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#Written by David Tam, 1996. #
#davidkftam@netscape.net Copyright 1999#
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INTRODUCTION
============
Dave Welling has been an entrepreneur for the past ten
years. In his first entrepreneurial venture he started WRF
Telemetary Ltd. in northern Ontario developing custom military
electronic parts. In his second venture he started the Ontario
operations of Inso/Microboutique, which was formerly based
exclusively in the province of Quebec. His venture became very
successful, becoming the largest Apple dealer in Ontario with
annual sales as high as $40 million. He left this venture last
year to start Watco Inc., a web technology consulting and systems
integrations company. His focus is on corporate intranet
consulting, project management, and systems integration.
Currently, his business is in the startup phase, with ambitious
goals for the year 2000. I have had first-hand experience with
the business as a summer student employee.
Dave Welling, President
Watco Inc.
100 Lombard Street, Suite 202
Toronto, Ontario
M5C 1M3
Phone: (416)943-4999
Fax: (416)943-4725
Email: dave@watco.ca
BEGINNINGS
==========
Dave Welling was born in the small Ontario town of Parry
Sound on MONTH DAY, 1962. He started worked since the tender age
of eight by volunteering in his Grandfather's store. With this
early training and exposure to business, Dave learned the meaning
of work and responsibility.
Having a strong aptitude in academics he received the award
of having the highest marks in his graduating high school class
of 1980. As a consequence, he entered McMaster University with a
one year entrance scholarship, enrolled in the electrical
engineering and management program. His strong academic
performance earned him the distinction of becoming the first
undergraduate teaching assistant in the area of mathematics and
sciences at McMaster University. This trend of employing
undergraduate teaching assistants still remains in effect at
McMaster. The engineering and management program, in which Dave
was enrolled, was a special five year program that allowed
engineering students to study business as well as engineering.
In Dave's case, he studied electronics with specialization in
microwave communications, along with marketing. In 1985, he
graduated with a bachelor of Engineering and Management in
Electrical Engineering and Marketing.
1ST ENGINEERING JOB
===================
Graduating near the top of his class, Dave was quickly
recruited by EMHISER Research, which was a United States defence
contractor. Though this was his first real engineering job, he
had worked for EMHISER during the previous two summers as a
summer student. Once hired as an official engineer he worked in
Nevada doing electrical engineering work. After a year, the
entrepreneurial bug had bit him. He resigned from EMHISER and
returned to Canada to start his own business in the same
industry.
ENTREPRENEURIAL ACTIVITIES
==========================
Venture #1 - WRF Telemetary Ltd.
--------------------------------
In the summer of 1986, his first entrepreneurial efforts
resulted in the creation of WRF Telemetary Ltd. Based in
northern Ontario, his company specialized in custom military
electronic projects. Clients included the United Kingdom and the
United States government. Though business was great, Dave knew
that his over all contribution to the world would have been
negative. His efforts in engineering and business were leading
the world towards remote warfare. Due to these reasons, he left
the business one year later.
Building a Reputation - ASAP Computer Products Ltd.
---------------------------------------------------
With the need to quench his entrepreneurial thirst again,
Dave entered the computer industry in the fall of 1987 to search
for a new business venture. His reasons for entering the
computer industry are best described as follows, "I entered the
computer industry because I knew I couldn't make money as an
engineer. It would take me twenty to thirty years to make a
decent living, given the strata in the profession... but I knew
engineers controlled a lot of the money and a lot of the world."
With this reasoning in mind, he landed a job at ASAP Computer
Products Ltd. selling CAD/CAM systems to engineers. However, he
was given this job on the condition that he would accept the
challenge of selling these CAD/CAM systems exclusively on the
Macintosh platform rather than the traditional IBM PC platform.
This was a challenge of substantial size considering the markets
at that time. Most engineering work and CAD/CAM systems were
IBM-PC based. It was the widely accepted platform for these
tasks. The Macintosh, however, had virtually no market
penetration in this area. Some how, Dave had to convince the
market that Macintoshes should be the platform of choice for
CAD/CAM systems. He successfully surpassed this challenge.
Being an engineer himself, he knew the engineering profession,
the mindset of engineers, the problems they faced, and the type
of solutions that would be successful. He was able to develop,
package, and integrate CAD/CAM Macintosh solutions that fulfilled
the needs of his engineering clients. In short, because he was
an engineer, he could easily identify and fulfill the needs of
his customers. Within one year, he was promoted from the
position of sales representative to division manager. Dave's
sales performance was so remarkable that it caught the attention
of Microboutique, a giant Apple dealer based exclusively in the
province of Quebec.
Venture #2 - Ontario Operation of Microboutique
-----------------------------------------------
In 1989, Dave was recruited by Microboutique and given the
task to start the Ontario operations of the company. Before this
position was fulfilled by Dave, Microboutique was in search for a
dealership in Ontario to expand its operations. Though they had
a large number of proposals from various candidates, none
appealed to Microboutique except for Dave's proposal. Dave was
flown to Montreal where he faced a twelve hour interview.
Afterwards, he was given a Macintosh computer, a cell phone, $50
to buy an office desk from Ikea, and a plane ticket back to
Toronto. From these few resources, Dave was given the task to
start business in Ontario. Basically, he was left on his own to
explore and develop the business with very little intervention,
guidance, support, or feedback from Microboutique. Given the
vast amount of freedom, Dave's entrepreneurial thirst was going
to be quenched once again.
The only restrictive factor was that the location of the
business had to be approved by Microboutique. Consequently,
Dave's first and only mandate to the parent company was to find a
location for the business. He roamed the streets of Toronto,
conducting research, viewing property after property, and
contacting real estate agents. His search criteria included
close proximity to the downtown core (targetting small and medium
sized businesses), convenience, ample parking, a ground floor
location with room for future expansion, and adequate loading and
operational facilities. Initially, he developed a list of thirty
prospective locations and later reduced this list to ten. He
then contacted the president and presented his list of ten.
After viewing all ten locations with the president, none met
approval. Unsatisfied, the president and Dave roamed the streets
of downtown Toronto until 3 am, searching for the right location.
At three in morning, they found the perfect location on Toronto
Street. Ironically, Dave had previously rejected this site in
his list of thirty locations.
On September 1, 1989, the lease for the location was signed
and major renovations began. Since Dave was basically on his
own, he had to supervise the renovations, assemble the necessary
equipment, and recruit employees. He was given a $1 million
budget, which as sufficient for one year of operation without any
sales, supporting thirteen employees and maintaining the the
current location. On October 17th, the first employee, a
receptionist, was hired to manage incoming calls.
By December, Dave had assembled a launch team of 10
employees. Notably, none of these employees had past experience
in the computer industry. Instead, Dave strategically recruited
people from his target market industries to bring in a fresh,
new, and realistic approach to the application of computer
technology. He knew that the best way be sensitive to customer
needs was to have employees who had been in the customers' shoes
in the past.
From January to April 1st, time was spent on getting the
corporate system up and running, and training the team.
Believing that the right corporate culture was going to be a key
ingredient to success, Dave also spent time orienting the team on
the culture of the company.
The official launch date took place on the 17th of April,
1990 with the unveiling of "Humanware" to massive media
attention. The company's target market were small and medium
sized business, taking on the philosophy that they could help
Canadian companies become more efficient and competitive by
integrating the right technologies into their businesses. They
offered total solutions to their clients. While a variety of
companies in the computer industry offered certain software or
hardware products, none offered the value-added service of
integrating all of these ingredients into one package to provide
a complete solution to the corporate market. In effect,
Microboutique fulfilled this need with their "Humanware" line of
complete solutions. They provided the hardware, software,
integration and customization of the entire solution. This
created very high value, complete, all-in-one solutions for their
clients. Their slogan was "After hardware and software, what's
left? Humanware!" Because of its success, this marketing
strategy remained in effect for the next four years.
One of the key ingredients to Dave's success was in learning
to say "no". When Microboutique was initially launched in
Toronto, they had zero sales, zero customers, and zero letters of
intent. Dave did not think it was wise for the company to accept
customers until the company was fully ready to do so (which was
on the launch date). Customers would come with good and proper
preparation. Saying "no" does not mean "no, never". It just
means "no, not now, but maybe later". Accepting customers
without being ready to do so could jeopardize the business, but
say "no, not now, but maybe later" would keep the opportunities
open. Dave believes that a weakness of many entrepreneurs is
that they tend to over promise because they need the support of
many people. As Dave states, "Entrepreneurs tend to forget their
promises because they are so busy, and so many things are
happening around them... but those who they make promises to
never forget!" Dave's strategy worked. Microboutique became
very successful because they were fully ready for business on the
initial launch date.
Dave's marketing plan also included an aggressive free
seminar campaign. Again, Dave decided to recruit seminar
presenters from his target market industries. These industries
included (1) CAD/CAM, with more than 6000 businesses in the
Greater Toronto Area; (2) Pre-press, which included advertisement
agencies and graphic design firms that totalled to 7000 business;
(3) Multimedia, which were mostly post-production houses,
totaling 1500 businesses.
Dave's strategy paid off once again as his seminars became
so popular that they had to be presented as often as four times a
day. In contrast to his competitors, who offered seminars for a
certain fee, Microboutique educated customers for free, offering
a lot of value to corporate clients as well as retail customers.
Microboutique's market targets eventually grew to cover the
industries of image/document management, education, and even
retail. Dave managed to build these successes despite industry
analyst speculations that the markets were already well-served by
the existing providers. Basically, industry analysts believed
that there was no room in the industry for Microboutique.
However, within five years of operation, Microboutique grew to a
business that achieved annual revenues as high as $40-million,
employing one hundred employees. Notably, these successes were
all achieved during the infamous recession period. During this
period, Dave saw three of his major competitors go into
bankruptcy -- Computer Connection, Archon, and Computer Care.
Being an entrepreneur, Dave saw the opportunities that were
presented during the recession. When many people in this country
were laid off, many decided to start their own businesses. Dave
captured this market and promoted the use of technology as a
"business weapon". He provided all-in-one business solutions to
this market.
Through only one dealership, Microboutique in Ontario became
bigger than Apple Canada itself. They employed more people than
Apple Canada and also represented 20 % of Apple Canada's annual
revenue. However, such successes and rapid growth caused a few
growing pains for Microboutique. While Dave originally intended
to service the target markets mentioned previously, the huge
successes soon overflowed into the retail market.
In the fall of 1991, Apple introduced its very first low-
cost computer, the Macintosh Classic. With a base price of under
$2000, it opened a large market for Apple and Microboutique.
Dave had anticipated this opportunity and decided to open a
retail division of the company. With the intended release of the
Macintosh Classic, Apple had warned dealers that to survive in
the new market, they had to either become solely a retail
operation or specialize in providing integrated solutions, but
not both. Microboutique managed to overcome this challenge by
becoming equally successful in both areas. Dave's key to success
was to create segmented teams. The corporate clients team dealt
exclusively with the corporate clients, while the retail team
dealt solely with their respective customers. In this way, each
of the teams remained highly focused and specialized in their
respective areas.
However, as a consequence of the very successful retail
operations, Dave felt that Microboutique on the whole was
beginning to lose its focus of servicing business clients. Too
many of the retail customers were flooding the support services
that were intended for corporate customers. Resources were not
being utilized effectively. In October of 1994, he decided to
create a new division of Microboutique, called Inso, that focused
resources exclusively on corporate clients and offered high-end
total solutions to these markets.
Dave repeated his tried and true formula for success and
Inso saw rapid growth through 1995. Inso was involved in the
construction of the Toronto Star web pages. They provided a
total, integrated solution to their client by co-ordinating and
managing the project from conception to final product. They
provided the hardware, software, integration, customization, and
programming expertise. The team at Inso continuously tried new
methods and approaches in finding solutions for their corporate
clients. Continual learning was philosophy implemented by Dave.
For instance, Dave attended a one week management training
program at Harvard University in Massachusetts. He believes that
entrepreneurs must continually invest in themselves and their
corporate team by investing in life-long learning. In this way,
entrepreneurs and their corporate teams would able to effectively
handle their growing businesses.
Financial results for the year ended November 1995 reported
revenues of $22 million from the Inso division, $8 million from
the Microboutique retail division, and $10 million from the
education division (which included the K-12 schools and colleges
in the Metropolitan Toronto area). These figures created a total
annual revenue of $40 million.
As mentioned previously, one of Dave's formulas for success
was to hire employees who had no past involvement in the computer
industry. Through six years of operations, he had only hired six
employees who had this past experience. In this way, Dave was
able to maintain the company focus without the traditional biases
and attitudes that stemmed from so called "computer experts".
Instead, he hired employees from the industries of his target
markets to become more customer oriented. The result of his
strategy created a company with employees that had a burning
passion to get involved in the computer industry for the first
time. This gave them a common ground to build a distinct,
strong, supportive corporate culture. Dave believes that
entrepreneurs are control freaks. They often feel they are more
important than their business. However, Dave realized that the
only assets of his company were his employees. Consequently, a
high reward/recognition system was developed. This also helped
to bring out a highly competitive team culture. On the whole,
Dave and his team were out to prove that they could outsell the
"computer geeks" in the industry.
Whenever Dave discovered that the competition was copying
his past marketing or sales plans, he personal initiated new
marketing plans that changed the "rules of the game". For
instance, he changed the rules when Apple introduced the
Macintosh Classic. The competitors spent time debating whether
to stock up on the Mac Classics in time for the Christmas season,
which was a very lucrative selling period. These dealers had
doubts about the success of the new Macintosh model. Meanwhile,
Dave purchased the entire stock of 1000 Mac Classics from Apple
Canada before the competition had even placed a single order.
With this move, Dave effectively prevented his competitors from
having any Classics for sale during the Christmas season. During
that period, the only place consumers could buy a Mac Classic was
at Microboutique. This strategy was success as the Mac Classic
proved to be highly popular amongst the mass consumer market. As
Dave puts it, "If others starting copying you, it's a sign that
they think they know your formula for success, but they don't!"
Dave's passion was to make a difference in Canadian
companies by applying technology successfully. He wanted to be
on the positive side of technology rather than the negative side
(such as his engineering job at EMHISER). This led him to start
Microboutique. However, Dave was never granted ownership by the
owner in Quebec despite the successes of Inso/Microboutique in
Ontario and the promises made by the owner. At the end of
November 1995, Dave left Inso/Microboutique in search of another
business venture.
Venture #3 - Watco Inc.
-----------------------
Dave decided to pursue a business opportunity that he and
his friend, Todd Finch -- who is now the president of Netscape
Canada Inc. --, had seen in the summer of 1994. They had their
first glimpse of Netscape's Navigator browser software and
recognized its potential. During that period, most of the world
was not aware of Netscape nor the internet.
From January 1996 to May, Dave conducted technology and
market research, and developed a business plan to start Watco
Inc. The focus of the company was on constructing corporate
intranets using a total solutions approach similar to that of
Microboutique. From conception to implementation, Watco would
provide a total solution by providing hardware, software, and
custom programming, with project management, consulting,
subcontracting, and support. Competitors in the market include
Systems House Limited, Electronic Data Systems, and IBM.
However, these big competitors only provided these services to
very large corporate customers and ignored small to medium sized
ones. Watco was going to fulfill this need by servicing these
clients.
In May of 1996, a location in the downtown Toronto core was
leased and in June, Dave hired his first employee as the product
manager. On July 1st, he hired his second employee, a summer
student, to assist in technical research and support. On a few
weeks later, a sales representative was hired to develop and
follow business leads.
While still in the startup phase of the business, Dave was
busy trying to raise capital from the capital venture community.
Watco required $1 million in funding aside from Dave's personal
investment. However, Dave found the task of raising venture
capital to be the most challenging. Though he had spent a lot of
time on market research, he did not conduct much research on the
Canadian capital venture community. Instead, he relied on the
experience and advice of others to help him obtain capital
venture funding. Unfortunately, the information Dave had
received was not the complete picture. The Canadian venture
capital community did not invest a large percentage of their
funds in technology companies. Instead, it is invested in
resource-based industries and biotechnology companies. According
to Dave, there was a total ignorance of the opportunities in the
service-based industry. As a consequence, he had underestimated
the time needed to secure adequate financing from this source.
Of the few prospective investors that he has found, most would
only fund ventures that required $2 million to $5 million.
Dave believes that there is a financial marketing scam led
by the big banks. Another problem faced by his new venture was
that credit, for cash flow purposes, was hard to obtain for the
newly incorporated business. He found that no one wanted to give
a credit line to a new company for the first two years of
operation. Even though Dave himself has had an excellent history
and reputation with financiers and the computer industry, he
found that the credit department of most businesses he dealt with
ignored his past credentials. Under corporate policy and
bureaucratic red tape, they could only base Watco's credit line
on the incorporation date of the company. Since a corporation is
legally considered as a separate entity registered under the
provincial government, Dave's past credentials were legally not
applicable to his newly formed company.
If he had to do it all over again, he would skip the venture
capital route altogether and find smaller amounts of financing
from elsewhere. He would have probably operated out of his
basement, hired three to four employees, aggressively close sales
deals, and meet contracts using a fly-by-night approach that was
oriented towards short-term goals. Eventually, this type of
operation would build cash reserves high enough to allow Watco to
to achieve long-term goals. A lesson that Dave has learned is
that it is very important for entrepreneurs to understand
financing and cash flow.
The marketplace has changed since he first started Watco
Inc. When Dave first started this venture, the wonders of the
internet received tremendous amounts of media attention, while
the potential of the corporate intranet was ignored. Now,
everyone has "jumped onto the intranet bandwagon". ISPs have
changed their marketing strategies to target corporate intranets
instead of the mass consumer market. Even Netscape Corp. has
drastically changed its company strategy to target intranets.
Netscape barely paid attention of the potential of the intranet
during its IPO launch. They were focusing on electronic commerce
over the internet. Now, 80 % of Netscape's revenue comes from
companies using its software to set up corporate intranets.
As of now, Dave's strategy during the startup phase is to
follow a very methodical procedure of measured step. First,
venture capital must be found. Once adequately funded, the first
few deals with clients would be closed. Dave's goals for the
next five years are to (1) build Watco Inc. into a company with
annual revenues of $55 million; (2) have a business model that is
attractive enough for an Initial Public Offering; (3) employ 100
staff; (4) become known in the industry as "The Intranet People"
-- the best implementors in the intranet world; (5) develop an
evolutionary propriety technology (e.g. Sun Microsystems' JAVA
language); (6) do things differently than those in the industry;
(6) and to have sufficient resources to spawn new high-tech
companies. A challenge faced by Watco is that there is confusion
amongst most corporations concerning the capabilities of
corporate intranets. This is partly due to the marketing
confusion purposely generated by companies such as IBM Lotus and
Microsoft, who have made their profits on the pre-
internet/intranet computing model. Watco must do its best to
educate corporate clients, perhaps using the same formula that
was implemented at Microboutique.
Dave plans to develop the corporate culture by recruiting
employees with a passion to be in the computer business,
rewarding performance, and making everyone stake holders in the
company by giving everyone a "piece of the action". Dave
believes that entrepreneurs must learn to delegate responsibility
to others. Consequently, he plans to empower his team members by
allowing them to make key decisions. However, whether the
results are good or bad, accountability would be upheld. Dave
believes that entrepreneurs must be infectiously passionate about
their goals. They must be so passionate about their goals that
it infects other members of the team and these members develop
the passion as well. In this way, Dave hopes to create an
environment that fosters creativity and the pursuit of
excellence. As he remarks, "The enemy of great is good. Anybody
can be good." Once you think you are good, you stop trying to
achieve greater things and fail to remain progressive and
innovative.
CONCLUSION
==========
Dave's success can be attributed to many factors. He has a
high level of integrity, and takes responsibility very seriously.
He believes in taking full ownership whether the results are good
or bad. He acquired these ideologies at a very early age,
working at grandfather's store. What Dave has learned from his
grandfather is that, "Your name is yours. At the end of the
journey, what your name stands for reflects your life. Your name
is the only thing that is really yours."
Dave has a passion in life. He wishes to make a positive
contribution to the world by making a positive contribution to
technology. He left his engineering career because he knew that
his work aided the world towards remote warfare. This desire to
make a positive difference first led him to Microboutique and now
to Watco Inc. In the fast moving, volatile world of the
internet, many companies are sinking in the quicksand, but some
are seeing tremendous success. A tough challenge lies ahead for
Dave and his new company. Hopefully, Dave's entrepreneurial
instincts will lead him and his team towards the successes he has
so often seen.
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