despite company's closing
January 29, 2001
BY MICHAEL KRAUSS
does that old Billy Joel song go? "Got a call from an old
friend/ We used to be real close ..." These days, instead
of calls, old friends resurface via e-mail.
e-mail started out like this: "Well, it’s been a wild
two-and-a-half years! Start an Internet business, get married,
get acquired, move to New York—and now, I’m sorry
to say, iCanBuy.com is closing."
from CBS’ 60 Minutes to the local newspaper gloating about
the "dot-com bomb," I thought Keck and her entrepreneur
husband, Paul Herman, would be bitter and angst-ridden after spending
more than two years and thousands of dollars to start a dot-com
business. But quite the opposite: They’re positive about
their experience and raring to go again.
ex-McKinsey & Co. consultant, and Keck, a big-league advertising
agency creative, met aboard a United Air Lines flight from Chicago
to San Francisco. They conceived iCanBuy.com on a trip from San
Francisco to Chicago in May, 1998.
for iCanBuy was simple and powerful. According to Herman, "Kids
control approximately $180 billion in purchasing power. They’re
among the most savvy of all Internet users."
they were stuck at the ‘kiddie’ table," Keck
adds, "with no ability to make purchases online."
access to credit cards, Keck and Herman saw kids ages 10 to 18
as underserved and in need of a means for spending online. Through
San Francisco-based iCanBuy, a parent would sign up their child
and provide an online allowance. Parents could also set up permission
guidelines for their children’s spending.
like a concept with legs.
Like a credit
card company, Keck and Herman intended to make their money through
percentage transaction fees paid by the retailer. But unlike a
credit card company, they’d have no payment risk because
the parents would deposit money in advance of their child’s
acquired, iCanBuy had about 50,000 customers. They had partner
relationships with more than 50 retailers including CDNow, online
computer store Outpost.com and Pacific Sunwear. They even signed
up several charities, a bank and a firm where kids could invest,
according to Herman.
fateful flight in May 1998, Keck and Herman recruited some cofounders
in June, including Herman’s brother, Ross, who built the
prototype site. In July, they hired a technical firm to start
building the scaled-up version. Unlike most dot-coms, they conducted
marketing research and did focus group concept-testing in August.
The results were positive.
The goal was
to launch their business in time for the 1998 holiday season.
In October 1998, they got married and got the business into the
Keck and Herman
funded the business out of their own pockets for all of ’98
and half of ’99. They started approaching investors once
they had a working prototype and were told they had a good idea.
They had lots of meetings and lots of opportunities to make presentations.
They saw more than 30 venture capitalists.
But they were
unproven start-up entrepreneurs. They got a couple of offers and
term sheets but never closed on any external funding from professional
investors. Instead, they kept raising money from angels, friends
and family—pretty much shoestringing it all the way.
business continued to growmodestly, last March, they sold iCanBuy
to a company called MainXchange, based in New York and Tel Aviv,
more than 400,000 customers, and Herman and Keck saw the deal
as a way to scale the business.
to try to grow but never had any significant money to attract
a larger audience. In November, they shuttered the business.
this was not a win for us or for our investors," says Herman,
who nevertheless remains philosophical and optimistic. "Even
though we didn’t realize a fortune, we learned a hell of
bubble of dot-com investing is over," he says, "but
we’re only about five years into the era of the commercial
Internet. It takes 40 years for an industry to fully mature. There’s
another 35 years of work to be done and innovations to be made."
So now, Herman
says, they’re free agents.
took our honeymoon after two years and went to Morocco. We’re
catching up on our personal lives a little bit. We’re doing
a little consulting," Keck says.
nor Herman seems particularly concerned about the future.
moves faster and grows more complex, great talent is always in
demand. We’ve had some pretty unique and widely varied experiences,"
you might think, Herman believes that he and Keck have been extremely
fortunate, even if they haven’t created a pile of wealth.
made the dumb mistakes. We have a better feel for how this world
really works. When we go to get funding for our next venture,
when they ask if we’ve done this before, we can say, ‘Yes,’
" he adds.
might be heading back to some secure corporate environment, Keck
and Herman describe a different type of security.
say we’ve done the hard job of taking the risk. Our unique
risk profile has career security. It may not have job security,
but it has career security," he says.
As for the
future, "Bottom line," Herman says, "I think Gayle
and I will find somebody who needs help or somebody in need of
help will find us."
is a partner with DiamondCluster International in Chicago.
He can be reached at email@example.com.