Marketers have much to learn from start-ups

August 14, 2000

BY MICHAEL KRAUSS

This is one of an ongoing series of articles on interactive marketing leaders who are doing things other marketers can learn from. They're not yet household names, but will be in the headlines tomorrow. They're the emerging leaders of an emerging marketing discipline

Name, rank and serial number: Reade Fahs, 40, BA, English Literature, Cambridge, Mass.-based Harvard College, 1982. Marketing manager, KraftGeneral Foods, White Plains, N.Y., 1983-1985; joined LensCrafters, where he rose to head advertising and brand strategy, 1986-1996. Was managing director, London-based Vision Express, 1997-1999, and sold company to a French firm. Became CEO of First Tuesday (www.FirstTuesday.com), October 1999.

Mantra: "Get a consumer to respect you, they might come back; get them to love your brand, they’ll always come back."

On First Tuesday’s origins: "In October 1998, three Brits and two Americans got together in London, saying, ‘How come we can’t find an Internet community here?’ They started get-togethers (networking events). They e-mailed their friends. They got 50 people to the Alphabet Bar in Soho. Everyone said, ‘This is pretty good. Let’s meet again next month.’ It just took off from there."

First Tuesday high-tech and financing networking events are held in 81 cities in more than 40 countries across six continents. "First Tuesday is for people who don’t live in Silicon Valley ... people who need to learn quickly to catch up with Silicon Valley."

On First Tuesday’s purpose: "It’s about connecting people to the people who will help them be successful in the new economy." Name tags are color-coded: red for investors, green for entrepreneurs and yellow for service providers such as consultants. "The (venture capitalists) heard about it and started showing up. Deals would get done. Businesses got funded in the rooms. Word spreads quickly when that happens."

On becoming CEO: "I wanted to join the new economy. You’d walk into these (First Tuesday) events, and within 10 minutes, you’d have a job offer. It was just veryexciting. I wrote one of the founders, ‘You’ve really got something here. You’ve developed a pan-European brand and a consumer base worth millions.’ The next day, they called me up and said, ‘Would you think of running First Tuesday?’ "

On making money: First Tuesday events start out free, then move to a percentage pricing model. For its matchmaking business, for example, members send business plans on specific topics -- wireless, broadband or financial services -- and First Tuesday execs screen them down to the best candidates. Then qualified investors are invited to meet with entrepreneurs across a table, all in the same room; the financiers have 15 minutes per table. "We hit a gong, and the money (walks) to another table.

"We started out doing it for free. Now, we take 2% of the deal, (and) we’ve had about five or six of these. It’s an efficient way to meet your money."

On business since March: "The numbers of people wanting to get into the room have actually increased. It’s astounded us -- I expected a slowdown. But the harder it is to find your money, the more excited you are about this sort of an approach." In the next 12 months, Fahs predicts, the market will be back, investment will be up and "wireless will have gonea long way."

On his career: "I grew up in Cincinnati, in the shadows of (Procter & Gamble). When you grow up there, all you want to ever do is brand management." His first big marketing accomplishment was running the Hasty Pudding Show at Harvard and selling the rights to cable television.

But now, he advises, "Go to a start-up. The world has changed. General Foods was about learning the rules of theold economy. Going to a start-up is about learning how things are going to work in the new economy."

His best marketing advice: "At store openings, (LensCrafters’) Dean Butler would shout at the top of his lungs to his retail staff, ‘At LensCrafters, you will never, ever get in trouble for deciding something in the customer’s favor.’ That’s still good advice, online or offline."

Michael Krauss is a partner with Diamond Technology Partners in Chicago.
He can be reached at news@ama.org.