Challenges and Obstacles
Building a company from scratch in an industry that the entrepreneur knows nothing about, and severing a flow of steady income can all equate to problems and challenges that can truly test the integrity of an entrepreneur’s character. VU Points has experienced the gambit of pitfalls in their operations that are typical of a business of any age including production problems, design flaws, fund allocation issues, partner and vendor problems, scheduling problems…the list goes on. Matt has been able to work through them and fortunately have his company turn out for the better because of it and gain valuable experience in handling similar issue the next time he goes through any of these processes.
Problems occurred with some facets of the product design phase when Matt felt some of the professionals he was using lost sight of the design efficiencies he wanted to achieve and focused on designing a product to show their full capabilities and worthiness of recognition, “We’re in business to be profitable and not to win awards for our products – although that would of course be nice. This caused a long delay in getting product to the level of quality that I wanted the binoculars to be at.” The initial manufacturing schemes resulted in 48 minutes of labor required to assemble one unit which put costs too high for Matt’s projections, and caused significant frustration among the production people and a higher reject rate than was acceptable. “It is absolutely amazing all the facets and people you have to work with and things you have to balance, and how so many things are intertwined in the creation, sourcing and manufacturing of a product.” For some of Vu Points advertising efforts Matt was faced with free-lance contractors that did not abide by his wishes of a cost conscious effort. They ended up spending a significant amount of money on production elements that Matt felt he could have sourced through more economical arrangements such as bartering through magazine editorial contacts made through PR efforts. “People make mistakes, it’s a part of taking chances and learning. But in a start-up there is little margin for error. When a paid contractor makes the mistake of ignoring specific instructions that results in wasting a considerable amount of your precious cash resources, you have to decide if they are suited to be on the virtual team. To me it’s a matter of finding talent that can create my vision for the particular free-lance project with their unique skills within the time and money constraints I outline. When you are taking care of everything you’re going to make mistakes and other people are going to make mistakes. There is little margin for error.”
Personal challenges prove to be very taxing on the entrepreneur. Matt has realized these challenges and is conscious of relying on his own support mechanism, which is a system of stress management ( a lot of exercise), and family support to see him through the tough moments. “It’s a real hard road. You have to honestly evaluate your own abilities before you get into it. You need a strong home life to support you and the ability and willingness to stop your comfortable life style. Some people should take a look at themselves and decide if they can do this. Some people are just not meant to carve a trail on their own. It takes an awful lot of persistence and a willingness to just get smacked against a wall and realize that you will be taking your loved ones on the journey with you. You are doing things you’ve never even imagined were involved with the project in the first place and sometimes everthing will go wrong. You have to control your frustration because when you arrive at home those are the people that are out on the limb with you and are trusting you.” Matt does what he describes as self Prozac-ing himself to maximize his effectiveness by creating releases to help establish a positive mind-set. “It’s a pendulum because the days you have highs you also have the lows. You Prozac yourself and stay right in the middle. Don’t get too excited when the great things happen and don’t get brought down too low when the bad things happen. Get out, dust your butt off, and go back on the plan. Keep the compass out and keep going in the right direction.”
Have there been moments of uncertainty about such an undertaking, and concerns of whether one has gotten themselves in too deep with what they have created? “There have been times of trepidation, and it helps to communicate with other entrepreneus I know and work together like a support group. The advice from them was that you really don’t want to go into this yourself. When you do all the pieces of the puzzle yourself and you’re in uncharted territory, and people who were supposedly interested aren’t getting back to you, and you’re using your IRA for short term funding, and you have $200K in bills in the drawer…there are times that it is really treacherous. There are times when you think that yeah, you got in too deep. There are tremendous challenges with this sort of engineering because of the curved parts and the different materials… overmolding, in-mold decorations, sonic welding are all very modern production techniques and very difficult.” Fortunately for Matt he takes comfort in his wife and family being healthy and their families being very supportive to give them what he feels is a lot more staying power than some people. “Anyone who tries something new, and is open to the experience, is guaranteed to meet talented new people, learn new skills, and grow as an individual no matter what the ultimate outcome of the enterprise.”
Success and Opportunities
The VU Points Performance Binoculars started shipping in February of 1996. In the quarter since the first round of finished units were ready for shipping VU Points has generated approximately $30K in revenue. Fine tuning of the overall production process will offer Matt a steady flow of finished product to fill orders which began in late 1995. His ultimate goal of making the Vu Points Performance Binoculars a retail driven product is already taking on a life of its own as he was demanded by a retail store in an area ideal for his product to allow them to carry his product. “They wouldn’t take no for an answer despite the lack of retail packaging. It’s a great retail location on Melrose Ave. in Beverly Hills and will offer VU Points great exposure. Telephone orders are being handled through a 800 – telephone service (1-800-PTS-OF-VU) that is set up to answer questions and fill orders for the binoculars who in turn transmit those orders to VU Points on a daily basis.
Other retail channels that are non-traditional for this type of product that Matt wishes to capitalize on include the World Wide Web. The VU Points web site is ready for launch which will hopefully generate on-line sales to the tens of thousands of individuals that surf the internet who fit the profile of the VU Points customers. This web site will be much more than just a retail catalog as Matt wishes to employ the unique interactive capabilities of the web to share messages of his company, and the issues it believes in such as its social consciousness and goals to please its customers by giving them the chance to share their opinions on the products and the whole VU Points attitude.
A built in characteristic of the binoculars is the ability to customize the product for appropriate clients such as the Hard Rock Cafe or Wimbledon with custom artwork imprinted on the binoculars. Their high level of quality and production, and the film graphics makes the customization look much better and higher quality. “This customization ability was part of the design criteria. That was the thought all along.” Matt doesn’t want to take on custom production too early because he wants to ensure that it will be appropriate for his vision and morals. “We’re a profitable and socially responsible company. Gotta pay attention to the clients that you take and do you hold true to these values. Learn from the mistakes that other people have done and make it true to who you want to be.”
What Achievements are Necessary to Succeed – The Road Ahead
Matt’s goal with VU Points is to make the binoculars a product that launches the VU Points brand in retail outlets. His experience lies in understanding how retail stores work and the effectiveness of marketing and selling product within them. “I know how much we need to get to retail and how much to spend to get us there. The success of this product is how it will sell once it is in retail. All of this has been a prelude to the real game. I have to continue to hang on. We have to get into retail with our point of sale vehicle and counter sale display unit. A package unlike any binocular package because we are not just binoculars, we are a brand of fun, functional lifestyle objects for ‘Active Stylers’.”
As for the yet undetermined prosperity of the internet, “We have a website called www.vupoints.com that will be up at the end of June. People can visit it, buy ’em, try ’em, and if they’re not happy we’ll send their money back. It’s supposedly a $10 billion market on the web, but we were also supposed to have 500 TV channels by now. You have to wait and see. I think we have a chance of selling really effectively on the web and every step we make will have to be consistent to VU Points.”
With regard to funding, the organization has been funded privately to this point with personal investments, angel investors, and F.F.A. (friends, family and associates), and Matt is seeking to bolster his funding by arranging a second round of investment. His business plan is being shown to venture capitalists and presented to industry groups to try and muster interest to support the high six-figure funding VU Points is seeking to carry them into their retail foray.
The more intangible benefits to reaping the benefits of an emerging business venture is to start paying back those who have supported him and been with him for the entire duration. “I have created the product I first envisioned on that cocktail napkin, but all along my plan has been to create a company to launch the VU Points brand of products. It’s been almost three years and we have accomplished a lot. The objectives are clear, we need to work through the ups and downs to build a company that will enable me to support my family. Our plan has always been to get our product into the mix of retail stores by implementing our distribution strategy, supporting our retail partners, and continuing to produce an outstanding product that brings fun and performance to our consumers. Once we have done that we will have succeeded in creating the profitable, socially conscious company that is the VU Points that exists in my entrepreneur’s mind.” – ###