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I was pondering the early days of Feld Technologies tonight, thinking about what mistakes we made (and boy did we make a lot of mistakes.) I wound the clock all the way back to the beginning (sometime in 1987) and tried to figure out what the first major mistake we made that could have killed the company.
Both Dave Jilk and I started working full time on Feld Technologies in the summer of 1987. I had just gotten my undergraduate degree from MIT and Dave had recently quit Viewlogic to help start Feld Technologies. We decided to rent an office across the street from our fraternity (the fourth floor of 875 Main Street) and go for it.
We rented 1600 sq. ft. We borrowed someone’s pickup truck and went and bought some shitty used furniture somewhere for a couple of hundred dollars. We went to Service Merchandise (I think that’s what it was called) and bought a few phones. We called Nynex and got some phone lines. Dave brought his old college half refrigerator into the office. We “borrowed” a plant or two from somewhere.
We then hired about a half dozen people. I remember all of them – Pat (who was already working for me and had worked for me the previous summer on our one major client – Bellflower Dental Group), Mike (a friend from Petcom who lived in Texas but moved to Cambridge for the summer to work on our first product – DOSBox – a bunch of DOS API calls), Mike (a frat brother who was usually stoned, but was an outstanding programmer), Dan (another frat brother who was also frequently stoned, but was an equally amazing programmer), and Rob (I can’t remember where we met Rob.)
We had some business – beyond Bellflower – but not much. I think we broke even for a month or two but then lost $10,000 in August when we had an office full of people but no business. Ever the optimistic entrepreneurs, we didn’t panic. We figured we’d find some business somewhere. We lost $5,000 or so the next month (I’m making the numbers up – these are the approximate ones.) Our “team” went back to school (including me – I was doing the second year of my masters degree) so we rationalized our costs would be lower because people wouldn’t be working as much. True – but they also didn’t produce anything and since we were doing everything on a fixed price basis, we kept losing money. On Monday October 19th, 1987 the stock market lost 22.6% of its value. I remember sitting around in Dave’s office listening to the radio. I took the T home that night, wondering if the world was going to come to an end. I didn’t have any stocks of significance, so this didn’t really impact me, but this was my first real awareness of financial panic.
We realized we couldn’t keep losing money because we had none (duh). We also realized that we (Dave and I) were doing all the work, but paying everyone else. Now – they were good guys – but they were going to school and our clients and our business weren’t their top priority.
We fired everyone a few days later. We somehow got out of our lease, put almost all the crap we had bought (except a few desks and phones) into storage in Somerville, and moved our offices into the spare bedrooms in our respective apartments (we both lived in One Devonshire Place in downtown Boston.) We started paying $50 / month for an office share in Faneuil Hall Marketplace so we could have a real business address (6 Faneuil Hall Marketplace.) We had no overhead (I think we used the same desks and phones for a couple of years.) It took us another year before we hired our “next first” employee (Shawn). By that time, we were making a profit of $10,000 / month after paying ourselves decent salaries.
Hiring too early almost killed us.