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Published in U.S. 1 Newspaper on May 31, 2000. All rights
A New Kind of `Training’:
The co-founder of Princeton Learning Systems follows his passion down
a different kind of track
In August, 1995, Steven and Nadine Haase had a
and a brand new baby and had just signed a mortgage on a new home.
At that point Haase had a good job, and his wife was at home with
the children. One month after they moved into the house, Haase quit
his job and went off to found a dot-com company, Princeton Learning
Systems, to do online training for financial services firms. With
no income at all for the first year, they would soon come to be on
intimate terms with their creditors.
Haase landed Merrill Lynch as his first paying client one year later,
in July, 1996. Then Donaldson Lufkin Jenrette’s Pershing division
signed on to a branded version of the firm’s "Financial Services
University." Four years after quitting their jobs Haase and his
partner, William Healy, sold their firm to another hot young dot-com
— younger than theirs, but better funded and about to go public.
They can’t reveal the sale price, but Haase does say it was
Now the Haases’ bills are paid, the mortgage is taken care of, college
funds have been established for the children — and what is Steven
Haase doing now? He has bought his stepfather’s business and is having
the time of his life. The new business — selling railroad videos
— seems worlds apart from training stockbrokers over the Internet,
but it presents the same challenge: How to persuade a very
industry to make pioneering partnerships with a new media firm.
"The first couple of years," says Haase, "the financial
industry did not see themselves as needing us. The Internet was brand
new and not widely available across the major companies. It took a
lot of persistence in convincing them that Internet delivery of
training was much more efficient."
The train market is similarly conservative. "This industry is
very slow in adapting to the Internet," says Haase. "But both
competitors as well as providers of other products and services are
looking to us as the online experts. It’s a nice position to be in,
and I feel very confident that we can now go to the various railroads
and work in partnership to elevate public perception of railroading.
We look forward to establishing a leadership position and helping
the hobby reach a wider audience by leveraging the Internet."
Stop the train. Pull the emergency brake and come to
a screeching halt. Just what kind of market is this, anyway? Hardcore
train video fans are almost totally separate from the model train
Most are men. Some chase trains — they pile in a car with their
friends and follow a train for an hour or a day, always trying to
beat the train to the next stop. Some are trackside watchers —
they bring picnic lunches and set up for the day to log in the trains
that go by. There used to be a third kind of train fan, the ones that
would try to ride in the cab with the engineers, but the federal
levied severe penalties and put a stop to that.
Haase has a library of more than 275 train-related videos appealing
to both the trackside fans and those that like the cab rides, called
"head-end" rides, plus some vintage tapes. "For the train
fan, experiencing a ride in the engine cab is the equivalent of a
football fan watching the Superbowl," says Haase. "Through
our videos they can step back in time and relive the excitement of
an early steam engine in full operation."
"The size of this market is one of the better kept secrets
says Haase. He just returned from a trade show in Massachusetts that
drew 25,000 people over two days and figures the train and railroad
hobby industry is $2 billion now and growing.
Harold H. Carstens, publisher of the 50,000 circulation trade
Railfan & Railroad, estimates there are 200,000 hardcore train fans
who regularly buy videos, and that does not count the 300,000 people
whose hobby is model trains but occasionally buy videos. Haase says
the fringe market is even bigger.
"My father was a techie," says Haase, "and my stepfather
was a lifelong railroader, and I was exposed to a lot of both."
He grew up in Rahway but when he was 11 his family moved to Lancaster,
Pennsylvania. His stepfather worked for Amtrak as vice president of
communications and signals and started Railroad Video Productions
in the mid 1980s, almost by chance. "He got on a GG-1 (a type
of engine) that was making its last run from South Amboy, and he took
a video from the engine cab, looking out, for his personal use. Word
got out, and he ended up selling several hundred copies. Putting two
and two together, he realized that if he did other `head-end’ trips
there would be a good market."
"He took a classified ad in national railroad publications and
got phone calls on an 800 number. My brother, myself, my mother, and
friends would help out on replication and fulfillment. I started doing
local train shows, setting up racks of our VCRs with monitors and
highlight tapes. I got a chance to go to another city, finance my
evenings out, and make a little money on the side."
At Rider University (Class of 1989) Haase majored in
management and organizational development and change. In the summers
he worked for on Wall Street, where his father was vice president
of technology for several financial services companies. Haase worked
at Citicorp for four summers and took a liking to the financial
space and New York City.
"My senior year I got the entrepreneurial itch and decided to
focus on Railroad Video after graduation. I saw it as a wonderful
opportunity to expand the business. My stepfather, Walter Berko, had
kept it to a level where he could manage it as a two-person operation.
When he got too many phone calls he would reduce the size of the
For six months, commuting from Lancaster to the home of his fiance,
he built up the video business by opening wholesale outlets. "It
was my opportunity to repay my parents for picking up my college
he says, "and we expanded to 100 retail hobby shops." Back
in New Jersey he went to work for Prudential, selling financial
products for a year.
Here comes the "it’s a small world" department. Through his
future sister-in-law, Judy Tocatlian, who was managing the HQ shared
office space at Forrestal Village, he met his future partner, William
Healy, former vice president of training for American Express,
Lehman, and Merrill Lynch. Haase left Prudential to join Healy and
start up the United States arm of a distance learning provider,
VMI Communications and Learning. He sold Prudential a $12 million
contract for VMI to standardize its training by putting it on a wide
area network. "It was very timely. After I had gone through the
new hire training process, a year later we won the contract,"
Implementing this contract taught them a great deal about distance
learning. Four years later, and right after they had landed another
big account, they started Princeton Learning Systems. "We had
just bought a house and had two kids under the age of 14 months. I
was due a whole lot of commission money and did not get that money.
This account would have provided a lot of stability," says Haase.
"But I had my wife’s full support, which is a lot of the reason
I have had some success. We had no revenue, no clients, and a lot
of vision, but vision doesn’t pay any bills. We got to know all of
our debtors over the years."
A competitor threatened on the horizon, Yipinet, now known as e-Mind.
"We decided we were better off selling to e-Mind because they
were going to do the IPO a year before we were. We saw a premiere
management team — from Disney, Activision, and others — and
we saw the window closing. We could have competed with them, but they
were much better financed, in that they had raised four times the
funds that we had," says Haase.
E-mind’s corporate headquarters is in Los Angeles. On its web site
(www.e-Mind.com) are the current E-learning offerings: a course
a learning management system (for assigning courses and tracking
and scores, an E-mind product), a custom course service (for
a company’s proprietary learning material), and a customer service
team. The customer service team and any of the courses relating to
financial services are from PLS.
Haase and Healy expected to continue with the e-Mind, but that did
not work out due to what Haase calls "different management
We ended up leaving some very good folks at PLS as well as at e-Mind.
e-Mind is among the top three learning providers and upon doing their
IPO will be the leader, and I know that space very well." Healy
lives in Clark and is doing some consulting.
Now Haase relishes having more time with the family — as
soccer coach, and baseball coach — and mixing family with
"When I go home in the afternoon versus evening and have
dinner with the family I can talk about how we are doing a video on
Conrail engineers and show some sample footage and the children can
give a thumbs up or a thumbs down. Believe it or not they can take
a very active role. I see myself doing this for quite some time."
His "proof of concept" was a series of presentations at his
children’s school. "Never in my life have I seen a group of
so focused. We let them be engineers and got them dressed up in hats
with wooden whistles, and then showed the video. For two hours we
had the undivided attention of the classroom without the aid of any
teachers. That is pretty unusual."
Kids, he points out, do not like narration or head-end rides. They
like the trackside films, so they can stand in front of the TV and
see the engines go by. Videos aren’t as good as being there "but
it mesmerizes them and they enjoy the electric engines and the diesel
Today his company has two employees, Debra Vorp, manager of service,
and Barbara Wasylyk, vice president of sales, plus seven freelancers
in such areas as graphics and site development. His graphics, in tones
of sepia and gray, draw from a library of ’60s photos but have a turn
of the century aura. From his stepfather he has a library of more
than 275 train-related videos plus hours of stored train footage and
prospects for new video shoots.
"We are also acquiring content from smaller video producers who
don’t have the knowledge and resources to get a site up," says
Haase. "That is very similar to the relationships we had with
Princeton Learning Systems, where we had a percentage of the sponsor’s
He has about 6,000 customers who buy videos "fairly actively,"
and they are divided between those who like narration and those who
don’t, and by those who prefer trackside to head-end (cab) rides.
About 25 percent of model train collectors are also railroad video
"People do not buy the tapes for the scenery," cautions Haase.
"Ninety five percent buy it for sounds of the various engines
and to experience the conversations with the signal towers. For the
most part you are seeing track with maybe 100 feet on each side and
you will go from point A to point B and see oncoming trains and live
what the engineer lives."
A second series of trackside tapes films from various points on a
route so the viewer can see the engines go by. "Millions of rail
fans are doing that these days, spending a weekend in Johnstown and
watching the various freight trains and Amtrak engines come by,
in what they are seeing, and that’s their hobby."
His site will have chat rooms related to products, videos, books,
calendars, on-line customizable photo albums, and personal home pages.
But no mugs or hats. "The margins are not there but the headaches
are," says Haase.
A typical customer is the 45-year-old male who, on Friday afternoon,
will place a series of videotapes on the TV and decide to
from Boston to Miami over the weekend by watching 20 or so tapes,
one after another.
Flush with funds from the sale, Haase is his own venture capitalist
for now and plans to invest an initial $250,000 plus an additional
$100,000 to $150,000 before getting another round of financing. His
major costs are $60,000 to $70,000 for launching the site and a
marketing and advertising campaign including full page ads in two
Within the next six months he plans a round of financing and thinks
he will have an easy time of it. "In hundreds of discussions,
regardless of who I tell about this, there haven’t been more than
five people who didn’t know a train enthusiast, for the most part
— in the family or a good friend."
His major competition, a West Coast firm named Pentrex, has a
sized video library and a huge advertising budget, but Haase says
Pentrex does not serve the hard core train fan because its videos
are larded with narration. "The hard core fan doesn’t appreciate
a lot of voice-over that takes away from the actual production. They
also don’t have much of a presence in the online world."
Haase has chalked up an excellent track record on inking alliances
with big companies for online space and he hopes to leverage this
with big companies like Amtrak. His dream goal would be to get rights
to videotape Amtrak trains on a national basis. "Public perception
has been better of late but for the most part, people associate Amtrak
with negatives," says Haase. "We can get people involved,
starting with children. The companies in this space have done a very
poor job on the marketing side, but when children ride a train they
typically never forget."
His server is Interland in Atlanta and he has various freelancers
working on the back end of the site — many of whom are also avid
train fans and are getting a combination of options plus money. He
will add a few full-time employees soon. Buchanan Ingersoll is his
attorney and J.H. Cohn is the accounting firm. He answered a Coldwell
Banker ad in U.S. 1 to find his office.
"We are doing the fulfillment in house. My experience tells me
that the best case scenario is where you do fulfillment internally
and hold client satisfaction in your hand," says Haase. For now
he stores everything in a 2,000 square-foot office.
In June he plans to go live with online video samples using
and stream up to 15 seconds each of 30 videos. But he is careful not
to antagonize ‘Net newbies. "Our average customer is a 45-year-old
male who is still exploring how to use the Internet. You will lose
a percentage of the customer base if you force them to download
So we have an offline strategy. We are sending out 10,000 postcards
to customers and retailers."
"We are not looking for an IPO," says Haase. "I am
this too much. With an IPO comes a lot of pressure and time away from
the family. I am interested in building up a nice business, very
to Princeton Learning. We have a great team here and we will be
this market very aggressively."
"What my parents instilled in me, fortunately, was an `always
believe in yourself’ phrase that has come in handy in the
world and the roller coaster. Those with that upbringing certainly
do better as far as ventures go because they are able to get through
the downtimes. I am trying to do the same with my kids, to always
believe in themselves."
Steven Haase, principal. 609-466-0880; fax, 609-466-8114. Home
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