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By Glen Sparks
As Tom Ruwitch looks around his new business, he sees a good product and happy customers. Then again, it looked that way just before his last business failed.
That was in the fall of 2000, 18 months after the Internet entrepreneur co-founded his Web site, SportsHuddle. In just a year and a half, he had grown from three founding business partners to 85 employees. The company had rented space in the old Brown Shoe Building. Local media endlessly trumpeted the success of SportsHuddle during the dot.com craze.
Ruwitch’s customers were big time, too. Some of the largest newspapers in the country—including the Los Angeles Times, the Chicago Tribune, the Washington Post and the Boston Globe—had hired SportsHuddle to compile high school sports statistics and link them to prep sports fans across the country.
 Tom Ruwitch is president of Marketvolt, a
company that provides software and consulting services for e-mail marketing campaigns. |
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Then, with only a few days of warning, the investment money went dry. After two rounds of layoffs, Ruwitch and his partners sold their business to Waveshift, a company out of California. Now, four years later, the former SportsHuddle operates under the name MaxPreps.
Ruwitch, meanwhile, is president of Marketvolt, a company that provides software and consulting services for e-mail marketing campaigns. Clients create newsletters, promotions and postcards. They manage their mailing lists, conduct and track online surveys, coupons, pledge forms and sweepstakes.
What is he doing differently this time around? Ruwitch, a graduate of John Burroughs High School and Yale University, spoke about his entrepreneurial efforts, both past and present, during a recent interview.
In 1999, Ruwitch, Matt Coen and Doug Villhard founded SportsHuddle after working together on some of the St. Louis Post-Dispatch’s early Internet efforts. Ruwitch, now 39, had also done a three-year tour as a reporter for the Belleville News-Democrat.
It was Coen who drew up the initial plans for SportsHuddle. The company melded Ruwitch’s lifelong passion for sports with his career interests in journalism and the Internet. “We saw an opportunity and we went for it,” says Ruwitch, a three-sport athlete at John Burroughs. “The Internet was clearly changing the way business operates. That remains true to this day.”
Back then, the SportsHuddle founders thought big. They wanted to create not just an interesting Web site, but something much bigger. Instead of simply compiling sports stats for large-circulation newspapers, they wanted to create an online high school sports magazine. They wanted to see Sportshuddle youth camps; they wanted to hand out SportsHuddle awards; they wanted SportsHuddle to be a brand.
“We always recognized that our business would not be solely on the Internet,” Ruwitch says. Still, 65 of the top 150 leading circulation media outlets had hired SportsHuddle for its Internet expertise.
“Some of the most powerful media companies in the country loved us and loved our product,” Ruwitch says. “They were using our software to generate high school sports stats and we never blew a deadline for anyone. We built personal contacts with all of our clients and emphasized customer service.” At its height, Sportshuddle was on track to encompass 90 percent of the high schools in the United States.
Almost over night, everything soured. Investors, eager for profits rather than promises, ordered the payroll cut at SportsHuddle and other Internet firms. In October 2000, SportsHuddle cut about half its staff. One month later, it let go the other half.
“We were in business for 18 months and had a plan to be profitable in three years,” Ruwitch says. “The investors wanted us to be profitable in two years. In a sense, we were ordered to play a game that was different from the game we signed up to play.”
He adds, “The environment turned so fast. The media celebrated the dot.com economy. People wanted to be a part of it. Then, suddenly, nobody wanted to be a part of it. A lot of bad companies disappeared when the bubble burst, but a lot of good ideas were ended, too. That’s a shame.”
When it comes to rags to riches to rags again stories, Bob Brockhaus has heard them all. As head of the Jeff Smurfit Center for Entrepreneurial Studies at Saint Louis University (SLU), Brockhaus has worked with fledgling companies for years. U.S. News and World Report ranks the center as one of the top entrepreneurial studies programs in the country, and Brockhaus and his wife, Joyce, also run the Brockhaus Group, a business consulting firm.
It helps that he’s been in the trenches himself. Brockhaus was an up-and-coming executive at Ralston Purina until he grew tired of the traveling and job transfers. After seven cities in seven years, he decided to call it quits.
He opened a restaurant in North St. Louis County, while teaching part-time at the University of Missouri-St. Louis. A few years later, he sold the restaurant at a profit. Then, after the owners muddled around, he bought it back and sold it again for another profit.
| As head of the Jeff Smurfit Center for Entrepreneurial Studies at Saint Louis University (SLU), Bob Brockhaus has worked with fledgling companies for years. |
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Now Brockhaus, 63, spends much of his day talking to ambitious, would-be entrepreneurs who are enrolled in the MBA program at SLU. Frankly, he tells them to think twice about opening a business.
“Well, actually, I tell them to think four or five times,” he says. “I tell them that it typically takes two times as much money as they might think to get the business going. It typically takes two times as long as they might think to show a profit. I ask them, ‘Are you prepared to mortgage your house?’”
Learn as much as you can, Brockhaus says. Anyone interested in starting a restaurant should go work at one as a cook or a server. Better yet, go work at three or four restaurants. Work at one as a cook and another as a server.
Think big, too. The idea of opening a restaurant, bar or clothing store is popular with student entrepreneurs. But those ideas offer the most risk and the lowest reward. Think of something new. Think outside the box. Fresh ideas offer the least risk and the most reward. That’s because Brockhaus says new products don’t need to be perfect; they can still be full of bugs. But if the demand is there, people will buy them anyway.
Studies indicate eight out of 10 businesses fail. That might be a misleading statistic, though, Brockhaus says. Some people close their business because it no longer interests them, not because it is bleeding red ink. Some businesspeople sell at a tidy profit.
“I got out of business, so am I one of those eight out of 10?” Brockhaus says. “Maybe, but I don’t look at it that way.”
Often, entrepreneurs succeed the second time around. They learn from their mistakes. Here is one important tip Brockhaus can offer: Do not take business failure personally, because success can come the second time around.
“People who do not succeed the first
time have taken an on-the-job class in Entrepreneur 101,” Brockhaus says. “You just need to remember to keep the passion.”
It didn’t take long for Ruwitch to try his luck again as an entrepreneur. He got
the idea for MarketVolt after studying SportsHuddle and some of the other successes and failures from the dot.com craze. Several companies that came and went utilized the same media model—build a Web site, drive an audience to the site, and sell advertising space to companies looking to expose their brand to the audience.
“But it’s not the only model, nor is it always the most effective model, for connecting buyers and sellers online,” Ruwitch says.
That’s where targeted e-mail comes in. Ruwitch says it has several advantages over traditional Web sites. Companies can send every e-mail for a miniscule cost. Also, they know something right away about customers, depending on whether the customer opens the email, clicks on different links and answers the questions.
“This is knowledge that you can’t acquire through traditional direct mail or through passive media models,” Ruwitch says. “It’s about beginning a dialogue with your customers.”
This time he’s growing the company slowly—a luxury he didn’t have during the go-go business climate of the late 1990s. “If you didn’t grow as fast as you absolutely could, you were being left behind,” Ruwitch says. “It’s important to note that I’m not saying that one way is better than the other. I’m just saying how things were at the time and how things are now.”
Ruwitch also is not relying on money from investors. Marketvolt is a division of a larger firm, Foundry Software. Marketvolt does not put money into new product development or hire new employees unless or until it has the cash to do that. This makes it a less risky venture than SportsHuddle, he says.
Marketvolt’s clients include Ameren, Talx Corporation, the O’Brien Corporation and Aspen Athletic Clubs, plus several major advertising and public relations firms. The company is growing every day, he says. Ruwitch is back to being an entrepreneur.
But Ruwitch shrugs off any suggestion that he might be a “risk taker.” He rejects any notion that he is like a surfer trying to catch the next big wave. He insists that he is not searching for the elusive Next Big Thing. It isn’t like that at all.
“I think there’s just such a great satisfaction is running my own business,” Ruwitch says. “You start something and you see it through. If you find the right challenge, and you succeed, it’s exhilarating.” |
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