Successful Female Entrepreneur Tells Her Story

How can a company with no business plan, no offices, and no track record become a multi-million dollar business? That's exactly what I asked Rosalind Resnick, who took her company, NetCreations, from a two-person home based startup in 1995 to a public company generating $58 million in sales. She recently addressed a group of internet entrepreneurs at an iBreakfast meeting I attended. After listening to the program director, Alan Brody, give a short introduction about her, I knew I needed to find out more, so I asked her for an interview. She graciously accepted, and I've posted the details below.

Where did you get the idea to start an email marketing company?

NetCreations started out as a Web design firm in 1995. Pretty quickly, we began to see that our clients needed more than just cool Web sites – they needed a way to get people there. We pioneered opt-in email marketing as a way to connect marketers with the consumers and business people who wanted more information about their products and services but didn’t want to waste time surfing the Web trying to find them.

Did you have a business plan?

No. We didn’t have a formal business plan until our company went public.

How much money did you start out with, and where did it come from?

We started with $1,000. My partner and I contributed the capital.

What did you use the money for?

The money was just to open our bank account. My partner was a Web designer and programmer who worked at our local ISP [internet service provider] so he had the technical skills that we needed. I was a journalist who had just written a book about doing business on the Internet so I did the sales and p.r. and brought in the clients.

What happened after that? How did the company get sooo successful in such a short time? Did you ever imagine it would grow as much as it did?

Our big break came when a circulation manager from Ziff-Davis tested our lists in the fall of 1996 and got a response far better than anything he’d ever achieved through postal mail or telemarketing. Once we realized that we were in the direct marketing business and that companies like Ziff-Davis needed to be able to mail to millions of names in thousands of different categories, we started putting together a partner network of high-traffic Web sites to build our database.

What were the most crucial factors that helped your company achieve success?

Building a partner network of Web sites that sent email addresses to our database and partnering with list brokers, ad agencies and resellers to market our lists to Fortune 1000 clients

What mistakes do you see startups making the most?

Failure to plan. While some companies fail because they lack capital, many more startups go under because their founders lack management experience or because their business models don’t add up.

What advice do you give your startup clients?

Don’t be afraid to try new things and make mistakes. As long as you learn from your mistakes, you’ll be all right.

It's interesting to see how by building a partner network you can grow your company faster and larger than just by yourself. That's definitely something that Mogulettes-in-the-making need to think about: who can refer clients to me that isn't in direct competition with me? Pet care providers can team up with pet stores, life coaches with career counselors, children's entertainers with babysitters, I could go on and on.

Rosalind is now using the valuable knowledge she gained from her experience to help small businesses become successful through her company, Axxess Business Consulting. She's also one the experts "on call" at Entrepreneur.com, where she and a handful of others answer questions related to startups. And as if that weren't enough, on top of that she writes a blog, Vest Pocket Consultant, with more information on small business. Thanks Rosalind!

Springboard Luncheon with Christie Hefner

Did you know that 3 out of 4 companies are started by women, but only 10% of venture capital funding goes to women-owned businesses? That's pretty sad. Here's another one: women own more than 50% of the wealth in the U.S., but only 8% of those funds are allocated to investing in start-up companies. If you're a small business looking for alternative ways to finance your growth, funding from private investors, aka angel investors or venture capitalists, could be an option for you.

Traditionally this segment of the market has been dominated by men, but an organization called Springboard Enterprises is changing that. For eight years this nonprofit, which was founded by Kay Koplovitz, has been helping female entrepreneurs get access to money through the equity markets, while at the same time encouraging women to invest in women-led companies.

I was lucky to have been invited to a recent luncheon sponsored by Springboard, and the key note speaker was Christie Hefner, CEO of Playboy Enterprises (below left), who gave us a fascinating account of how she got started in business. She studied law and journalism in college back in the 60's when it was all about anti-establishment, so the last thing on her mind was going into the corporate world. However, after working as a journalist for some time her dad, Hugh Hefner, urged her to move to Chicago and join his company, where she would start from the ground up. There were a great many high caliber journalists that contributed to Playboy, and the young Ms. Hefner was very much attracted to the intellectual challenges the magazine presented, so she signed on.

A few years later, during the 80's, Playboy went into financial trouble, and after a management shake-up Ms. Hefner, then just 29 years old, suggested she become president and work alongside the CEO, whom she admired greatly. Soon after taking the post, they started dumping losing lines of business and focusing on "managing for cash", keeping track of cash on a weekly basis, as opposed to quarterly as had been done in the past.

Some time later she got a call from Michael Milken, the "junk bond king", who invited her to meet with him in his offices. After asking her a few questions about the magazine, he announced he could raise half a million dollars from her. Ms. Hefner was dubious at first, concerned about taking on a heavy debt load, and not knowing exactly what to do with all that money. Milken's response: "First raise the money, then figure out what to do with it!"

That she did, first of all by seizing an opportunity in cable TV, realizing that channels could become a destination in and of themselves, as opposed to just tuning in to watch a particular show. To this day Playboy TV, which she says is targeted to couples, is in 100 million homes and is their biggest profit center. Ms. Hefner pointed out that magazines need brands and content that live beyond its pages, and they have been one of the few able to successfully take a brand into a whole new medium. Case in point: they have Playboy the magazine and Playboy the channel, unlike Time Magazine and CNN.

In 1992-93 she met Jim Clark, who had created Mosaic, which would later evolve into Netscape. Those were the early days of new media and Ms. Hefner was trying to figure out what the world wide web meant for Playboy, so she asked Jim for help. He suggested she build a site and put Playboy on the web. Playboy.com is now their fastest growing profit center, and where they monetize traffic in a variety of ways: e-commerce, international deals, social networking, etc. The internet, she says, is a transformative technology, and she quoted a few stats: 15% of newlyweds met online, and more text messages are sent and received every day than there are people on the planet.

For the future? She sees a move toward more user-generated content, which is why they've launched PlayboyU, a college-only, no nudity social network.

It was quite insightful to see how Ms. Hefner, by asking experts for help, was able to take her company to places she might not have ever envisioned. That's a big lesson for someone like me, who often thinks I can do everything myself!

That help is what Springboard's founder, Kay Koplovitz (that's me next to her on the right), offers. By putting together a team of investors for female-owned startups, Ms. Koplovitz, along with the company's president Amy Millman, has made many a dream come true for women launching their own businesses. Sounds like a familiar theme - I definitely want to follow in their mogul-ific footsteps!

Startup Camp and UnConference

I just came back from two days of intense information swapping with a couple of hundred other internet startups and I have to say I felt as if instead of New York I was actually somewhere in Silicon Valley. Labeled the "Start-up Camp: An Un-Conference" by its organizers, the event was unique in that the participants decided what topics to cover in many of the break-out sessions, as opposed to having an agenda forced upon you. Those that had a subject they wanted to discuss (me!) went to the front of the room, announced the title of the issue they wanted to cover and posted it on a large board. Anyone interested in joining the discussion would gather around at a designated area. We spent the whole afternoon going from table to table, and conversation to conversation, to chat with other business owners, and figure out solutions together.

I like this format because, in launching their own businesses, entrepreneurs usually accumulate a ton of information on various topics, so in a sense we become experts ourselves, and that allows for a very useful - and lively - exchange.

My big question was how to use online social networks (blogs, Facebook, LinkedIn or others) to market our businesses. I found out that companies online are coming up with applications, or software, they can customize to attract potential clients. One startup called 8 Coupons is looking to devise a widget that people will place on their Facebook page to let their friends and contacts know what discount coupons they're using in their neighborhood, and in that way drive traffic to their site, which offers the coupons themselves. (For more on how to use Facebook for business see Marci Alboher's recent post, and check out the November issue of Inc. Magazine to see how 5 companies are using widgets as a marketing tool - unfortunately the article isn't available online as of yet.)

Another way to use social networks is to have people leave testimonials about you on LinkedIn, or, you can respond to questions that people pose in the "Answers" section - you'll get top billing as an "expert" if you reply to enough of them. This is one subject that's evolving as we speak and it's definitely peaked my interest, so stayed tuned for updates.

From there we went on to something called "speed-geeking", which is similar to speed-dating but instead of potential partners showcasing their romantic talents, entrepreneurs tried to get 3-4 participants to "fall in love" with their business ideas for 7 minutes, at which point a horn would blow and the crew would move on to the next startup-in-waiting. I was able to see first hand which pitches worked and which didn't, and to realize that I have some work to do with regards to my own pitch...(yikes!).

There were almost two dozen hopefuls vying for the Best Startup prize, with some very innovative ideas. The winner? A company called UpNext.com (that's the creator on the left) who offers 3-D mapping of Manhattan with a social networking component. The 2nd place prize went to BricaBox.com, makers of website building software, and a company called BeenVerified, which verifies that you are who you say you are online, won 3rd place.

As I walked out I stopped by to chat for a few minutes with John Havens from BlogTalkRadio and gave him my quick thoughts on the event (click here if you'd like to listen to the 7-min. podcast).

I got home exhausted but with my head full of ideas. Get ready for Mogulette Camp!

Money, money, money

Do you have a clear idea of how much you need to spend on your business? I recently attended a seminar held by the Women's Venture Fund, a non-profit organization that provides loans to female entrepreneurs. Betty Yee, who led the presentation, pointed out that most women that start out businesses are underfunded. That means that they either fail to get funding or the funding that they get is too little.

That made total sense to me because I'm always worried about spending money, but that type of mentality won't get me very far. Playing small does not help the world, as Marianne Williamson would say. To create a company we need to dream big, and for it to operate, we need to spend money. But the question is how much? And how do we allocate those resources? That's where the business plan comes in. So I'm booking a session with one of the friendly business counselors at my local Small Business Development Center to help me figure that out.

But thinking big doesn't mean I can't run a lean operation. One way I saved money recently is by designing my own business card. Microsoft Publisher, which comes built in with Microsoft Office, is a great tool for this. I picked one of their templates (loved this retro/modern look, see below) and changed the color and added a few details to it and... ba-da-bing!

I took it to Staples, bought some of their business card paper and had them print the cards in their color printer, which is much better than my old clunker, but you may be able to use yours. In the end it may have cost a little more than Vistaprint (about $14 for 100 cards) but the big advantage is that I can change it anytime if I need to and don't have to wait around for the order to get shipped to me when I need more. I can also use the same template I created for other marketing materials, like flyers, banners, etc. Very nifty!