A native of Hamilton and a graduate of Steinert High School, Doug Kerwin learned the Internet through its primitive bulletin board system (BBS) — “the Internet before the Internet,” he says. “You would dial directly into someone’s home computer, and you could share files.”
He put his early computer skills to use at college, earning a bachelor’s in management information systems at Cedarville University in Ohio, after switching from his original major in accounting. An internship at accounting firm Deloitte & Touche (now Deloitte LLC at 750 College Road East) in his sophomore year exposed him almost entirely to software.
While taking a full course load in his senior year at college, Kerwin picked up a job as lead software developer for Appletree.com, an online dating service. “I talked my way into it,” he says. “I was the first one to contact them, and I transformed a $10 an hour ‘nothing’ job into a $100,000 opportunity once they knew what I was capable of.”
Later, while working for Merrill Lynch in Manhattan, Kerwin co-founded his own company and helped develop software for Microsoft’s .NET (pronounced dot net) programming tools. Microsoft wanted to develop a back-end website software so that non-technical business users could control their own websites.
But this was at the wrong end of the IT boom. Kerwin and his friend, Richard Sbarro, shielded from bad IT news inside Merrill Lynch, left the financial giant to found Metaverse Corporation, a business software company, in 2002. However, it was quickly clear that the idea was not working. “We saw within six months that our burn rate was much too high to keep going,” says Kerwin.
The staff dwindled from six to three. After some consulting work, Kerwin and his two friends started Fulcrum Gallery as an offshoot of Metaverse’s technology. Fulcrum is an online depot of art pieces where companies and individuals can buy reproductions. The idea took off. From three people and an afterthought just a few years ago, Fulcrum has grown into a major online art dealership that now employs 60 and offers about 200,000 pieces from about 10,000 different artists.
My course would be entrepreneurship. I think most undergraduate business degrees do a decent job of preparing you to be a cog in the system somewhere in the overall soulless void of big business, but they do very little from a practical perspective to prepare you for the realities of actually starting your own business.
I think one of the most valuable skills in this area is drafting projections. You need to go through the exercise of projecting month-over-month income and loss, with detailed line items of your expenses. You also need a good understanding of what your revenue ramp-up would likely be and a realistic view of the amount of capital you will need to sustain the losses during that ramp-up period. Because let’s face it, unless your business is a one-man show where you are simply providing a service, you’re going to have expenses from day one with little to no revenue, and you will need to seriously plan for how to bridge the gap between being a concept and a going concern.
If you can’t think through the issues and run the business on paper, there’s little hope of succeeding in real life. Many people are overly optimistic here, and others take huge shortcuts. I’ve seen too many projections that only include three lines for a whole year — revenue, “expenses” (whatever they think those might be, who knows), and profit.
While things will never play out just like your spreadsheet anticipates, going through this exercise and challenging your assumptions is a critical part of evaluating a new business idea. Sadly, most new business ideas are bad, even if they’re your own. Always have a set of conservative and aggressive projections. One of the goals of going through this exercise is trying to prove how the business can’t work — that your margin isn’t high enough or customer acquisition cost is too high, and the breakeven point is at a much higher revenue level than you thought.
Know when to fold your hand, and better to fold before three rounds of betting if possible.
I remember at the beginning of almost every business class I took in college that the teacher felt it necessary to review the forms of incorporation, always with some rhetoric about how a corporation provides protection for the owners against the liabilities of the company.
While technically that’s true, the reality for small businesses is that you can’t get a bank loan, lease equipment, or lease office space without personally guaranteeing the obligation — which for many means if the business goes under, so do you.
You might think that once you become a reasonably established profitable business with millions in revenue this would change, but in my experience I’ve still been required to personally guarantee any significant obligation of my company. Be prepared to shoulder these risks, or take the safe path and work for someone else. There are pluses and minuses to everything; if you want to own it, you’re owning the good and the bad.
Ultimately there are many lessons that can only be learned from life experiences, and even then many of our experiences have different outcomes. I think the most important thing is to understand the risks of getting into business, have a realistic view of the sacrifices you’ll have to make, and do it for the right reasons. And money is usually at the bottom of this list.
Find a mentor, and realize that you and your mentor are never done learning.
Be open minded enough to realize that every place and time is different — lessons you have learned in the past may not apply in the same way in the future. And most importantly, be sure you have fun. Sometimes as they say, the money follows, but I think the best advice is a shortened phrase, simply “do what you love.”
#b#Fulcrum Gallery (Metaverse)#/b#, 49 Stouts Lane, Monmouth Junction 08852; 732-997-4290; fax, 732-997-4296. Doug Kerwin, president. www.fulcrumgallery.com.