A Digital Mom and Pop

As Web Reseller Expands, Growing Pains Emerge

Started in a basement, Dyscern fills a warehouse with consumer electronics that are resold online by family and friends of chief executive Jennifer Canty. (Photos By Richard A. Lipski -- The Washington Post)

Jennifer Canty, chief executive of online retailer Dyscern, keeps her friends close and her co-workers closer.

At the company's office in Sterling, she sits next to Erika Dickstein, vice president for marketing, a former classmate. Dickstein sits next to Bill Frischling, chief operating officer, who is Canty's husband. The chief logistics officer, John Angerer, is Frischling's childhood friend and was best man at his wedding. Canty's dad, Herb, runs the warehouse. Her brother's fiancee, Kristin Carroll, oversees customer service.

Dyscern, which each week sells more than 1,400 iPods, PDAs, GPS devices, digital cameras and BlackBerrys, mostly through eBay, has in a few years gone from being a small home business to one of the fastest-growing retailers in the country, according to Inc. magazine, with projected sales of $12 million this year. It has done that largely on the backs of family and friends.

Their rise as an eBay success story illustrates the growing pains felt by many companies that begin as mom-and-pop shops and grow quickly into much-larger businesses. As Dyscern looks beyond eBay and its own modest Web site, its owners are preparing to face bigger challenges, such as whether they need to hire executives with expertise their team doesn't have.

"As we look to future growth . . . we will bring in other professionals who have experience and fill in the team," Canty said. "These people will likely be found outside of our friends-and-family circle."

That is a crucial step for a rapidly expanding family business, says John A. Davis, faculty chairman of the Families in Business program at Harvard Business School. "You can't rely too long on family members for employment. You're going to need skill sets pretty quickly that the family doesn't have," he said.

Until now, Dyscern has been able to put off the tricky question of hiring outsiders because of its executives' mix of talents. As a former AOL guy and techie, Frischling, 35, continually buzzes with new ideas and directions for the company. Canty, 36, a University of Maryland business school graduate, takes a more cautious, by-the-numbers approach.

"Bill and I do not always agree. These disagreements certainly have the potential to be a bit more emotional than any I have had with previous companies," Canty said. "Since I control the finances and Bill generates the ideas, most disagreements center on funding these ideas."

For example, Frischling once suggested that Dyscern sell and install high-definition televisions and also proposed that the company embed video games into its the pages of its Web auctions. Canty vetoed both ideas. They have agreed, though, to start making digital picture frames, their first foray outside retailing.

One of the company's more heated debates was over a major issue facing small businesses: health-care costs. In the first few years, when Dyscern had four employees, the company paid for all health benefits. As the company expanded, health costs shot upward.

Canty and Angerer, the third partner in the business, argued that health costs were becoming too expensive and that employees should pay a portion. Frischling countered that it was the company's responsibility to pay in full. The three were blunt about their views, a common thread in their business discussions. "You can be honest rather than being diplomatic," Canty said.

In the end, they compromised on a lower employee contribution. "I do agree with Bill philosophically, but economically it was impossible for Dyscern to continue without employee contributions," Canty said.