It was the early 90’s before the internet was even a gleam in the eyes of the early domain investors. I was 20 years old living in the bustling island of Manhattan and like so many 20 year olds today, looking to be the next great entrepreneur. I ran with a diverse and interesting group of people back then, several of whom paid for everything in cash and only used first names.
While out on the town one evening I got to talking to one of my acquaintances and after a few drinks shared my thoughts of running my own business in the city. “What type of business?” he asked. I thought for a moment and said, “How about a tanning salon? It should be relatively simple to set up and it is predominantly a cash business.” “Nice!” he said, “Get your business plan down on paper and we’ll talk.”
By the next afternoon I had already visited 3 tanning salons in my area. Since I knew absolutely nothing about the tanning business other than having used a bed before, I decided to pose as a kid from N.Y.U. and use my “social engineering” skills to gather Intel. I explained I was doing a thesis on operating a tanning business and needed to know how much their overhead was and what the business entailed. You would be surprised at how many people willingly handed over everything from electric bills to their books! I gathered the information, went back to my apartment and proceeded to average the numbers and draw up a plan on loose leaf paper.
I have to admit I was pretty proud of my little hand written plan, especially since I had no prior experience putting a pitch on paper. I met with my friend, handed over the stack of paperwork nestled in a blue binder and waited for a response with bated breath. “That’s pretty good kid!” I was relieved. “I’m going to send a car for you tomorrow and we’re going to have a meet.” A what? “Yeah, I have to run it by some people first but uh, I think we could put you in business. See you tomorrow at noon.”
Promptly at noon a big black Mercedes with unusually dark tinted windows arrived at my Chelsea apartment to collect me and my wondrous plan. We pulled up to an Italian restaurant somewhere between Midtown and the Upper East Side and I was promptly ushered in by my friend who had arrived just prior. The restaurant was empty but all the way in back there sat a long table filled with men in a vast array of jogging outfits and custom tailored suits. When I tell you it was like being in a scene from the Godfather, it’s an understatement. My friend and I took the two seats waiting for us in the middle right side of the table. Within 10 minutes I was asked to hand over my now sad looking little plan, and remain quiet. The plan was passed from hand to hand until it reached an older gentleman sitting at the head. He looked over the pages for what felt like 5 hours but in reality was probably like 60 seconds, passed the limp blue binder back to my friend without saying a word and continued conversation with the men sitting next to him.
Moments later my friend decided we should gracefully exit and grab an afternoon cocktail. As we entered a different big black Mercedes and made our way downtown he leaned over and whispered, “You did it kid, you’re in.” Huh? I thought it was a total bust! I mean, I thought the lose leaf pages were permanently glued shut with Sambuca! He grinned from ear to ear and said, “Not only do they want you to open one tanning salon, they want you to start a franchise throughout the boroughs. Drop whatever other projects you have and you’ll start looking for property first thing tomorrow. I’ll send a car.”
I lay in bed that night half excited and half panicked. I knew I had a decent plan regardless of the presentation, but at the same time something was telling me I was way out of my depth. After about a full 2 hours sleep, I guzzled my morning coffee and prepared to start the commercial property search. The Mercedes pulled up but this time my friend was waiting in back. “Morning kid, you ready to start negotiating?” I thought I was going to vomit but managed a faint “yeah, sure…” as we proceeded to the first stop.
Upon arrival a tall, thin, well dressed redhead greeted us and introduced herself as the broker who would be taking care of us. As we walked around the empty property I asked her pertinent questions and tried to hold on to the confidence I once felt before this whole thing started. By the third property I started to feel something wasn’t quite right. I told my friend I needed to take a break and head back to my apartment. “Sure kid. Listen, don’t let this stuff overwhelm you, this is pretty standard. We’ll continue looking for a space this week. Once we get the first tanning joint set up the rest will be a piece of cake.” At that he dropped me off, smiled and said to call him when I was ready.
You’re probably thinking at this point, “Boy, you must have been so excited! They really liked your proposal and believed in your vision.” I knew better. Sure I thought my plan was passable and I’m a confident person who can learn on the fly but this was way too fast with not enough information. I started to ask myself questions. Did I know anything about the people I was about to sign contracts with?… No. What happened if the business didn’t take off right away and I found myself deep in debt, would I end up at the bottom of the East River?…Maybe. You may laugh or think ‘that is just ridiculous’ but let me tell you, people that lend out that kind of cash don’t mess around, whether they are of Italian decent or not.
I called my friend the next day and gracefully bowed out of the deal. I hadn’t signed anything yet and no money had exchanged hands so there were no hard feelings. I decided to take a nice Florida vacation after that and rethink my original goals and reasons for starting a business. If you’re wondering if I ever regret not becoming the “Tanning Queen” of N.Y.C., the answer is no. I know beyond a shadow of a doubt that the right decision was made. I mean hey, I was a 20 year old kid and just being given that opportunity was an accomplishment in itself.
If becoming an entrepreneur is your passion it can be tempting at any age to take a deal, especially if you are struggling financially. You have to step back and ask yourself, “Is this what I really want? How much control of my company am I giving up? Who are the people that want to jump on-board with my fabulous idea?” If you really have a winner than you should be confident in your plan and be willing to wait for the right fit. Just because you get an offer doesn’t mean it’s the right one.
Since then I have owned several businesses, some with partners and some solo. I’ve had successes and failures but they have all been on my own terms and I have learned a great deal. That is one of the things I love about the domain industry, most people are playing by their own rules. I think going the VC or Angel route for someone, especially if you are young, can be very rewarding as long as you prepare and don’t get caught up in the hype that surrounds it. Hold on to your confidence, ask the right questions and above all else trust your gut! And remember use caution and common sense if you ever find yourself dining in the back of an obscure Italian joint with your prospective investors.
Till Next Time,