Key Idea #1: Step Out Ahead of the Crowd

HATTIE: Hi. I'm glad you're back. This is the place for you to be if you want to start a business or if you already have a business and you want to make it more successful. We'll give you ideas to help your business grow and also help you get off on the right foot.

Last week you met a toymaker. Today you're going to meet someone who can deliver a flower, a stuffed animal or a ham anywhere around the world in less than 24 hours. How does he do it? I'll show you.

(Voiceover) And, of course, Jim Shell is here. He's our veteran entrepreneur. Jim has started and sold four businesses during his career.

Now he writes about his experience. He wrote the book "Brass Tacks Entrepreneur" and his newest from John Wiley Press is in the bookstores right now.

The Master Class is about to begin. If you ever studied music, you probably went to a master class. Now these classes are not taught by teachers. Teachers teach nuts and bolts. The Master Class is taught by a professional musician. And what you learn from a master is how to connect the heart and soul to the nuts and bolts. And now join me in the Master Class.

(Voiceover) The cut flower industry is a $17 billion business. The man you're going to meet now knew nothing about flowers seven years ago and today he sells more of them than any one florist in the world. When I asked him where we could come to interview him, he said, `I can run my business and show you my business on any PC in the world that has Internet access.' So in a complete stranger's office at IBM in Somers, New York, I met the man who has already become a legend in the interactive world.

BILL TOBIN (PC Flowers & Gifts): I had to do it. I had to do it. Everybody said it couldn't be done. Everybody said, `It won't work.'

HATTIE: OK, but what's the principle underlying? Do you...

BILL: The principle underlying is you don't listen to what other people tell you simply because they said it's never been done. `Never been done' doesn't mean anything. Never being done is either an opportunity or it's a wall. I review `never been done' as an opportunity, but sometimes you have to be realistic and you get involved in something and you say, `This shouldn't be done now, but I can do it some other time,' and you shelve it. I've--I've shelved things and come back to it five years later and said, `Now is the time for this.'

Key Idea #2: Work Smart To Earn Online Customers

HATTIE: Bill, what is PC Flowers & Gifts?

BILL: It's the most comprehensive floral and gift service in the interactive world today.

HATTIE: (Voiceover) In 1989, in partnership with the online service Prodigy, Bill Tobin started PC Flowers, and in 1994, he expanded.

BILL: I instantaneously used push-pull technology, which is the latest technology, cutting-edge technology to give you motion, to say, `OK, we sell greeting cards. We sell Valentine's Day roses. We sell flowers of all kinds, plants of all kinds. We sell balloons. We sell bears. We sell gourmet foods. And we sell gift baskets.'

HATTIE: So all this is happening for me, I don't have to do anything?

BILL: Nothing. I believe that on the Internet, as in an online service, you must earn the right of the consumer to tell them about your commercial message.

You can't be as intrusive as you are with traditional channels and means of advertising--TV, radio, print media and so forth.

HATTIE: Is that because the user is a different kind of customer?

BILL: Yes. This is a highly educated user. This is a user that is used to our laser-beam approach to what they want. This is a user that won't put up with a waste of their time, and it's a user that's very demanding. Believe me when I tell you that the marketing to online consumers is so different than to consumers as channels of distribution. They are far more demanding, and basically, the reason is that they have total control. If you anger a consumer in your traditional channel of sales, such as a catalog or a retail store, they won't come back.

HATTIE: Right.

BILL: They possibly might even call your number and complain. On an online network, the sword of Damocles drops with a keystroke. They can go and tell 10 million people how you ruined their mother's Mother's Day by going on a chat service, and they have a sword that has never been before over any type of retailer or marketer.

HATTIE: Right.

BILL: And you can use it to your advantage or you--it can destroy you. The Internet consumer or the interactive consumer is far more demanding than any other consumer you've ever dealt with. He's smarter, he's better educated, he has more money and don't think he's going to take all this time to go through because it's your ugly child site. We've put together--Magnet Studios has designed my site to the point where it's instantaneous gratification, and it must be that way.

Key Idea #3: Deliver Value Pricing and Gold Service Online

HATTIE: OK, and that's no matter what you're selling. You can sell pizza on a corner, it must be high quality, it must be instant, it must get that customer to come back.

BILL: It must be better than everyone else. And also, on the Internet and on interactive services, people are going to want better prices, because people are thinking, `Well, I'm going to give them this convenience through this interactive medium, and they're going to pay me a premium.' Wrong. They're going to say, `You don't have brick, you don't have mortar. You should be 30 percent cheaper than everyone else.' The Internet consumer is going to be very bright within the next year and start to demand significant price differences from those that are in the brick-and-mortar paradigm.

I'm asked over and over again, `Why have you made it and nobody else has?' And it's quite simple. PC Flowers & Gifts developed a technological infrastructure from the ground up for an interactive service only for a year prior to going live.

Number two: We developed probably one of the most comprehensive autoprocessing and customer service interactive networks that instantaneously we can have a database management program that tells us where it is, we can respond to the consumer electronically. And we have a 100 percent customer guarantee, no questions asked. If you, for instance, go into the traditional retail store and you place your order with him, he places the order into the Mercury Network and it goes to a florist by ZIP code anywhere there, no without any acknowledgement as to how good the guy is or whatever. We used 7 percent--the top 7 percent of the FTD membership.

HATTIE: Oh.

BILL: We don't...

HATTIE: You've already preselected the florists you're going to use.

BILL: We've preselected--we've eliminated 93 percent of the members. We use 7 percent.

HATTIE: (Voiceover) In the Dallas-Ft. Worth area, floral orders are delivered by England's in De Soto.

Have you noticed an increase in your business since PC Flowers & Gifts has used you as a supplier?

SUE ENGLAND (England's): Oh, yes, very definitely. He's made our--he's made our business over the--when times were hard, PC kept us alive. And it doesn't matter if it's going to be going 20 miles from here or 30 miles from here, if PC wants it, we're going to go s--directly there because we're going to be sure it gets delivered.

HATTIE: (Voiceover) The owner, Sue England, has been in business for 30 years and it is definitely a family affair.

Christy is--Quin, I just want you to stay with me. Christy is the daughter-in-law of the founder, and this is Christy's mother. Are we straight? In other words, Christy married Sue's son, and then Sue's--then Shirley came to work. And then we have Christy's daughters and--no, wait a minute. Oh, she's busy helping a customer.

SUE: Uh-huh. Natalie, could you come here for a moment?

HATTIE: And this is Lesley.

LINDSEY: Lindsey.

HATTIE: Lindsey. I'm sorry. And this is Lindsey and this is Natalie. So we have a woman-owned, a woman-run, three-generation business standing here in front of you.

Key Idea #4: Understand Your Customer

BILL: Three years ago--well, almost four years ago, I did research that showed that in the United States, men won't send men flowers and women won't send men flowers.

(Voiceover) And men and women won't send children under 13 flowers. And what we allow you to do is build your own balloon arrangement on the screen, and how you build it is how we download it, is how we deliver it. And it's delivered through my floral infrastructure. All my local florists have the ability to do balloons. They love it because you don't have to have a designer, it's not a live product.

(Voiceover) And consequently, I ship one balloon arrangement for every four flower arrangements.

HATTIE: Wow.

BILL: Now there's a co...

HATTIE: All right, let's choose something--in fact, Quin, my producer he has this wonderful mother and she always does nice things for us.

So I think that we should order some flowers and I'll use my credit card and we'll do it right now, and we'll send them to Billie in Dallas, Texas, because we're sitting now in Somers, New York, and Bill's running his business out of an IBM office just that we've borrowed.

BILL: OK.

HATTIE: What is this?

BILL: This is a superbatch.

HATTIE: Superbatch.

BILL: This is something that's really a lot of fun.

HATTIE: Let's do the superbatch.

BILL: And she'll love this, and I'll tell you why. Each month, a grower says to me, `I've got five different kinds of flowers that we have an excess in abundance of from last year in the fields right now and we're going to ship those into Miami.' So we'll put together five different kinds of batches together and these are probably $90 worth of flowers at retail. You'll get a videotape with a booklet--videocassette and booklet enclosed which show you how to care for and design your flowers are part of this program.

HATTIE: Wow.

BILL: And so we'll now place our order.

HATTIE: OK.

BILL: And this tells you that you have requested a secure document.

This document and any information you send back are encrypted for privacy while in transit. You know, I hear a lot about the perceived problem of security on the Internet and I can tell you that it is just perception and it has been fostered by a negative spin that the media puts on it because it sells.

Negativism and scary stuff sells.

HATTIE: Right. Right.

BILL: But I can tell you what we're going to do right now with your credit card is a far sight safer than giving this credit card to the waiter to take into the kitchen to run it for anybody else to see or to pick up the telephone and give to an operator located where who's going to put it into a database that who knows has access to it. I mean, for us to do this through an encryption is so far more secure than the other traditional methods of ordering, I can't even explain it to you.

HATTIE: So it's a psychological problem we have.

BILL: It's perception.

HATTIE: OK. B-I-L-L-I-E... (Voiceover) We ordered the superbatch for Quin's mom and it arrived on time, straight from the grower, just when we expected it.

BILLIE: Hello.

Unidentified Woman #1: Good morning. How are you this morning?

BILLIE: Fine, thank you.

Woman #1: I have two packages for you.

BILLIE: Oh, great.

Ooh, aren't they beautiful?

Key Idea #5: Learn From Your Childhood

BILL: I started my first company when I was 11. I actually borrowed my mother's credit card and she bought me a lawn mower at Sears and a hand edger, and from 11 through 16, I did it manually, and then at 16 I got a car. And by the time I graduated college, I had 50 guys and I had 12 trucks and I owned one of the largest landscaping companies in Long Island. And so I then used that experience, went in the Army and came back three years later and decided that there was just no way I wanted to work for anybody because, unfortunately, I was being offered salaries that were about a quarter of what I was making as a landscape entrepreneur in college.

HATTIE: Let's stop a minute. Bill Tobin had a positive business experience very early in life. Even though his father was a policeman with a job, Bill learned beginning at the age of 11 that he never wanted to work for someone else. Lots of companies have downsized. Corporate America is getting smaller and smaller, but high schools and colleges are still preparing people for "a job," "how to write a resume." I want to suggest that you can make a living in a lot of ways and having a job is not the only option. You can be self-employed, which means you're a one-person operation; you can have a small business; you can be an entrepreneur. All these choices are available for you. The only thing standing between you and working for yourself is more information and knowledge.

Key Idea #6: Face Down the Establishment

BILL: ...I was going to do something I never did. I was going to take a vacation.

HATTIE: (Voiceover) After founding eight companies and experiencing great financial success, Bill decided to take off two years and sail around the world, but that never happened.

BILL: And while the boat was being readied, a very good friend of mine from college, Peter McMurray, who has owned some of the largest floral shops in the FTD network for 20-some-odd years, said, `You know, if you ever came into the florist industry and you brought your knowledge of technology and your ability to have large companies come in and do strategic alliances,' he said, `you could own the industry.' I said, `Flowers? I mean, give me a break.' He said, `Do you know how many cut flowers were sold in America last year?' I said, `How much?' And he told me at the time it was $13 billion. I said, `Billion dollars? Thirteen bi'--he said, `Absolutely.' He said, `It's huge, but,' he said, `it's still run like it did in 1955.'

HATTIE: Mom-and-pop shops on the corners of America everywhere.

BILL: Precisely. I thought at that time that interactive marketing was the wave of the future but threatened to remain so forever until somebody with a deep pocket and a commitment came along. And I honestly thought that IBM and Sears around the 1988-'89 time frame were that company.

HATTIE: With Prodigy.

BILL: So I went on the Prodigy network, examined it, looked at it, met the people and said, `I think I've come up with what I feel to be an excellent paradigm,' and we did a demographic search of the type of consumer that they were going after. And basically, that consumer was a perfect demographic overlay for PC Flowers. I came back to Prodigy and said, `Listen, I've got an idea for a service. I would like to develop a floral wire service on your network, but I want to own it. I want the exclusive rights to it and I'll fund it.' They said, `It's the greatest idea. We've already thought about it. Unfortunately, you got to use the FTD network, and they've already told us that it's the worst idea they've ever heard of and they don't want any part of it,' because FTD is a not-for-profit cooperative owned by the member florists. Anything that doesn't encourage the consumer to go into the front door of the flower shop's the enemy. I took my presentation, I flew down to Detroit and I made a presentation to the board of directors, which is 19 florists who are elected by their peer group, and I made a presentation to them and they summarily dismissed me and told me it was the worst idea in the world. I said, `However, listen. Look at my track record. You may not like my tie, you may not like I'm from New York, but I'm telling you, I am five to seven years ahead of everybody on everything I've ever done. It's just a knack that I have, and I'm telling you now, here in 1988, that your brick-and-mortar paradigm in the '90s is going to be in jeopardy because there are going to be many, many alternate means of ordering flowers. And electronic ordering is the--as far as I'm telling you right now, the electronic ordering is the wave of the future. And go by my track record, don't go by what you think of me,' and so forth.

They summarily dismissed me. So I just simply looked at the fact and said, `OK.' I bought a chain of florists. I digitized all the FTD selections and multiprotocol programming. I informed FTD I was going to be their new best friend and that I was going to, in fact, bring them kicking and screaming to the 21st century, I would apply by all the rules and abide by all the rules of the Mercury network. However, if they tried to stop me, `Check my track record. I've sued seven of the largest companies and three governments for antitrust, and I will have no problem coming after you for antitrust.' They just decided that they would let me dry up and blow away.

Key Idea #7: Execute Near Perfection

So in 1988, I did a test on the Prodigy network with four products and I realized that 93 percent of the FTD members can't perform to the standards that I needed. So I developed an entire network called PC-Net and I got 7 percent of the largest FTD members on contract to perform to my standards.

HATTIE: Individually.

BILL: Individually.

HATTIE: You went to them instead of doing the whole 25,000 at a whack.

BILL: I only use 2,700 or 2,800 and they give me the entire network for the country coverage. I went live full tilt in January of 1990 as the 25,000th florist in the FTD network. By May, I was the 10th largest, and by September, I was the largest in the world. By then, I walked into FTD, walking softly and carrying my rather large stick, and said, `Now here's what I want. I want 5,000 square feet at the Mercury network. I want my people, my computers, my software. I want you to give me the keys to the Mercury network and I want to eliminate and bypass 93 percent of your members. I want to download directly from the platforms and I want to have the fastest, most efficient distribution channel in the world and I want to have perfection.'

The floral industry had between 5 percent and 7 percent or 8 percent, as it does today, that doesn't fly on a transactional paradigm, on an interactive network because, as I say, the sword of Damocles drops with a keystroke, and they can tell three million people how you ruined their mother's Mother's Day and everything you've done to them is down the tube.

And so consequently, I now have, over the past seven years--I'm told we've processed more orders than the rest of the interactive industry combined, and we have a documented error rate of 2/10ths of 1 percent.

Key Idea #8: Modify Your Philosophy

I've really never had a financial partner ever, mainly because I felt when you take money from an investment banker or any other source, you become an employee, and that's been very alien to me and I've always, I guess, felt that I would like to be the decisionmaker and not have to go back and ask permission. And so right through this company, I've never had a partner, but all entrepreneurs must know that there's a time within a certain life cycle of a company or a product--the Internet is a perfect example. The Internet is bigger than any company in the United States and any government in the world. And consequently, I've established a paradigm that, over the past six years, has proven financially successful and that it can be ported to the Internet, and I've done that successfully.

Now I believe for the first time in my business career, at the end of 30 years, that I'm going to take in a financial partner. And so consequently, I believe that to be a major player on the Internet, you need a lot of resources--not only dollars but synergistic resources that a large corporation can bring to it that has a synergistic goal. They have the network, they have the technology and they have the desire.

HATTIE: What kind of partners do you want with PC Flowers & Gifts?

BILL: I want a company that will give me the ability to go and bring PC Flowers forward and expand it to have a complete interactive shopping paradigm on the Internet utilizing PC Flowers' magnetism to bring in traffic and to pass that traffic to other sites which unto themselves would not be able to bring the traffic.

In my opinion, if you don't bring up the best graphic capability, the best navigation capability and the best considerable amount of dollars in, A, your Web site, the tools you have for autoprocessing, credit card processing, customer support and insight, at a bottom line, to bring it up and develop the transactional service from the bottom up. If you bring on a service without doing all of this homework ahead of time, you've bought yourself a ticket to anonymity in cyberspace.

For the same reason, over 30 years, I've made a reasonably good living out of being faster on my feet and more creative than corporate America.

BILL: And as I say jokingly, but not so jokingly many times, in the '70s large corporate America considered me a parasite. In the '80s, I became a valuated partner. In the '90s, I'm Inc. magazine's Entrepreneur of the Year and I'm doing nothing differently, except it's the perception of what I've been doing.

Key Idea #9: Don't Quit Your Job

Delete...HATTIE: All right.

BILL: I become everybody's new best friend. I develop...

HATTIE: Because you bring them a new idea.

BILL: I develop strategic alliances. I never try to do everything myself. Pigs don't get rich. You simply take the best and you bring it together and you form strategic alliances, and my Web site is nothing but one massive strategic alliance and every business I've ever had is one big strategic alliance.

The Internet is the biggest thing that I've ever been involved with.

HATTIE: This is your eighth company and it's the biggest one, which is why the partnership is so critical to its success.

BILL: Absolutely.

HATTIE: And you're willing to take a little of a lot rather than what you've done in the past, a whole lot of a little.

BILL: Absolutely.

An entrepreneur to me is sort of like a dog with a bone. He doesn't drop it until there's not a scrap of meat left on it. He stays with it. He is focused, he is myopic, he is tenacious, whereas people that try to be entrepreneurial but are skipping and jumping and spreading themselves thin. An entrepreneur is absolutely driven and cannot sleep, cannot eat, cannot do anything until he accomplishes that goal.

I mean, I meet guys all the time in large corporations that tell me they want to go out on their own, and about 90 percent of them shouldn't because I can tell you right now the difference between an entrepreneur and a guy that is used to working is a guy says, `Well, I've made $50,000 this year. I'd be willing to go out on my own for $40,000.' No, you're willing to go out on your own for nothing and with no income possibility for the next couple of years, and you must take everything that you've got continuously, as opposed to saying, `This is for my kids' college. This is for this. This is that.' You got to take all those marbles and put them up on the table every single time. Take a little aside, keep a little back, but most of it must go on the table for the next venture or to get the penetration you need for this venture. An entrepreneur is absolutely one of biggest gamblers in the world, but he gambles in an area where he's figured he controls the odds, as opposed to the house controlling the odds.

Move up from bottom of show... BILL: The Internet is tantamount to being alive 100 years ago. It's sort of a time machine for me. It gives me the opportunity to take a look at all this broad, new area that's never been done before. And I understand the Internet and I understand where it's going to go as well as anybody does. I mean, I'm going to look back at myself five years from now and say, `Phew, back then, I didn't know anything about anything.' But basically I understand where I want to go with the Internet and the Internet's going to give me an opportunity to take, expeditiously, what I've done in a very limited way with PC Flowers & Gifts and move forward into 100 other areas. It's just a wide-open free-for-all highway. It's the Autobahn of opportunity.

Key Idea #10: Know Your Tolerance for Risk

HATTIE: if you can delete: Bill Tobin is the quintessential entrepreneur. Here's Jim Shell, our veteran, to define entrepreneurship and explain to you why some small business owners succeed and some fail.

Tell me, Jim, what is your definition of an entrepreneur?

JIM SHELL: I'll start off by telling you what Webster's is. His definition of an entrepreneur is someone who takes a risk for profit. And I think that Webster's full of baloney.

HATTIE: Oh, really?

JIM: My definition of an entrepreneur is someone who chooses to seek opportunities without having to depend on someone else.

HATTIE: OK.

JIM: You and I have talked about this before, Hattie. You know that I think people that really take risk or someone who has to depend on somebody else for a paycheck, that's risk, that and bungee-jumping.

HATTIE: OK. Well, so is there a difference between someone who's self-employed, the small business owner and an entrepreneur then?

JIM: Yeah. Here's what--I think that an entrepreneur is someone who starts a business with the intent of growing it, as opposed to someone who starts a business with the intent of subsisting.

HATTIE: So when you use the word `entrepreneur,' can we assume that you're also talking to the self-employed person and a small business owner?

JIM: Whatever his motives are. It's a motive issue. It isn't what he's doing, it's why he's doing it.

HATTIE: All right, let's elaborate more on the word `risk.' You're saying that it's a greater risk to work for someone else than it is to work for yourself.

JIM: Mm-hmm.

HATTIE: But someone who's had a paycheck for 20, 30 years, I don't know if they can grasp what you're saying. Can you elaborate on that a little bit?

JIM: Well, for one thing, if they've been getting a paycheck for 20 or 30 years, that's probably going to stop as...

HATTIE: Great.

JIM: We probably, `we' being people who own and manage our own small businesses, are on the cutting edge of where the world's going. The days of Ma Bell are over.

Move up to end of key idea #9 BILL: The Internet is tantamount to being alive 100 years ago. It's sort of a time machine for me. It gives me the opportunity to take a look at all this broad, new area that's never been done before. And I understand the Internet and I understand where it's going to go as well as anybody does. I mean, I'm going to look back at myself five years from now and say, `Phew, back then, I didn't know anything about anything.' But basically I understand where I want to go with the Internet and the Internet's going to give me an opportunity to take, expeditiously, what I've done in a very limited way with PC Flowers & Gifts and move forward into 100 other areas. It's just a wide-open free-for-all highway. It's the Autobahn of opportunity.

The Closing of the Show.

Questions? We invite your questions or comments.

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