, don't do it -- even if it makes you money. Always stay on your strategic tact.'"

When Fishman founded All Wound Up, he stuck to that philosophy and it made all the difference.

"We had an idea at All Wound Up that we went to the board with," Fishman recalls. "That's really where we got this thinking from. John asked, 'Is it tactical or strategic?' We said, 'We'll make a lot of money.' He said, 'But is it tactical or strategic?'"

The idea, as it turns out, was tactical. The board rejected the idea and remained focused on its core competencies.

"I use that as my litmus test," Fishman says. "If it's opportunistic and tactical, it takes more resources than it's worth. Stick to the business plan, stick to the strategic issues. You've only got so much horsepower. You can't do everything. You can't spread yourself that thin."

A recent buying trip in Indonesia for OneWorld2U re-enforced that sentiment. In a 12-week period, Fishman spent only three weekends at home. That's a lot of time away from one's family. And, at this stage of his career, he realizes it's something he can no longer do.

"I do love it, start-ups, but this will probably be my very last one," Fishman says. "But I've said that before. And the only reason I say that now is because I'm 46 years old and it takes a lot out of you."

That doesn't mean he will eschew start-ups from this point forward. Instead, he's looking to his investors for inspiration.

"That's what I'd like to do next," he says. "I'd like to do what those guys do -- serve on boards and make people better. You don't necessarily have to be an angel investor to do that kind of work."

And, he recognizes that despite the constant entrepreneurial itch, you don't necessarily have to be able to paint a new business every few years to do that, either. How to reach: OneWorld2U (440) 247-7400 or

Daniel G. Jacobs ( is senior editor of SBN .