The first story I shared was about an event that took place in 2011. This one comes from an earlier time between 2002 and 2004- when CNE/illumynt first started. It was one of the worst times of my life, but I learned some invaluable lessons along the way.
In the beginning there were three of us- Chard who was a hometown friend, Paul, who was a friend and former colleague, and yours truly. We had all left our previous jobs without having a next one lined up- so we were a little desperate to make something work. We only had $50K in startup capital and It was June of 2002, not the best time to start a business.
Our high level plan was to break into the “reverse supply chain” for mobile computing devices. The “dotcom” bubble had recently burst and companies across the country were laying off employees. We speculated that most people would have been issued a company laptop that they would need to turn in upon departure. Our goal was to buy those laptops in bulk, repair/refurbish them, and resell to developing markets overseas. This business model, which is very commonplace today, was in its infancy in 2002.
That initial business plan ended up being a complete debacle. We failed to understand the complexity of the refurbishing process, and after all expenses were covered, we were barely making any money. None of us were taking a salary at the time and we had agreed not to take a dime out of the company until/unless we had net profits on the books.
The building we resided in was called Shetland Park in Salem, MA. The original occupant of the entire space (1.5M sq. ff.) was the first steam powered textile mill started in 1839. By 2002, the property had come a long way, but a few drawbacks remained.
We outfitted our warehouse in the basement of the building to accommodate a “production line” for laptop test and repair. We bought our first load of a few hundred laptops from Xerox and got ready to make our millions.
There were a number of reasons why this particular venture failed, mostly related to the condition of the product. However, an even bigger problem was that the electrical infrastructure in the basement was antiquated, and any time we powered up more than five laptops simultaneously, the entire grid would go down. By this time we were losing money every month and panic was starting to set in.
At one point it occurred to me that I hadn’t taken a paycheck in over a year, had a three year old son at home, and had drained all of my life savings to fund the business. As much as I loved my home in nearby Marblehead, I had to put it up for sale- which was heartbreaking. Heading into the end of 2004, the outlook was bleak.
We had been working day and night for many months trying to catch a spark. We would prospect in the US and Europe during the day and go home to our families for a while. Then we would go back at night to work the Asia market.
I had hired a few people in Taiwan and mainland China by that point. The larger companies in the US and Europe wouldn’t talk to us because we were too small. The one thing we knew about the Asia market was that if a list of material was available to bid, the company with the highest offer paying “cash in advance” would be the winner. We kept bidding and bidding as aggressively as we could, and didn’t win a thing.
I remember sitting in my office one day in early December of 2004. I was completely demoralized and dejected. I felt like I had wasted two years of my life and I was effectively broke. I closed the door and just stared at my screen. I had terminated most of our staff and only six of us remained. A couple of times that day someone came to my office to report some sort of negative information. It felt like a “gut punch” every time. I was mostly thinking about where I would get a job and how I could bring closure to the business.
At some point that day I made a promise to myself that if one more person came through the door with another piece of negative information- I was going to immediately shut the company down for good.
The rest of the day passed and no one else came knocking. I decided to keep waiting and working- trying to hold on to some hope. About two days later I arrived at the office and we’d gotten an email from our representative in Taiwan- Amy. Incredibly, we had bid $120K for a load of laptop parts from Compal, which were production excess from a HP contract. Within two days we had all of it sold at a $40K profit. I couldn’t believe it actually happened and was sure it was a fluke. However two days later we won another, even larger deal from a different vendor, and from there we were on our way.
Nowadays, we’re spending time decommissioning data centers and working on projects with thousands of servers and storage products. Our revenue just last month was over $12.0M and we have plenty of business coming our way.
What makes me laugh is that a significant chunk of our business is buying, refurbishing, and reselling laptops in large volumes. It seems all we needed was a little electricity!
I hope you enjoyed story #2. I’ll keep them coming if people seem to enjoy them.
P.K.
