Smith: How did you raise your start-up capital?
Legatos: We accepted the first check from family and friends in December 1998, and took in amounts from $2,000 to $75,000 until we had half a million dollars. We quit iVillage on the day it announced it would be doing an IPO, and everyone there thought we were crazy. But it showed our investors how committed we were.
We built confidence because of our experience and the people we recruited to help us. Then we spoke to the Downtown Venture Conference in New York City and the organizers said we could put out a press release if we'd write it by the next day. We stayed up 'til the wee hours of the morning to get the wording right, and it went out over a commercial wire service. The next weekend, Amy got a call from a venture capital fund in Cleveland that saw the release, and eventually we raised $4.5 million. At this point, going public isn't on the horizon-we'll probably build towards that.
Smith: How did you link up with other Web sites for marketing?
Legatos: We hired LinkShare, which has this amazing system that allows you to send information about your Web site to other sites and invite them to refer visitors to you for a percentage of purchases. They have hundreds of thousands of all kinds of sites on their system, all carefully screened. It's a sophisticated, turnkey system that even small companies can afford. We used our contacts to get them interested in what we were doing. We also used our contacts to approach AOL and MSN and establish a presence on their networks.
Smith: What's been your best marketing idea?
Legatos: Sampling. We have assembled a database of customers consisting of 130,000 names and done direct mailings. Any visitors to the site get free product samples. It's very efficient in converting people into customers.
Smith: How did you go about choosing who would design and host your Web site?
Legatos: We decided to make a significant investment to hire Fry Multimedia, which gave us credibility with investors because they build many of the large sites. We have all our systems integrated, from manufacturing to accounting, using Microsoft and Great Plains software. But you don't have to be that ambitious to have a successful system. You can hire some freelance talent and a combination of smaller shops that will put together what you need.
Smith: Where do you think you'll be with the company a year from now?
Legatos: We'll keep working to invest in the business, sampling, courting media attention and building a brand with third-party endorsements.
Scott S. Smith writes about business issues for a variety of publications, including Investor's Business Daily.