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So, we got quite a response from the last Insider/WOW’s that went out last week. It’s pretty cool to see other entrepreneurs (past and present) responding with their own WOW’s and lessons learned AND encouraging us to share those lessons with others. On that note, if you have your own WOW’s that you’d like to share with the MouseDriver Community, please feel free to respond to this email or to post it on the discussion forum (www.mousedriver.com/forum). That way, you’ll be able to share knowledge with all sorts of aspiring entrepreneurs…not just the two of us!

Alright, we know its been awhile since the last Insider, but we’ve got a couple of pretty good excuses. In addition to trying to find our ‘next’ opportunities (respectively), we both felt that we needed to take some time to gain a little perspective on what’s happened over the past 40 months. So, with the company officially shutting down in 11 days (that’s a good thing by the way), we’re ready to share our “words of wisdom” with subscribers. What you’ll read in the next few Insiders is simply based on our own personal experiences and may not reflect the lessons learned by other entrepreneurs. Everybody is different. But in the end, we hope to provide you with some key points to take along to your next venture, project, job or experience. Once we’ve highlighted the WOW’s (Words of Wisdom…around 18), we’ll send out a final Insider that highlights the 5 big mistakes that we made. Should be interesting.

A couple of things here. First, look for our “words of wisdom” Insiders coming out over the next few months…great for anybody thinking about starting a company or already there. Second, all of the Insiders are now available for download in .pdf format on the website…we’ve even added a few extra bonus features.

We apologize for taking so long on this Insider…just too much stuff going on right now. Next one will go out within the next five weeks or so. And as usual, please check out all of the book comments on Amazon and feel free to post your own…we love checking those things out!

Lessons Learned

Well, after a couple of months of some serious self-reflecting, the two of us have finally made the decision to ‘officially’ search for new job opportunities. That’s right, we’re movin’ on! Now, before the depression kicks in for some of ya, let’s go over a couple of points. First, we never intended to build a sustainable company. When we sat down to create the business plan for this thing, it wasn’t to build out the next Sony or the next Logitech. Our vision was simply to bring a new product idea to market, sell as many as we could over an 18-24 month period, bank our millions and then move on. Hell, even calling Platinum Concepts, Inc. a company is a reach. It’s more of a project. (Most of you know by now that we were a little naïve in our time frame and financial projections). Second, just because we’re looking at other opportunities doesn’t mean the company goes way. Quite the contrary. We’re still selling MouseDrivers, we’re still building out distribution channels and we’re still trying to find somebody to buy all of the MouseDriver assets. It’s just that the majority of our time will be spent looking at our next individual career moves. To get a better idea of what each of us is looking for and what we’ve been able to accomplish over the past few years, just check out the links below and let us know your thoughts!

John (www.mousedriver.com/aboutjl.htm)

Kyle (www.mousedriver.com/aboutkh.htm)

So where does all of this leave the Insider? As we’ve said to many of you, we’ll continue to write the Insider as long as we feel like we have information and insights and as long as people want to hear them. Who knows, maybe one of us will become a US President and everyone will finally get realistic accounts of what it’s like to work in the oval office. The
bottom line: the Insider will live on….just have to figure out what adventure it’s going to cover next. In the meantime, the two of us have decided to focus the next few MouseDriver Insiders on the ‘real’ lessons that we’ve learned during this entrepreneurial adventure. Now that we’ve had some time to look back and reflect, it’s really easy for us to pinpoint
what we think are very key insights for anybody looking to start their own company. We don’t have all the answers by any stretch of the imagination, but we certainly understand what we did right, what we did wrong, what we could have done better, what the emotional roller coaster is like and what kept us going over the past 36 months. What we’re going to do is package all of these insights into the next few Insiders and leave all of you with a very nice close to the MouseDriver chapter. Hopefully (praying), we’ll be able to invite you to join a new chapter of Insiders in the very near future (as in ASAP!).

In case you haven’t figured it out, the MouseDriver story has actually become bigger than the MouseDriver product. What started out as a simple marketing strategy to tie a story (and an emotion) around our product has led to an incredible amount of press, a cover story, book deals, potential Hollywood opportunities, a phenomenal network of entrepreneurs, professors, students, etc. and who knows what else. We’re not too sure exactly what the ‘story’ did for us from a sales perspective…way too hard to measure…but we’re pretty confident that it helped. But damn, can you imagine what sales would have been like if we were able to build out all of our distribution channels as the story was getting big. Timing is critical, right?. Anyway, because the story is now bigger than the product, we’re seeing more people associating MouseDriver with the thrilling ride of entrepreneurship rather than a novelty computer mouse that looks like a driver golf club. Which is fine by us…just means that we need to do what we can to continue promoting MouseDriver as a metaphor for entrepreneurship and to continue motivating and inspiring others to live the entrepreneurial experience. Things are going well thus far. As of Monday, August 5th, 32 professors around the world are using the Insiders and/or the MouseDriver Chronicles as an educational tool in the classroom. Now that is cool!

So what are we doing to promote our experiences and continue building out the ‘brand’ that MouseDriver has come to represent? Right now, we’re focused on the website. . We’ve totally modified the website and made it less product-centric and more community based. The idea here is to promote the fact that MouseDriver has become a metaphor for the entrepreneurial experience and to inspire and motivate others to take the entrepreneurial plunge. While the site still needs a ton of work (keeping it simple right now until we figure out what to add), we’ve managed to succeed in driving some traffic to the discussion board. Now that we have some traction on that thing, we’re going to spend a little bit more time making sure that the board is providing tons of value to visitors. That means adding moderators, changing/adding topics to reflect the needs of visitors, dedicating sections of the board to certain groups (i.e. students and professors) and basically taking a more proactive role in generating discussion. As the board continues to gain in popularity, we’ll start adding other things to the site…a resource section, an area to attach standard documents such as NDA’s, sales rep agreements, etc, a chat room, etc. The vision is that this site become THE place for entrepreneurs to ask questions, share ideas and discuss their experiences. We’ll see…

What We’ve Done

• Redesigned the website to reflect more of the entrepreneurial experience that MouseDriver has come to stand for. Let us know if you have any suggestions.
• Contacted a bunch of ASI distributors and retail distributors in an effort to get them to pre-pay for large inventory investments. The jury is still out on this one.
• Spoke with a talent agency in Hollywood about the possibilities of putting together a talk show focused on entrepreneurship. We give this as good of a chance as seeing the MouseDriver TV Sitcom on the air next fall!
• Started to streamline basic operational stuff in order to cut down expenses.

Priority Goals

• Sell the company assets and return as much money as possible to our investors. This is, by far, our biggest goal.
• Put all of the Insiders in a very easy-to-read format so that anybody can download one document off of the website and check them out.
• Find out through discussions with professors and students how our story is being used in the classroom.
• Find jobs and start the next ‘adventure’!

Mood Meter

We’re stoked! There’s a certain freedom associated with committing to a decision and knowing that you’re moving on with the next phase of your life. We’ve had a phenomenal experience, one helluva ride and the opportunity to accomplish some really great things. But it’s time to move on, to leave this chapter behind us and to look for the next life adventure. After all, isn’t life all about experiences? When we’re 80 and pushin’ shuffleboard in some retirement home, at least we know we’ll be able to talk about those crazy three years in our late 20’s/early 30’s when we decided to go against the grain and bring a novelty computer mouse to market. Sure beats the hell out of wondering ‘what if’ and talking about all of those great corporate retreats! 🙂

Just want to take the time to thank all of you for all of the phenomenal comments regarding our book, The MouseDriver Chronicles. Really seems as if that thing is having an impact on people. If you want to check out some of the reader comments, please visit Amazon. And feel free to post your own comments as well…our parents (and us) love checking ’em out. Also, the discussion board is starting to gain traction. Any questions?

Lessons Learned

OK, so it’s very clear that selling a company (or the assets of a company) doesn’t just happen overnight. We basically knew that going into this process, but now we are keenly aware that, as in starting a company, selling a company requires a ton of patience. And it’s not like we’re just sitting around and waiting for things to happen. With the help of our independent banker we’ve developed a substantial list of potential acquirers, put together a one page ‘tear-sheet’ highlighting the key points of the company/product, spent countless hours organizing due diligence documents and financial statements (any company that is remotely interested is going to ask for this sort of stuff) and actually contacted a vast majority of the companies on our target list. We’re getting some decent interest, but like all ambitious entrepreneurs, we want more. So, if anybody out there knows of any companies or individuals who would like to purchase a cool product with proven sales, room for growth and about as much awareness as you can possibly obtain, feel free to contact us. By the way, a huge lesson that we’re learning regarding selling the company: Just because we’re selling doesn’t mean that we can slack off. We’ve got to stay focused, , identify goals and continue building out MouseDriver distribution channels as if we’re going to be doing this for awhile. The last thing we want to have happen is a potential buyer passing on us because we were lazy and let sales dwindle down to nothing.

Speaking of sales, we’ve decided to change our inventory investment strategy somewhat. Given that we’re trying to reduce the risks of ordering a bunch of MouseDrivers and not being able to sell them, we’ve decided that all of our inventory production runs out of China will be demand-driven. That is, we won’t be paying for new MouseDrivers unless we know that we can sell them once they’ve safely made it to our warehouse in Southern California. In the past, we’ve forecasted how many MouseDrivers we think we could sell, invested cold-hard cash in inventory, housed MouseDrivers in our warehouse (where we incur holding costs) and then attempted to sell. Now, we’re going to attempt to get actual orders before we invest in inventory…well, at least enough to warrant another inventory investment.. Because we’ll be running orders directly out of China, we’ll be able to offer our channel partners (suppliers, distributors, retailers and ultimately, consumers) better pricing as our costs will be lower. By giving our partners better pricing, we hope to further build out our distribution channels both in the States and in other countries. In a nutshell, we’re really going to try and blow this thing out. We know, we’ve said this before, but we’ve learned some things over the past year or so and think that we might have it figured out now.

So back to the most popular question that we’ve been getting from all of you: “What else are y’all doing?” Honestly, we’re all over the board right now. Seriously. It seems as if we’ve got our hands in a bunch of different things. We’re continuing to sell MouseDriver while trying to sell the company, we’re consulting for a few clients, dealing with book stuff (the book is the #1 listing in Simon & Schusters Fall UK Catalog by the way), trying to pitch the movie/tv rights to studios (can anybody see this as a TV Sitcom?), putting together a business case for our own radio show, motivating aspiring entrepreneurs to just ‘do it’, speaking to university classes and entrepreneurial groups, performing interviews for media publications, meeting with VC’s, private investors and private equity groups (trying to see if there are ways for us to work together), making a ton of introductions to people in our business network, attempting to deal with the company knocking-us off, responding to all of the great comments that we’ve received from people regarding the book and still looking for that next ‘big thing’. Basically, we have no focus right now. And while all of this stuff is very cool, exciting and fun, it’s EXTREMELY hard to stay committed and do a good job when you’re dabbling in a bunch of different things. We really, really, really need to find one thing that we can dedicate the majority of our time to, otherwise, we’ll end up going nowhere and John will continue to work out of his apartment bedroom. Finding this focus is one incredible CHALLENGE and is a great example of where a very seasoned, experienced entrepreneur who’s been through this type of thing before would be of great benefit to us. Any takers? 🙂

Alright, one of the coolest things about being published authors is responding to and meeting with all of the interesting folks who have read about our story. We probably receive 15-20 emails a week from readers who have read The MouseDriver Chronicles and are now more inspired and motivated than ever to follow their dreams and bring their ideas to fruition. We’ve also spoken with a number of entrepreneurs who have gotten to a certain point with their idea and then decided that it was time for somebody else to take the reigns…so to speak. While these entrepreneurs are still very passionate about their ideas, they have come to the conclusion (for a number of different reasons including personal and financial), that somebody else is better suited to execute. Here’s the interesting part: These entrepreneurs are asking us if we know anyone who would be interested in taking on their ‘project’. And it got us thinking…”Hey, maybe there’s a way that we can help match idea people (actually, the ideas we are seeing are well beyond idea phase. In most cases, prototypes/product already exists) with aspiring entrepreneurs who would love the opportunity and challenge of bringing a new product/idea to market.” So…if you or anybody else you know is interested in bringing a new product to market, feel free to let us know. You can’t beat the experience.

What We’ve Done

• Attended our first book club meeting in which the members of the club (about 20 women!) read and then discussed our book. Very cool.
• Began pitching the idea of turning the MouseDriver story into a TV sitcom of sorts to talent agencies and studios.
• Videoconferenced with students and professors from The University of St. Louis and George Washington University.
• Tried to work out a licensing deal with the company knocking us off. They weren’t really open to the idea…whatever.
• Received our first book royalty check a few weeks back. Yeehaa!
• Sold MouseDrivers to distributors in both Denmark and Spain.

Priority Goals

• Steady income. Steady income. Steady income. Steady income. Steady income. Etc., Etc.
• Solidify a “Chinese Menu” of sorts for the consulting side of our business. We’re just now realizing that people will actually pay for all of our knowledge, our network, etc.
• Begin the process of publishing The MouseDriver Insider newsletters so that readers, especially students, professors and entrepreneurs will have a nice complement to the book.
• Prioritize what opportunities we want to focus on and make sure that we don’t get pulled in too many directions.
• Figure out how we can best capitalize on our knowledge and business network.

Mood Meter

We’re not going to bullshit you on this one. We’re really having problems figuring out what to do next and it’s kind of bringing us down. We know we have great experience, we know we want to move forward together on something, we know that we’re in a very unique position with regards to all of this awareness, etc. But damn, we’re having one helluva time trying to figure out how to take all of this to the next level. A part of us keeps saying “Just hang on and something will surface”. However, it’s not like we can just kick-back and wait. We’re kind of frustrated right now and are really hoping to get as much advice and insights as possible over the next month or so. We’re still very excited…just a little anxious.

Check out all of the book comments on Amazon. Absolutely Hilarious! Feel free to post your own comments if you’ve read The MouseDriver Chronicles…we’re having fun reading ’em. Also, the discussion board is back up…watch out!

Lessons Learned

We’re selling MouseDriver!! That’s right. We’ve retained the services of an investment banker and have begun the process of searching for potential acquirers of our MouseDriver assets. Now, for those of you who read the book, this shouldn’t come as a surprise. Our strategy all along has been get MouseDriver up and running and then sell it to a larger company looking to expand their product line (aka “An Exit Strategy”). The way we see it, the timing of this sale couldn’t be any better. MouseDriver has plenty of life in it, especially given that we were only able to penetrate about 30% of our target distribution market. The book is helping to bring a ton of awareness, is helping to “brand” the product and will lead to mass exposure in all of the UK and Commonwealth countries once the book is released overseas in September. So, plenty of both domestic and international opportunities exist for MouseDriver. And, quite honestly, we’re ready to move on to bigger and better entrepreneurial things. We’ve learned a ton from bringing MouseDriver to market and now it’s time to apply all of those lessons learned and embark on new challenges…whatever they may be. In the meantime, we’ll continue to update you on the process and progress of selling a company. This should be a great learning experience for all of us.

So, what are we doing now? First of all, we’re still focused on selling MouseDrivers. We have a tangible product that customers still want and we want to continue extracting revenue until the sale is complete. Second, we’re ready to take this entrepreneurial ride all over again! After working and living together for almost five years (in the same apartment), the two of us realize that our ability to work together is a pretty remarkable asset and that we make a great core team. The simple fact that we want to continue working together on the next entrepreneurial gig is a very true display of our trust and confidence in one another. However, we both agree that the next venture will need to have a much larger market potential than MouseDriver and will need to have much more intrinsic value than a novelty computer mouse. We haven’t found that next idea yet, at least one that we’re very passionate about and can see ourselves dedicating the next 5-10 years of our lives to….but we’re looking. And we’ll continue to network with as many people as possible in hopes of finding the next “big thing”. In the meantime, we’re utilizing our knowledge, insights and network to help other aspiring entrepreneurs get their companies off the ground. As of 3/1/02, we started offering Advisory Consulting Services to entrepreneurs. The way we see it, we can provide immense value to those who are fully committed to following their entrepreneurial passions. We only wish that we had somebody like us around when we first started!

We have successfully completed our first (and most likely last) official book tour. Six cities, 25 interviews and 10 presentations/booksignings later, we’re back in San Francisco trying to get back into the swing of running a single product company. For those of you who weren’t able to make it to any of the events, you missed quite a show. Actually, you really just missed the two of us reading passages from our own book, talking about why we thought the passages were significant, answering a ton of questions from the audience and autographing books. A cool experience. It may sound like fun and games, but the book/media tour was actually pretty damn exhausting. In addition to doing a number of interviews and presentations, we had to constantly answer the same questions over and over again and be prepared to answer totally random questions. At times, it was frustrating, exhilarating, annoying, and exciting…all at the same time. The most tiring aspect of the media tour was that we always had to be “on”. That is, we had to be constantly prepared to answer anything and everything without looking like complete jackasses. Our primary lessons learned: 1) Always have three messages that you want to get across when you’re doing an interview. Most likely, you’ll never get to all three messages, so always focus on mentioning one key message. 2) Never show up to a live 6am interview with no sleep and and/or a hangover. You’ll get absolutely crushed!

We’re going to substantially modify the website over the next month or so. It’ll still be the “MouseDriver” website, and visitors will still be able to gather more information on the product, but it’s definitely going to have some noticeable differences. Given that MouseDriver has become a metaphor for entrepreneurship we’ve decided to give www.mousedriver.com more of an entrepreneurial community look and feel. On the home page we’ll have a tab for MouseDriver, a tab for The MouseDriver Chronicles, a tab for The MouseDriver Insider (we’re actually looking into the possibilities of binding all of the Insiders to date), and most importantly, a tab to our entrepreneurial discussion board. Most of you will recall that our last attempt at a discussion board was a huge success. But once we lost all the data within the board due to a technical glitch last Summer we were too lazy to put it back up. Well, it’s time to make the effort and get the thing up and running again. The way we see it, why limit the knowledge and insights of our network of entrepreneurs, investors, professors, students, etc. to just ourselves….might as well open up all of this great information to anybody who is interested. So, when you get a chance, go register athttp://mousedriver.com/forum/forum.htm and let’s see if we can get this board going.

What We’ve Done

• Put together a company tear sheet and a list of potential buyers of MouseDriver
• Networked with a number of VC’s, angel investors, authors and entrepreneurs in the Bay Area
• Completed a six city media tour that included, 15 radio interviews, 2 television interviews, 10 presentations/booksignings and 8 print publication interviews
• Spoke to 30 different entrepreneurs about their companies and/or ideas
• Kyle got engaged in Sedona on March 9th, 2002 to his fiancé, Angie

Priority Goals

• Continue developing new sales channels for our MouseDriver product
• Prepare for the sale of our MouseDriver assets
• Continue marketing our Advisory Consulting Services and the incredible value that we can bring to aspiring entrepreneurs
• Network with as many people as possible and let them know that, as a team, we’re ready for another entrepreneurial ride
• Make sure that The MouseDriver Chronicles becomes required reading in at least 50 universities across the country!!

Mood Meter

OK, try to follow us on this one: Take yourselves back to college for a second. You’re in your favorite bar (or party or whatever you did for fun in school) with all of your buddies havin’ a good time. You look at your watch and it reads 1:45am. All of a sudden, you’re totally bummed because you know the bar will close at 2am, but you’re not quite ready to call it a night. You want the evening to continue going and going because you’re having so much fun. Well, that’s how we feel about MouseDriver. We see the MouseDriver experience coming to an end, but damned if we’re ready for this entrepreneurial adventure to end!! Guess we’ll just need to find an after hours joint!

If you want a good laugh and a great read, check out our book (which is based on The Insiders). You can purchase it at all major bookstores such as Barnes & Noble and Borders and online at Amazon. Also, keep checking our website for updates on book reviews, interviews, photos and the book tour.

Lessons Learned

Well, the holiday numbers have finally come in and they were marginal, at best. I think our biggest beef here is not necessarily the actual numbers (we weren’t expecting a stellar holiday season) but in the way that the department stores (aka “the big boys”) treated us. Now, after speaking to a number of people who have dealt with the big boys before, we knew that selling to the likes of May Company was probably going to be a somewhat frustrating experience. But damn, we never expected that dealing with the big boys was going to be this much of a hassle. Thank goodness our sales rep has been able to negotiate on our behalf, otherwise, we could have been looking at a dismal end to 2001. Here’s the bottom line: The big boys ultimately have all the power because they’re the ones who interact with the consumer. Because they have this power, they can set up a relationship with a small manufacturer such as ourselves that guarantees that they never incur any risk whatsoever. If they don’t sell your product, they’ll eventually (we’re still trying to collect) pay you for what they sold and then send the rest of it back. It’s the risk-free way of selling on consignment. Was it worth it? Absolutely. No question. We have the experience now, we saw how MouseDriver did in the department stores and we did make some money off of May. But there is a lesson learned here: If you’re a small company and you have the opportunity to sell to the big boys, make sure that you have enough cash on hand to deal with returns, chargebacks and missed projections. The last thing you want to happen is to end up losing money on the deal.

We’ve officially been knocked-off! Seriously. Kyle actually ordered the knock-off product on the web. Now at first, we were a little pissed off, but after awhile, the whole thing felt kind of cool. I mean, here’s a 50-year-old, multi-million dollar company copying your idea and bringing it to market themselves. Imitation is flattery, right? So what do we do here? Well, let’s preface all of this by saying that the knock-off product is essentially the same as MouseDriver. There’s absolutely no improvement (which is odd since you would think that the company knocking us off would have tried to make improvements to the product) and the packaging, albeit very nicely done, is bulky and positions their product as a shelf item rather than a counter-top impulse boy. Maybe they know something we don’t. Anyway, we’re still in the wait and see mode. We’re pretty sure we could go after them from a legal perspective, but is it really worth it? If we thought that dealing with the big boys was frustrating and expensive, dealing with a big company in a court of law would be about as much fun as us doing your taxes. We’re still trying to figure this one out, but in the meantime, John sent the COO of the company a signed copy of the book along with a personal note highlighting our experiences, the book and the book/media tour that we’re about to go on. You think the COO will notice the original patent drawing of MouseDriver on the book cover?

In case you’ve missed the barrage of “book” emails that we’ve sent out over the past couple of months, we’ll let you know one more time. Our book, The MouseDriver Chronicles is now officially published! You can walk into any major booksstore, online and offline, and find it. Are we excited? Yes. Are we a little nervous? Of course. Despite all of the great advance reviews, etc., we’re still basically putting the last 2.5 years of our lives on shelves for everybody to read about. Some people have told us that we have a lot of courage, that we’re risk-takers for putting a book out there, that the criticism (if any J) might be hard to take. Yeah, we realize all of this. But you know, we’ve been sharing our experiences, our mistakes, our emotions and our triumphs from day one and that has been the most rewarding part of this whole gig. Why stop now? As long as the story continues and the experiences are meaningful, we’ll continue to share them with anybody who’s interested. And hopefully, hopefully, hopefully, people who read the book will appreciate the insights and the honesty.

Speaking of the book, we do have one really big fear. And this is a fear that, unfortunately, we can’t really do a whole lot to quell. There is a good chance that the awareness that the book brings to MouseDriver is fairly substantial. If there is ever a time that MouseDriver is going to be known on a national (and even international) scale, it’s going to be over the next few months. And that’s great. Phenomenal even. And, if we’re lucky, the MouseDriver awareness will lead to a huge increase in MouseDriver sales. But, if there is a huge increase in MouseDriver demand within the next few months, the chances of us having any inventory to fulfill this demand are going to be pretty slim. We know what you’re saying, “why not just invest in a bunch of inventory now so that you have it on hand in case demand increases?” Well, we’ve played that game before in the past and we’ve ended up over-investing in inventory. Despite the great publicity that MouseDriver might receive, we’re just not willing to risk another large inventory investment at this time…not one that will act only as buffer inventory at least. We’re sticking to our strategy and that strategy is to focus on landing volume sales with the large mass-merchandisers and discounters. Bottom line: We’re not investing in more inventory unless we have a purchase order in hand. So what’s the fear? That we were patient, stayed the course and executed our strategy only to find that, because of timing, we miss the one really big chance to sell a ton of MouseDrivers.

What We’ve Done

• Found a much cheaper warehouse and fulfillment center in Los Angeles.
• Wrote a by-lined article for BookSense…search for it on www.booksense.com.
• Spoke with some individuals who are interested in purchasing the rights to sell MouseDriver through their mass distribution channels (i.e. they want to purchase the company).
• Did a book interview with Sky Radio, the in-flight radio magazine that can be heard on United and American Airlines. If you fly either of those airlines, let us know if you hear the interview.
• Updated the website with all of the book information, reviews, photos, book tour details, etc.

Priority Goals

• Erase the very little bit of company debt that exists within the next month.
• Rest and relax so that we’ll be fully prepared for the book/media tour that’s going to take place over the next five weeks or so.
• Figure out how we’re going to take advantage of all of this great publicity. Again, and we’ve said this before, we have to find a way of capitalizing on all of this great stuff.
• Utilize the increased MouseDriver awareness to close a large volume sale with one of the mass merchandisers that we’re currently speaking with…cross your fingers.
• Take a long vacation where we have absolutely no responsibilities!

Mood Meter

Man, describing our mood right now is tough. We’ve got so many thoughts going through our mind that there’s really no description for the amalgam of feelings that we’re both experiencing. The economy sucks, the instability of entrepreneurship is starting to wear on us and this whole “work out of your apartment” gig is getting really, really old. But…never in our lives has either one of us been this excited about the potential opportunities and experiences that lie ahead.

Just want to let all of you know that you’ll be receiving a few more emails from us between now and the end of the year regarding our book, The MouseDriver Chronicles: The True-Life Adventures of Two First-Time Entrepreneurs. If you don’t want to receive the book emails, just let us know. Otherwise, there will only be a few, so if it gets too annoying, just delete ’em! For a little more info on the book, visit Amazon.

Lessons Learned

We’d be doing ourselves a terrible injustice by not self-promoting the book a little more in this Insider, so here goes. This thing is going to be BIG! Well, actually, we really have no idea how big it’s going to be, but intuition tells us that the book is going to do pretty well. If it does poorly, it definitely won’t be from lack of effort. We’ve been putting in 80-100 hour weeks over the past month or so developing a marketing plan for the book, coordinating stuff with the publisher, solidifying schedules and basically ramping up for the release in January. To tell you the truth, it’s been pretty damn exciting…nd the recent reviews that we’ve received have only helped to fuel this excitement. According to Kirkus Reviews, we “share copious amounts of information with generosity, humor, and All-American spirit” and the book is “a must-have for those in the business of business”. Not too bad for a couple of dudes hocking computer mice out of their kitchen.

Before we get too caught up in the book, let’s revisit our original marketing strategy once again. Remember, the strategy has always been to tie a “story” around the product (The story being why would these two Wharton MBA’s bypass all the great opportunities of 1999 to bootstrap a novelty computer mouse company out of their apartment?). We felt that if we gave people an emotional tie to MouseDriver, we would give them another reason to purchase besides the fact that it was an ultra-cool novelty golf gift item. Think about Coca-Cola. Whenever you see that one hour special on the history of Coke, it kind of makes you feel like going out and buying a Coke, whether you like the drink or not. That’s what we were kinda after. So, given that the book is the “story”, it plays right into our original strategy. We’re really hoping that the book helps to drastically increase sales of MouseDriver. That’s the whole point, right? You develop your strategy, you patiently execute and you pray that you chose the right strategy. If sales don’t increase because of the book, well, at least we tried and hopefully learned what went wrong. At least we get a book out of it!

Let’s talk about irony. This whole time, we’ve been waiting and waiting to get into the department stores and the mass merchandisers. Well, now we’re there and it’s an enormous headache! Here’s the deal; once again we have no leverage with the big retailers. Just because they buy, let’s say 15,000 MouseDrivers, doesn’t mean that we’ll actually ever get paid for that amount. The sales process works something like this. Somebody like Lord & Taylor gives us a purchase order. We honor the purchase order and ship L&T product. L&T receives the product, but the label on one of the boxes is supposedly off-white instead of gray. So we get a notice from L&T saying that they are going to charge us $150 b/c our label was the wrong color. Now it’s up to us to prove to L&T that the label was actually the right color and that the chargeback was unjustified. In the meantime, L&T just sits on our invoice until they’ve sold through all of their MouseDrivers. If they don’t sell all the MouseDrivers, they either 1) send them back to us (with a check for what they sold minus the $150 chargeback) or 2) they discount the price, sell their inventory and then pay us (what they owe us minus the $150 chargeback and whatever amount that they had to discount). It’s brutal, frustrating, time-consuming and extremely labor intensive. And expensive…especially if they charge you back so much that you end up owing the department stores money! It makes you really appreciate distributors and all of the warehouse folks who have to deal with this on a daily basis. We only hope that we end up collecting on all of our department store accounts.

We’re getting absolutely crushed by our inventory holding costs. In business school, we always knew about holding costs, but it was never really a “visible” expense. Now that expense is crystal clear and it sucks! Think about it. Our product really just ships a few months out of the year. The month leading up to Father’s Day and the two months leading up to Christmas. During the other months, we’re just taking up space and selling onesey’s and twosey’s here and there. But, because our warehouse and fulfillment center in Reno doesn’t like to have little guys like us around, they decided to levy a $1500 minimum monthly fee. So even if we don’t ship a single unit during the month of January, we get hit with a $1500 charge. That’s $18,000/yr in minimum warehouse fees! And that doesn’t even include the labor expense that is incurred during the several months in which MouseDrivers are shipped. Needless to say, we’re trying to alleviate this inventory holding cost issue and are searching for other companies out there. We’re also hoping that in 2002, most of our inventory investments are made based on purchase orders that we receive beforehand. That way, we just drop ship product in our customers warehouse and they incur all of the holding costs. We’ll see what happens.

What We’ve Done

• Sold the UK and Commonwealth country book rights to Simon & Schuster. They will be releasing the book next Summer.
• Spoke at the Inc. Magazine Thinc Out Loud Conference and a Glasshouse dinner event (Glasshouse is a UK based entrepreneurial organization…pretty cool).
• Solidified all of the viral marketing plans for the book and met with Perseus to coordinate schedules and gain a better understanding of what to expect in January.
• Sold a MouseDriver clamshell bundled package to a couple of retailers for them to test during the Holidays. If it goes well, we hope that they’ll order a ton of product in 2002.

Priority Goals

• Continue to approach mass merchandising buyers in hopes of blowing out MouseDriver in 2002. The book should help in bringing awareness to the product.
• Continue to try and figure out what we’re going to do moving forward. Do we build-out the company, go into consulting, take “real” jobs, start something else, etc? Big decision here.
• Make sure that we do all that we can to market and promote the book and convince people that it’s not only educational, but also motivating and inspiring.
• Collect on the majority of our accounts receivable from the department stores, pay off all the company debt and try to figure out what to do about our next inventory investment.

Mood Meter

You’re 8 years old, it’s the night before Christmas, it’s snowing outside and cookies and milk are sitting next to the fire place to welcome Santa Claus. You know that feeling of excitement, sleeplessness and the whole “I can’t wait” attitude that you had…that’s how we feel. If you don’t celebrate Christmas, substitute another holiday, or your first date, or a big game…you get the picture.

OK, we have to admit that this Insider was a little tough to write. Not because we didn’t have anything to write about, but because this thing seems so trivial compared to everything else going on in the world. We’ll continue to press on though.

Lessons Learned

Remember the cash position that we were in a couple of months ago? Well, we were saved by the UK!! In addition to collecting on our outstanding debt (we still have $10k to collect on) shortly after the last Insider, we received a couple of really significant orders from some of our UK distributors. The beauty of selling overseas for us…everything is done by wire transfer, so the cash was in our bank account within several days of the actual order. Now, we’re still in a pretty tight cash position and the economy, combined with recent tragic events isn’t going to change anything. But what the UK sales did do was give us enough money to hang-on until the Fall selling season and give us hope that we could continue pushing MouseDrivers and building out Platinum Concepts without the fear of having to find other sources of income. We don’t know how relevant this lesson learned will be in the immediate future, but one thing we found out: When the US economy seems to be weakening somewhat, other countries seem to be more willing to purchase our product. So, in a sense, go global if you’re not selling enough in the US. It worked for us…sort of.

We’re being knocked-off! Yep, after planning on getting knocked-off for so long, we found out in August that a $60m gift distribution company is planning on selling their own version of MouseDriver to retailers. Now normally, you don’t find out you’ve been knocked-off until you see your competitor’s product on the shelves. But we were very fortunate to find out way in advance. Turns out that the American guy who heads up our manufacturing effort in China also does business with this company. In a meeting in August, a representative from the company pulled out a Brookstone MouseDriver and says “this is going to be our big product for next year.” Thankfully, our manufacturing guy was loyal enough to fill us in on the future knock-off plans of MouseDriver. So what do we do here? Good question. There are a number of different ways we could respond and many different strategic angles to take. But here’s what we’ve decided for the time being: We’re going to wait and see if this company actually knocks us off before making our next serious move. In the meantime though, we are having our lawyers draft and send a letter to the company basically saying that we’ve heard they’re knocking us off, that they should cease and desist all knock-off efforts of our product and if they don’t, really, really bad legal things will happen. This should be a fun one to watch.

And what about our new product? We’re starting to gain momentum for our golf ball locator idea. Turns out that the technology that we’re looking at developing for this product can be used in a bunch of other applications and industries as well. We’ve officially kicked-off our fundraising process and have spent most of the last month meeting with private investors, venture-capitalists, potential advisors, etc. Everybody is intrigued, but most of them keep bringing up the same two questions. Will you own the technology (i.e. through patents or exclusive licensing) and how big are the potential markets for this technology (golf and non-golf related markets). We realize that we might be on to something here, but truth be known, we’re still working on the technology question above. We’re hoping to have more solid answers within the next month, but the bottom line is that if we can’t “protect” the technology, we really don’t have much of a case for raising money. We’re giving ourselves until the end of the year to figure out everything and raise money. If it turns out that this idea has to be shelved, our book tour next year might turn into a personal plea for people to give us salaried jobs!

Speaking of a book tour, this whole “book” thing is starting to get kind of exciting. Knowing that we are going to have a book on shelves in January, 2002 is not only somewhat surreal, we find it downright comical. But apparently, everybody seems to think that we’ve got a great story to tell and we’re certainly not going to argue. From a marketing perspective, the book will be pretty cool. We’re tentatively scheduled to go on a five city media tour (beginning next year) and Perseus is planning on marketing the book on airport billboards and in major business publications such as The Wall Street Journal, Fast Company and even The New Yorker. Now, all of this is very tentative and depends on how well the book actually does when it’s officially released, but we’re hoping that all of this marketing not only helps to sell the book, but also helps to sell more MouseDrivers. We’ll give all of you the real skinny on what’s going on (i.e. sales expectations, initial feedback, etc.) in the next Insider and will probably ask your help in letting others know about the book as well. Again, our biggest fear with the book: It comes out, it gets terrible reviews, people absolutely hate it and we end up looking like a couple of huge jackasses. Not likely, we know, but still possible.

What We’ve Done

• Started to reposition Platinum Concepts as a technology consumer products company rather than just the manufacturer of MouseDriver. So, we’ve got new business cards.
• Sold MD’s to most of the department stores under the May Company umbrella (we are praying that these guys actually pay us).
• Began talks with a major book publisher in the UK who wants to obtain the publishing rights to sell the book in all the commonwealth countries (England, Scotland, Australia, Ireland, etc.)
• Refined our “pitch” and executive summary for our new product and met with a number of VC’s, private investors and advisors.

Priority Goals

• Develop a viral marketing campaign around the book that will help to increase sales once it’s released in January.
• Start to approach buyers in Q4 of this year in hopes that they will purchase large quantities of MouseDrivers for Q1 and Q2 on next year.
• Determine within the next three months whether we will continue to build-out Platinum Concepts or seek other avenues of entrepreneurial excitement.
• Pay-off the majority of our company owned debt associated with our personal accounts so that we never have to go through the “margin-calling” process again. Last week’s plummeting Dow was certainly a wake up call.

Mood Meter

Our mood goes beyond general “business” issues this time. It’s interesting how something so tragic can put a little perspective on what’s really important in life. A little Styx below best describes our mood:

I’m sailing away, set an open course for the virgin sea
I’ve got to be free, free to face the life that’s ahead of me
On board, I’m the captain, so climb aboard
We’ll search for tomorrow on every shore
And I’ll try, oh Lord, I’ll try to carry on
(“Come Sail Away”, Grand Illusion album)

We’re still hanging in there!! Don’t let this Insider make you think that it’s all bad…some really good stuff is actually happening for us (i.e. we have a book coming out next year). We’re just having a little bit of a cash issue…which tends to bring out more of a down-beat attitude in this issue.

Lessons Learned

Alright, the final numbers are in and Father’s Day was a HUGE disappointment for us this year. In fact, we’re down 50% compared to the same time last year. Now, we’d like to blame this decrease in sales on the economy and are pretty sure that reduced consumer spending probably had something to do with our dismal performance. But, we’d be making excuses and putting blame on factors external to the company. The truth of the matter is that we made a big mistake with regards to understanding how our distributors and retailers were actually selling MouseDriver (a.k.a. “selling through”). Turns out that most of our channel partners had purchased way too many MouseDrivers during the 2000 Holiday Season and were sitting on a ton of inventory. Instead of ordering more product from us, our partners were focused on moving through all of the MD’s sitting in their warehouses. The good news here: MouseDriver is still selling well to customers. The bad news: we completely forgot to take into consideration that our channel partners may have ordered too much inventory. The technical business term for this issue is called “channel stuffing” (too much product in the distribution channel) and it effects your planning, budgeting, cash flow, etc because you expect to receive orders…and cash. We ’d like to refer to this issue as a “tremendous pain-in-the-ass”.

Let’s talk about collections. Collections is the process of “collecting” on all the money that is owed to you by distributors, retailers, companies, etc. Last year, we were pretty lucky when it came to collecting payment on our orders, only writing off $3k in bad debts (companies that never pay you) on $600k in sales. This year we’ve already run into problems and it’s coming from a very large golf distributor in which we thought we had a great working relationship. Turns out that these guys owe us $30k (they’re almost 100 days late in paying us) and there’s no sign of them paying us anytime soon….which is putting us in a tremendous cash crunch. So what do we do? After many, many, many attempts to get a hold of the distributor, we had no choice but to hire a collections agency (who charges us 25% of what’s collected) to help us collect on our debts. Now, you can look at the collections agency approach in two different ways; 1) it will help you collect your money, but may also help you destroy any working relationship with the company or 2) it proves to the company that you’re serious about doing business and that they better think twice before screwing you over in the future. We’re obviously shooting for number 2 above and hope that these guys realize that we’re not just some fly-by-night company looking to have product on the shelves. It’s amazing how something like this really sheds a bad light on business in general.

Speaking of cash. We’re pretty low on it! In fact, from a personal perspective, both of us are close to being out of cash Now, this doesn’t necessarily mean the company is going under. Quite the contrary. We’re starting to penetrate the larger department stores and mass merchandisers (thanks to a more than willing and ambitious Insider subscriber) and we have a book coming out next year (see next paragraph). This issue here is that we won’t see any of this cash (and results from the book) until Q1 of next year at the earliest. So what exactly does this mean? Well, it means that we should be in a good cash position next year and should have a ton of momentum to catapult the company to another level. But, if we don’t find some way of bringing in cash over the next 6 months, the two of us will have to attempt to find salaried jobs in the worst economy that San Francisco has seen in over 10 years! The lesson learned here: if you have a single, very seasonal product, you need to make sure that you have cash in the coffers to keep you afloat during cash-tight periods…which is very tough to do when all of your cash is being used to manufacture more product.

Let’s talk about something a little more positive now. The book! We finished the final manuscript of the book (after hours and hours of writing and hard work) and submitted it to the publisher last month. We can’t go into to much detail right now with regards to the book (the publisher wants us to hold off a bit before we start screaming and shouting), but we can give you a few high-level facts that we know thus far. So here goes. The title of the book is The MouseDriver Chronicles: The True-Life Adventures of First-Time Entrepreneurs. The book is scheduled to release in hardback in January 2002. We are the #1 listing in Perseus’ (our publisher) Winter catalog. And, everyone who has read the book thinks it’s informative, practical and downright funny…kind of like the Insider on steroids. Anyway, we’re pretty excited about the book and in our most unbiased opinions, really think that the it’s going to be a success (in addition to helping us bring awareness to MouseDriver, Platinum Concepts and the two of us). We’ve got some great marketing ideas for the book (especially from a “word of mouth”/viral and website perspective), but can’t really start doing anything until later in the Fall. If anybody out there has some creative ideas on how to really get the word out there regarding the book, feel free to share them with us…we’re all ears!

What We’ve Done

• Developed an internal marketing strategy for The MouseDriver Chronicles that will support our publishers marketing plans.
• Found a “sales rep” through The MouseDriver Insider who has been extremely effective in getting our product in front of big retail buyers.
• Presented to large department store buyers and secured verbal orders (not purchase orders yet) from The May Department Stores and hopefully Dillard’s and Macy’s.
• Continued researching our new product idea and getting a better feel for the funding environment (or lack thereof).
• Began negotiations with large distributors in Mexico and Europe. It’s amazing how much international interest there is when the US economy starts to tank. Seems like all sorts of opportunities exist overseas.

Priority Goals

• Find a way of getting our hands on some cash over the next six months. Otherwise, we might join the thousands in San Fran looking for new jobs.
• Penetrate the mass merchandising market (Wal-Mart, Target, etc) and hopefully get some orders for delivery in 2002.
• Market the hell out of the book and enlist the help of others who have been following our story over the past two years to assist us with this massive task.
• Put together a presentation for our first official business conference in San Diego in October. We’ve been invited to speak at the ThInc Out Loud Conference (put on by Inc. Magazine). Very cool!

Mood Meter

Honestly, we’re a little down right now. There’s all this great stuff that’s going to happen in about six months, but, personally, we may not be able to hold out that long. What we really need is for some HUGE break to surface over the next few weeks…..anything to bring our spirits back up.