Katie: Welcome back to the BusinessMakers Overtime Show heard here and online at the BusinessMakers.com/overtime. Esther and I are incredibly excited because not only are we sharing the studio with the one and only John Whiteside, our producer, we also have Russ Capper in the house.

Esther: Woo hoo.

Russ: I thought I'd never be asked to be here.

Katie: Well Russ, welcome to the Overtime Show.

Russ: It's my honor.

Katie: It's good to have you. Good to have your voice on our side of things.

Russ: Nice to be here.

Esther: So I think what we wanna talk about today is Katie and I on our show we always talk about start-ups and the kinds of crazy things people are doing in the business world that are unusual and out of the ordinary. We don't talk about a lot of Fortune 500 companies on this show unless they're getting sued.

Russ: Right.

Katie: Or there's a funny quote from their CEO, but that's another story.

Esther: That's right. But kinda' curious to see your perspective on how things in the start-up world have changed because you are yourself a very schooled and seasoned start-up guy. You started a lot of companies and you've been involved in a lot of start-ups. So I guess that's what I wanna know. That's what we're talking about today.

Russ: Well, and I'm also very seasoned. So I did this a long time ago. It's always debatable how valuable the history lessons are, particularly in things that are just so happening in start-ups. Somebody might think well, it doesn't matter what it was like 20 or 30 years ago, but boy, when you've seen what I've seen it's just dramatically different and this is just an incredible time to be a person that wants to go out and make it happen and start a company. The first one that I really did on my own was in 1980, which I was also 30 years old at the time so you can do that math pretty easy and figure out how old I am.

Esther: You were young and stupid and ya' didn't know better.

Russ: Right. But the number of resources for everything, for education, for funding, for assistance were just miniscule back then, which some people might argue well, that's pretty cool. That means that everybody wasn't out there starting up companies at the time.

Esther: Sure.

Russ: And that is very true. It was very rare. In fact, what I always remember what was so different about it back then, if I was telling anybody what I was doing they would always go, 'Oh man, I've thought of that. I've got this idea.' But very few people would do it. The advice that a lot of us that did it would give to those would just do it. It seemed like there was a lot more resistance, maybe even concern about possible failure and that sort of thing. It was just huge. I had lots of friends and they just wouldn't do it.

Esther: Do you think that after the recession that we went through in the 80s, did you see a lot of people starting businesses, maybe taking that leap after that? Kind of the way we've seen it this time because I feel like a lot of start-ups have been born out of necessity in a way. They have this idea and they got laid off and they said, 'I can't find a job. What else am I gonna do?' Might as well go for that company, go for that idea that I've had this whole time that I really wanna be doing. I wonder if there's a similar pattern there.

Russ: All of mine are just sort of anecdotal in what I remember. I think there probably were, but they were usually people doing franchises and that sort of thing 'cause I think they felt a little bit safer about them. I even remember this quote that one of our guests on the BusinessMakers Show, Nolan Bushnell, the founder of Atari, the inventor of Pong, and the founder of famous Chuck E. Cheese restaurant.

Katie: No comment.

Russ: But he had this quote from, it was probably a quote from 20 or 25 years ago and he said, 'We all have these thoughts when we're in the shower and we're isolated and we're thinking creatively.' He said, 'Just very few of us ever go out and just do it.' That is so different now. Now it's just everybody's doing it. The other thing that crossed my mind, Katie, you said something about starting something in your garage. Well my first business was really a textbook moonlighting business. I had a full-time job at IBM at the time. You had to keep those things so much more separate at the time. Nobody at IBM ever knew that I was running a business on the side. I don't know, but I think if they did they might have had a problem with it.

Esther: I bet they would have had a problem with it.

Russ: Yeah.

Katie: Yeah.

Russ: Yeah; I think they would have. Although I was putting in many hours at IBM and doing well I thought and -

Katie: But you could have been putting in more if you have all this extra time, Russ. Gees.

Russ: That might have been their thought.

Katie: Maybe.

Russ: The other thing was and get this, I even was a little bit worried about I didn't wanna look to my customers in my start-up business like I was doing it out of my garage. So I was always sort of playing around with the actual business address and get this. I was even worried about my subdivision and deed restrictions. At that time you kind of couldn't do that sort of thing. I think it was written in the deed restrictions and I was always worried that the mailman might turn me in or something.

Katie: Oh my gosh.

Esther: I remember when my dad started his business. He called the address 1 Brainer Tower. It was our house. He started it in the garage apartment with the computer, but to make it look big called it something big.

Russ: No, I remember your dad, Jay Steinfeld, telling that story. I think a lot of things that he did back in the very beginning of Blinds.com were similar to what I experienced, too. But Esther, going back to your question about what changed it. Was it one of these recessions and everybody - I think what changes so dramatically was 1995-1996, the internet. It is such a dramatic change in waking people up and a lot of people who might have always worried about a risk suddenly saw this new hold interactive world that was developing before their eyes and they thought wow, this is an opportunity, which I always like to really share my feelings even on the dot com thing and the dot bomb thing. My dot com experience was in the residential real estate world, which is a world all into itself. In that world they love to make fun of what happened and how it looked un-business like. I just think when they make fun of it and they criticize it they've got it totally wrong because there was just a massive change that took place there. If you couldn't get excited about it and wanted to get in on it somehow something was wrong with you and even though there were silly models and silly IPOs that were significantly successful for a few people and investors, then there were lots of failures. It is just so dramatically changed everything and it lowered the bar on lots of businesses and how to get in. That's what's so exciting about it today.

Esther: That's right.

Katie: So let's talk a little bit about our beloved internet, which of course Esther and I speak incessantly of as if it's a third member of our radio program. It's interesting. So certainly we are children of Google. We're able to search. We can Google anything we need. We go onto Facebook and there's undoubtedly a fan page for whatever we wanna find out. What was it like? What were your resources in 1980?

Esther: That's right. What was the -

Katie: Where did you go?

Esther: What was it like to not be - 'cause we are what they call digital residents.

Katie: Yeah; natives.

Esther: We've never known a world without a computer.

Russ: Well it was very different. The world of marketing, the Direct Marketing Association was really the direct mail association for all practical purposes. A lot of people did that, even though there were a lot of people that didn't like it and the success rates were just enormously low. Advertising, newspapers and magazines were healthy. Radio stations were healthy and they charged real high rates. So you still had to get out there in front of people and if you had an effective marketeer you still succeeded. The thing that changed so dramatically and I remember this in 1998-1999 when we launched erealty.com. If you were an early starter you had a huge advantage. If you just put up a billboard with a dot com, even if it was a business that somebody was not interested in, people would flock to your website because people were so interested -

Katie: 'Cause you had one.

Russ: Yes; exactly. They were so interested in well how in the world are they gonna sell refrigerators on the web and they'd go see their -

Katie: Right; the -

Russ: How in the world are they gonna sell window coverings on the web. My God, you can't do that. In our case real estate. Or you could do a mass - and I remember going through my mail at home in that era where I never paid any attention to the cards and direct marketing pieces, but suddenly if one of them was a dot com I'd look at it real quick and go now what are they doing. I was real curious and I would go there. So to get eyeballs in that period compared to getting eyeballs in this period when there's a million new websites every day and a million new Facebook fan pages every day, it was a completely different ballgame. It was exciting. The dot com that I ran was venture funded by people that wanted - that we were out there on a land grab. So we had raised lots of money and we were supposed to spend it all on advertising. That was a blast.

Katie: Wow.

Russ: Now there was debate on how successful it was at the time, but man, oh man. So all of that world is so dramatically different. The world of marketing has suddenly become much more important. It's always been important, but my background has always been in sales. Those of us like me always thought well sales really was more important than marketing. Well, I think the interactive world has flipped that completely upside down and now the excitement's in marketing. The effective ROI comes from marketing. So that's hugely different. So, you all live in a great time and you should appreciate it and everybody that's listening to this -

Katie: I do actually.

Russ: Well you should. You'd be bored in that old world.

Esther: We're certainly seeing a lot of people come up through the ranks and they're seeing how they can utilize these successful business models. Just like any industry although this is a new industry. It's young.

Russ: Right.

Esther: This is some precedence for success at this point.

Russ: Oh yeah.

Esther: We've seen some incredible - Amazon is on the Fortune 100 list. They're an internet company. They don't have a physical presence and yet they make, what? A billion dollars, two bil, something crazy.

Russ: That's why I started off answering the question I don't know how important it is the experience that some of us have now prior to the internet 'cause it just doesn't apply anymore. One thing that just certainly boggles my mind though that's always challenging is the barriers to entry in many of the spaces are not very high at all, which means you continuously have new competitors and the fickle, fad nature of this new media. You just look at My Space and I think My Space is still very successful and stuff, but just how big and it ballooned up and that's all anybody talked about and then it just started going away and how many of those there are. Even though they can get big real fast, they can get little real fast, too.

Esther: Yeah.

Katie: Yeah.

Esther: Absolutely.

Katie: Keeping the magic going is pretty darn tricky.

Russ: You bet.

Esther: Yeah; you definitely can't be running on hype. On the flip side, a lot of these companies feel that they must make a splash and grow from there instead of incremental growth like a lot of businesses. That slow growth, that slow, painful growth that it takes to get from Point A to Point Q, Z eventually.

Russ: Well that reminds me of one of our favorite guests on the BusinessMakers Show. Erica O'Grady interviewed John Moore's of Brand Autopsy probably two years ago. John Moore's had marketing experience with Starbucks' and Whole Foods, two very interesting companies. She kept asking great questions and was asking about branding and stuff. He would always defer back. He said, 'Well at Starbucks' when they're in these meetings and you're worried about branding, nobody talks about branding. All they talk about is serving the best possible cup of coffee that you can on the planet and having the best ambiance and environment and customer experience in each and every store.' That sort of sounded like the old-fashioned way. You don't build brand first and then try to attract customers. You attract customers and they become avid fans. Then that's your brand. The John Moore's interview is one of my favorite and we weren't talking too much about the interactive world then either. We were just talking about a couple of retail outlets that have been very successful.

Esther: Yeah.

Katie: We'll have to link to that on our Facebook.com/overtimeshow page.

Esther: Absolutely. Well it's been pretty interesting hearing your perspective. Thank you for stopping by and sharing it with us.

Russ: Well thank you for having me here.

Katie: Wonderful.

Esther: You're listening to the BusinessMakers Overtime Show heard here and online at the BusinessMakers.com/overtime. We'll be back with Chapter 3. We're gonna talk about whether you need college at -