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Week of 17 September 1999 Vol. III, No. 6 Feature Article SMG junior lays down textbook for retail career By David J. Craig Jeff Gut knows he's different. At a time when his peers are just beginning to ponder how they'll make a living after college, the 20-year-old Gut (SMG'01) already owns a business that could be the envy of any middle-aged entrepreneur. Jeff Gut (SMG'01) predicts that the online retail site he launched this March, CollegiateMall.com, will gross $15 million during its first year. Photo by Vernon Doucette CollegiateMall.com, an Internet retail site launched by Gut in March, targets college students and sells everything from furniture to bathroom supplies to calling cards. It's so successful that Gut (rhymes with loot) took a leave of absence from BU to spend more time as the company's president and chief executive. He expects it to gross $15 million in its first year -- sufficient reward for Gut's 15- to 20-hour workdays. "When I was hanging out in my dorm, I was reading Barron's and the Wall Street Journal, not Sports Illustrated," he says. "Business is my hobby. And running this company is the most thrilling thing I've ever done." Stressful move provides a spark The idea for CollegiateMall.com came to Gut last fall, after a stressful arrival on campus. "It was so frustrating," says Gut, a native of Raleigh, N.C. "I had only one day to move in before classes started, and I needed everything from a desk and a desk lamp to a bed." Without a car, and with no time to be finicky, Gut paid what he thought were outrageous prices at local furniture stores for basics and lugged it all back to campus on public transportation. Here comes the flood As lucrative Internet opportunities rise, so do the number of BU students who see their future in the world of online business. The Graduate School of Management's Entrepreneurship Program has grown from about 30 to 60 students during the past two years, in large part because of increased opportunities for e-commerce startups, according to Candida Brush, SMG associate professor of management policy and co-director of the school's Entrepreneurial Management Institute. About six graduates of the program launch their own business every year, says Brush, many of them online ventures. "The technology makes it easier to start any kind of business," she says. "It doesn't matter if you're going to sell pasta or furniture. Now, it's faster to get started and easier to get an advertising presence, which makes it possible for young companies to compete." But while a professional-looking Web site can be launched for as little as a few hundred dollars, luring customers to the site is costly. Rebecca Reynolds Moore (SMG'91), who launched an online company in 1997, says she was surprised to learn that it was constantly necessary to raise outside capital to expand her full-time staff to four and invest in marketing. Her company, Museumshop.com, sells products for 30 museum gift shops from across the country. "When I founded the company, I thought it was something I could accomplish by pulling up my own bootstraps -- and that I'd grow organically," she says. "But succeeding was hard. We've had to raise a half-million dollars since our inception. This month, we're closing a multimillion dollar agreement with two venture capitalists. "The other big challenge was developing relationships in the industry," says Moore, who worked in marketing at the Smithsonian Museum in Washington, D.C., before attending BU. "I used a lot of my contacts at the Smithsonian and branched out from there. Up until now, we've been growing very quietly." "I figured all that hassle shouldn't be necessary," he says. "There had to be a more efficient way." Gut's plan of attack was simple: figure out what every college student needs, and make it all available on one Web site. He spent his time outside class that semester drafting plans for CollegiateMall.com, doing market research, and pitching his idea to potential partners. Even then, he was no freshman in the business world. At the tender age of nine, he had turned a personal invention -- a small zipper tied around the wrist -- into a trendy accessory that eventually was sold across the country in stores such as J. C. Penney and Hudson Belk. Money that Gut had saved from the now-defunct bracelet business was part of the seed money used to launch CollegiateMall.com, and the rest -- about $400,000, he estimates -- came from family and friends. His father, Ralph Gut, president of Ideal Fastener, one of the largest zipper manufacturers in the world, and Ronald Kupferman, chief executive at Raleigh-based Global Software, gave the venture credibility by agreeing to sit on CollegiateMall.com's board of directors. Still, getting CollegiateMall.com off the ground wasn't easy. "I had a really hard time getting distributors to sell their products to me at first," says Gut. "I'd go to a furniture manufacturer and they'd treat me like I was just a kid. Of course, once you have some success, everything changes." Businesses eventually lined up to let Gut act as an online salesman for their products, because it allows them to tap in to what some observers believe is an increasingly hot online market. When a customer orders from the CollegiateMall.com site, Gut then purchases the product from the manufacturer and ships it. "We were intrigued because we didn't know anyone who had pursued this market before," says Edwin Yip, co-owner of Iconpower.com, a small Web development company. Yip agreed to merge Iconpower.com with CollegiateMall.com last November, when Gut approached him about creating his Web site. "It's got incredible potential because college students are so much more likely to use the Web than adults. We knew Jeff was onto something." Making it in the big time For the second time in his short career, Gut has found a niche. The first week of September, he says, after CollegiateMall.com teamed up with the Internet search engine Lycos to host a back-to-school shopping Web site, his site got about 139,000 hits. CollegiateMall.com now sells products for 40 distributors -- the most popular items are futons, shower sandals, beanbag chairs, desks, and cordless phones. The company also sells textbooks and CDs through partners VarsityBooks.com and Amazon.com. CollegiateMall.com will feature more than 20,000 products after it updates its Web site next month. Gut, who now is meeting with executives around the country to raise $5 million in venture capital so he can add to his six-person staff, says the recipe for CollegiateMall.com's success is simple. "Furniture stores in Boston probably make most of their sales in September and January, when students arrive," Gut says. "But they have to pay rent all year round and prices reflect that. With us, you go online, find what you want, and use a credit card, and it's all at 20 to 40 percent below retail prices because our overhead is nothing." Being a 20-year-old businessman still has its unique challenges, however. "Back in June, I was negotiating a contract with a big technology company, and I probably got outnegotiated because the executives were older, a little smarter, and more powerful. And even when we had an agreement, they really played on my emotions by not sending the contract for weeks, to see if I would get nervous. And of course I got nervous. But next time I won't show it." Gut plans to return to BU to become a CPA, but for now, his passion for business is insatiable. "I could probably go to work for Amazon.com, but this way I feel like I'm creating something," he continues. "And in some weird way, I'm affecting college students' lives, whether I save someone 20 bucks or a trip to a store."