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Small Business
ClubFixit: Diary of a startup
June 13, 2001: 8:14 a.m. ET

The final chapter: ClubFixit closes its doors
By Staff Writer Hope Hamashige
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NEW YORK (CNNfn) - It was just a year ago that Sean Mullin was putting the final touches on the business plan for ClubFixit and was getting his venture off the ground. Alas, a little more than 12 months and only a few small victories later, Mullin has finally decided to put his little company to bed.

"I still believe in the idea," said Mullin, whose company was created to offer technology solutions for the repair and maintenance industries. "But for now, at least, it's time to move on."

In the time since Mullin ordered his first batch of ClubFixit business cards, the technology industry has been turned on its head. The dot.com countenance went from giddy to grim over the course of several months, following the crash of publicly-traded tech stocks last spring.

Since that time, both Wall Street and venture capitalists who had been throwing money at dot.coms turned their backs on fledgling Internet businesses. Tech companies from Silicon Alley to Silicon Valley have handed out pink slips and closed their doors.

In that environment, it should come as a surprise to nobody that ClubFixit became yet another casualty. The venture financing never made its way to Sean Mullin's home office and the clients were never exactly breaking down his door.


Here's how it all started: ClubFixit: Diary of a Startup Part 1. Click here
to read the rest of the ClubFixit series: Part 2, Part 3,
Part 4, Part 5, Part 6, Part 7.


Gregg Clark, a vice president at Cap Gemini Ernst & Young, noted that the Internet, because the barriers to start a small technology company are so low, gave rise to a great number of new businesses. Many of those businesses, because this was an unusually euphoric period in time, did not adhere to many of the time-tested rules of starting a company.

"A lot of companies were on a land grab," said Clark. "Everyone was trying to secure the first mover advantage and, at the end of the day, you can only profit so much from that."

Jon Goodman, executive director of EC2, an incubator at the University of Southern California, who reviewed CNNfn's stories on the life of ClubFixit, had this to offer about the company: "All the rules went by the wayside for a couple of years and this company was no different. Had they started earlier, in 95 or 96 they may have gotten funding, but the outcome would have been the same."

Mullin, like so many other failed Internet entrepreneurs, forgot that it takes more than a good idea to start a business. In business, no amount of enthusiasm can replace an experienced manager who knows the market and can effectively execute a business plan.

"Good ideas are a dime a dozen. People who can implement those ideas are as scarce as hen's teeth," said Goodman.

Funding free fall

In early 2000, when the idea for ClubFixit first came to him, the climate for investing in start up technology companies was still proceeding at a frantic pace. Angel investors and venture capitalists alike, flush with cash, were bankrolling ideas for companies nearly as easily as actual companies with customers and profits.

When Wall Street soured on technology companies in the middle of last year, so to did investors. Mullin, in his short tenure as the CEO of ClubFixit, saw potential investors turn from enthusiastic willing partners to skeptics who wanted to see big revenue figures before they would give him so much as a dollar. The lack of financing, said Mullin, was one of the main reasons the partners decided to close up shop.

In the category of small victories, Mullin did come close on a couple of
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occasions to securing some angel funds for ClubFixit. But coming close didn't fill his bank account and the balance sheets have not come close to balancing.

Mullin's own calculation is this: he's spent at least the $10,000 he had in the corporate bank account put there by Mullin and his three part-time partners in the company. In addition, he bought new computer equipment. Other outlays such as a new fax machine, supplies and telephone bills came right out of Mullin's own pocket.

The company took in revenue to the tune of $295. That from the one client he took on, a general contractor in Manhattan, who wanted Mullin to build him a Web site and e-mail.

Goodman contends that Mullin improperly felt that their company could not make it after the downturn among tech companies. It is the best of times, said Goodman, when the startup costs of starting a business are high. In the worst of times, great executives can still start a company and make it fly.

"It's understandable why he did what he did in the context of a couple of very strange years where all the rules went by the wayside," said Goodman. "But you can't be hopping on the caboose."

No capital; no commitment

In the meantime, Mullin's part-time partners have spent a dwindling amount of their time on their ClubFixit commitments. Phill Legault, who for a while was working on ClubFixit full-time as chief technology officer, took a full-time programming job earlier this year and has not been able to devote any time to ClubFixit.

Craig Shirey, ClubFixit's part-time money man, never left his banking job, as he had hoped he would when investors materialized. Mike Fishman, the company's marketing expert, also never left his job at an Internet marketing company and is now thinking of leaving the tech field entirely.

"It takes two things to sustain a company -- capital and commitment," said Mullin. "When we started out, the commitment was high and capital was low and over time the commitment seemed to meet the capital."

Not enough research

There is no one event Mullin points at to explain the death of ClubFixit. Rather than collapse, it just kind of sputtered as the disappointments piled up, one on top of another. Particularly disheartening to Mullin was the lack of response from the plumbers, painters and general contractors themselves.

  graphic RULES FOR ENTREPRENEURS  
    Jon Goodman's rules for entrepreneurs
  • Good ideas are a dime a dozen. People who can execute them are rare.
  • Know your market before you start.
  • Don't fear downturns. Many great fortunes have been built in the worst of times.
  • Beware of artificial correlations. Potential customers don't make actual customers.
  •    
    He still believes, as do some in the industry, that technology will help run these businesses more efficiently and, in turn, create more profits. But when Mullin finally started pitching his services to prospective clients last fall they were politely disinterested.

    He cold called, he attended building industry conferences and sent information through the mail. Only a few returned his calls and only one signed up. The acquisition cost of this one client, as they say, was just too high.

    Goodman said it takes more than capital and commitment to start a company. You also have to know there is a market for the product you are selling. Mullin and the ClubFixit crew waited far too long to learn this lesson. They made a mistake a lot of Internet entrepreneurs made in the past couple of years: They confused the existence of a product with the existence of a market.

    "Before they started on the business plan, they should have known about the market," said Goodman. "You really have to know your customer. These guys had never been in a plumber's office. They don't know anything about electricians. And they waited too long to find that out."

    If the time in which Mullin and the ClubFixit crew started their venture had not been characterized by irrational exuberance, they would have done a lot of market research before they went out looking for money, said Goodman. They would have visited well over a hundred plumbers, electricians, painters and the like to talk with them about their technology needs.

    They visited only a handful early on. So, it came as something of a surprise when, in October of last year, they started trying to market their services and received a chilly response from their potential customers.

    What the future holds

    As for Sean Mullin, he will not be putting on a suit and start pounding the pavement, resume in hand, in search of a stable paycheck any time soon. Rather than feeling discouraged after folding ClubFixit, his time at the helm of his own small enterprise has only reinforced the entrepreneur inside.

    "If I took a job and just went to work for someone else I'd feel like I was selling myself short," he said. He's now tending bar four nights a week at two different Manhattan restaurants before he starts out on his next big adventure.

    Always the optimist, Mullin has no regrets about the past year. Although he spent a good deal of his own money, and didn't really get very far, he would do it all over again. As an educational experience, running ClubFixit is the best he could have asked for.

    "It was cheaper than a year of school and I think I probably learned a lot more than most MBA students learn in a year," he said.

    In 12 months as CEO, Mullin learned the art of writing a business plan, he pitched his company to prospective investors, he worked with his attorneys to draft contracts and even learned quite a lot about technology.

    He also learned some hard lessons, chief among them is the fact that, as enthusiastic as he was about ClubFixit, he couldn't pull it off alone. That his partners never materialized as full-time fixtures in Mullin's home office was a disappointment, but he doesn't fault any of them for keeping stable jobs rather than quitting as he did.

    Mullin's kind of a loyal guy. He would never have kicked out any of his partners since the company was theirs as well as his. So, rather than try to find new partners he has put ClubFixit to sleep.

    "I want to call it 'sleep,'" he said, "because I don't want to rule out the possibility that some day we'll revive it." graphic

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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.