Startup founder shares business ups and downs

According to Janet Stites, the most important ingredient to business success is not only a good plan and "having all your ducks in a row," but also "just a little magic dust."

Last night at the Weiss Tech House, Stites -- founder of the now-defunct AlleyCat News, a dot-com-era tech magazine -- spoke to aspiring undergraduate entrepreneurs about the roller coaster world of venture capital and entrepreneurship.

Stites, who graduated from Syracuse University in 1986, had a long history in tech-related journalism before starting AlleyCat Information Sciences Inc. in 1996 with just $15,000.

The small startup, which began as a newsletter on tech companies, grew into a magazine, AlleyCat News. By its peak in 2000, it reached a circulation of 50,000, booked $4 million sales and hosted major industry conferences with keynote speakers such as Moneyline host Lou Dobbs and former First Lady Hillary Clinton. Unfortunately, the company was hurt badly when the tech bubble burst and went under in December of 2001, the same fate suffered by many other small New York businesses in the wake of the World Trade Center tragedy.

College senior Alex McCauley, receptionist for Weiss Tech House, felt that Stites was "very interesting" and loved the lesson she exemplified of getting back up after being knocked down.

Director of Weiss Tech House Anne Stamer said that Stites was the first industry speaker brought in front of the group -- others have been graduate students -- and that she offered a whole new perspective. Stamer said she especially appreciated "all of the little details" that Stites offered and felt it was especially important for students to see that they would "face a lot of failures before they saw success."

Stites' stories and anecdotes encompassed the attitude and feeling of a young startup, as well as the frustration felt by many during the recent economic downturn, and offered advice for all situations.

She talked about how hard it is for unproven people to get loans and added that to be entrepreneurial, one should always have money from other jobs saved. In the startup days, an entrepreneur will not see any revenue end up in his or her pockets. In those times, she cautioned that the young entrepreneur should be prepared to "live well below [his or her] means."

Once a small business shows that it has a valid product, even more headaches can arise. A startup can only pay its employees so much, and when larger companies see the quality of such a business, headhunters reach out to double the salaries of college graduates hired mere months before. While a strong human resources department is helpful in stemming the tide, this particular problem is one of the many difficulties facing small businesses in the open market.

Stites said she felt that the fall of AlleyCat was unavoidable in the wake of the WTC attacks. At the same time, she felt there were mistakes made that could have been avoided. She said that one should always learn bookkeeping and remember that unless a person wants to be involved with one particular business for the rest of his or her life, he or she should always be ready to sell. AlleyCat "bootstrapped itself" -- or grew out of its revenue -- and thus basically overextended itself.

As for Stites, she currently does contract consulting work for several firms, but when asked how she felt about being an entrepreneur, she smiled and said, "I'm addicted to it."

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