Birth of a Start-Up: Entrepreneur on his own again

Nearly three weeks after moving into office space in Pioneer Square, Lon
McGowan is still trying to get his digital camera company settled in the new digs.

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

A file cabinet sits in the middle of the room.
Cardboard boxes are stacked one on top of
another. And a tiny whiteboard, with the
saying "eat your own dog food" scribbled on
it, leans against a chair.

"I really need to get some posters," said
McGowan as he stared at the barren 14-foot
white walls.

With digital cameras in each hand, McGowan refuses to take a break during a
recent interview — using the time to place his remaining inventory of about 80
cameras on shelving units bought at Office Depot.

Multitasking is nothing new to McGowan, who started the digital-camera
importing business Dec. 31.

But it is a skill the 23-year-old knows will become more important in the coming
weeks.

That’s because John Schmitz, the director of finance at McGowan Technologies
and a college buddy of McGowan’s, unexpectedly quit the company after just 54
days on the job.

"It has been tough," McGowan said, adding that Schmitz left on good terms. "But
I can pick up the slack."

Schmitz, who has applied to more than a half-dozen law schools, said he made
the decision on a Tuesday and was back in Boulder, Colo., on a Saturday.

"It was kind of bittersweet leaving," Schmitz said. "But even if we grew it into a big
company, that would not fulfill my goals in life. It would fulfill Lon’s goals, but not
mine. My heart is in the law."

Coming from a family in which his father ran a large company, Schmitz identified
with a more structured environment.

McGowan, on the other hand, grew up
with entrepreneurial parents.

"It is a big difference in
conceptualizations," said Schmitz, who
converted his equity stake in the
company into a short-term loan due in
one year.

Even though Schmitz thinks McGowan
Technologies has many hurdles to
overcome, he remains confident that
McGowan can make the business work.

"Lon has an incredible ability to market," he said.

Living month to month on a personal line of credit, McGowan will need those
marketing skills as he tries to sell the business concept to potential investors.

Saddled with more than $20,000 in personal credit-card debt, McGowan is
starting to realize how important outside financing is to the success of the
business.

"To really grow, I am going to need money, and to get money, I am going to need
investors," he said. "But I don’t know where to look. It is not like you can look
under the Yellow Pages."

If he doesn’t attract outside financing, McGowan feels as if he can keep the
business afloat for several months as he juggles his credit-card debt and
continues to make sales through Amazon.com, Bartell Drugs and other retailers.

But to build the business and target certain niches — brainstorming sessions have
produced ideas such as targeting eBay sellers, real estate agents and ski
instructors — money will be needed.

He quips that McGowan Technologies is "a safer bet than a dot-com."

McGowan’s financing problem became evident recently when a Florida distributor
contacted him about forming a partnership. The distributor wanted to help
McGowan sell the iClick cameras at major retailers across the country. But the
distributor also wanted a $2,000 monthly fee for the service.

"They are really hot on the thing. If I had an investor, that would be nothing. It is
pocket change," McGowan said. "The opportunity is there, but I can’t jump on it
because I don’t have the money."

McGowan has a business plan. But he says he would rather just sit down with
investors face-to-face to explain the company.

For now, McGowan is happy with his decision to move the business out of his
Belltown studio apartment. He has plenty of time to think on his 22-block walk to
work.

And the $600-per-month rent, which he now splits with a start-up Internet
company, isn’t very bad, he said.

With 500 more cameras arriving from Hong Kong next week, McGowan also is
feeling confident about the progress he has made over the past 4 1/2 months.

"I think things are going well; it still feels right," he said. "That is a good thing. I
still have that gut feeling."

But with more than $20,000 in credit-card debt looming, McGowan openly
acknowledges, "I need to strike it big."

Days in Business: 101

Days Business Partner Lasted: 54

Days in new office space: 20

Number of First 500 Cameras Remaining: About 80

Next 500 Cameras Due: Next week

Credit-Card Debt: $20,000-plus

P-I reporter John Cook can be reached at 206-448-8075 or
[email protected]

http://seattlepi.nwsource.com/business/66054_mcgowan11.shtml