What's Up, Doc?
Your knees are sore. But you're not complaining. You're too busy thinking about that migraine. But you're still not complaining. You're too busy calling the doctor about your constipation.
You have pink eye. The mumps. Bloated ankles. You have a back problem, a nosebleed, carpal tunnel syndrome, back pain and jet lag.
Is there a doctor in the house? If you're not interested in seeing a physician, and if you're a woman, you might want to visit Health4her.com.
Men, you're on your own. Good luck. Don't let the door hit you on your way out. Buh-bye.
It has to work that way. Before Louis Silberman, now 36, started Health4her.com, his Scottsdale, Arizona, company sold health products to both sexes-and nobody paid attention. But now he has a company that earlier this year made $200,000 in one month and, by year-end 2000, should have made about $3 million.
Just about two years ago, sales were running at just $150 per month.
What's even more amazing, perhaps, is that Louis Silberman has thus far never spent a dime of anybody else's money (except for a "very small private loan from a friend," says Louis). He invested all of his own money into Health4her.com, and he didn't end up going broke. Wait a second-are a few of you Internet-based entrepreneurs feeling a little dizzy?
Your knees are sore? Sure, sit down. But you're not complaining? You're too busy thinking about that migraine . . . ?
The Lean Year
For years, Louis' wife had said that he would make a great entrepreneur, and selling health products seemed like a natural way to go about it. Louis says his parents were always preaching good health, and there were several doctors in the family. Plus, he loved the Internet. "I've always had a passion for it," he admits. "I'm on it all day, every day." Well, always might be too strong a word for a method of communication that's only been around as long as the Internet has, but you get the general idea.
Louis, who previously worked for an investment firm, decided to start his own business in early 1998. With $100,000 saved, Louis quit his job and opened up-drum roll, trumpets sounding-HealthFactor.com.
Ahem. You were supposed to nod excitedly and exclaim, "Of course, I've heard of that company." Well, if you've never heard of it, don't be alarmed. Although Louis spent a lot of money getting the name out there, few people, it seems, were out there.
"We started the company in February 1998, and we didn't make a sale until September," Louis recalls, sheepishly. "We tried to be all products to all people, selling all the products that you see in your grocery store or at PriceClub, and literally blew through over $70,000."
The company had been the brainchild of Louis and his wife, Shelley. While Louis took care of the marketing and day-to-day activities, his wife was a one-woman shipping department with very little to do. Louis had purchased what he thought would be one month's worth of products: boxes and boxes of trendy and traditional products like echinecea, ginseng and vitamin C. He had spent $15,000 on those boxes, which filled up the couple's bedroom.
And they remained there.
One Step Forward, 20 Back
"We kept trying a million different ways to market the same products," laments Louis, who would sit at his computer in his home office, working from 7 a.m. to 3 a.m., he says, for days in a row. Ironically, but hardly surprisingly, Louis says he gained a few pounds and didn't get much exercise-all the while putting together a company selling health to others.
"We spent a lot of money on advertising," Louis groans. "Everybody told us, 'You have to spend money on banners! Banners is where it's at.' So we tested on all sorts of banner networks. People told us, 'If you do a banner, you get 2 percent click-through, and 1 percent of those buy, and that's how you get your money.'"
"Well," Louis says, taking a deep breath, "on paper, those numbers work. But we tested and tested, and that wasn't the reality. The reality was, we were lucky to get .5 percent click-through and .25 percent buying." So that would account for that sale in September.
But their biggest problem, says Louis again, is that "we were trying to sell all products for all people."
Meanwhile, the competition intensified, with names like drkoop.com (Dr. C. Everett Koop's Web site) and drugstore.com. "These were people with $200 million in the bank to compete against," Louis says.
With a wife and a son to support, and another on the way, there were days Louis would get frustrated, but he says Shelley always infused him with energy and optimism. If she was ever dejected, he never saw it.
But by October, with only a handful of sales, and plenty of their money down the drain, even Shelley realized their business couldn't continue like this. "We were almost ready to close the doors," says Louis. And that's when Shelley started taking a serious look at their health-care product competitors.
Not long after, Louis says, Shelley had a revelation. "She said, 'This is crazy. There's nowhere online that's a health site exclusively for women, where you can get women's health tips and beauty tips, and articles on women's health issues and women-specific products-PMS, menopause and sex drive and everything.' We ran with her idea, and it just took off."
They launched their new, revamped company with a product Shelley had learned about: Vimaca, which had in its ingredients a 2,000-year-old herb that was said to increase women's sex drives.
"Forget the regular products," Shelley told her husband. "You have to find a niche and specialize in carrying hard-to-find things."
They came up with a new name and a brand-new approach to their company: Health4her.com. In November 1999, they brought in $150. The next month: $2,000. A business was born.
A few months earlier, their second child had been born, and so Shelley, in light of her full-time mothering duties, now significantly restricts her involvement in the company to developing the product line, while Louis works as the CEO. They also have 12 full-time and three part-time employees, plus a warehouse, instead of their bedroom, for inventory.
As much work as Louis does these days, he's the first to say: "We founded the company together. It was a joint effort. It's because of Shelley's vision that I'm here today."
Shelley, however, gives all the credit to her husband for their newest business' success: "He will not take no for an answer," she says.
He also learns from his mistakes. "We've avoided [Web] banners like the plague," says Louis. And, while it's getting harder to do so, for a long time Louis was able to negotiate cheaper advertising rates on the Internet by refusing to pay the going rate.
"Companies like drugstore.com and MotherNature-they advertise on similar sites to where we do, and they pay anywhere from $10 to probably $30 sometimes for a lot of these e-zines, and we're always wheeling and dealing and negotiating deals," Louis says. "Somebody will say, 'My price is $10 per CPM [the term media use when referring to 1,000 people looking at your ad],' and we'll say, 'No, we want to pay $2 or $3.' When we get rejected, we say, 'Fine, call us back when you have a dead day. Even if it's 15 minutes before [you need the ad], if there's a cancellation, if you can't sell an ad and you'd rather have $2 than nothing, then call us.' Everybody wants something rather than nothing, and we've built a lot of our business on that premise."
It's apparently a pretty good premise. Louis has a watched drkoop.com and drugstore.com lose a substantial amount of their stock value in the past year, and he thinks the high advertising rates that those sites have helped create are a big reason that so many companies have a tough time making money.
In another breath, Louis exclaims, "But we're getting to the size where it's hard to keep cutting the deals, which is why we're looking to raise money now." Ah, the myriad problem of being a strong, health e-commerce company. Is there a venture capitalist in the house?
Geoff Williams frequently contributes to Entrepreneur. He hasn't had a cold in over a year.