Shannon Henry's The Download – Live
Discussion With VarsityBooks.com's Eric Kuhn Thursday, May 27, 1999 at 1 p.m.
Welcome to The Download – Live. I'm your host, Shannon Henry. My guest today was Eric Kuhn (below, left), 28-year-old CEO and co-founder of VarsityBooks.com of D.C.
VarsityBooks.com wants to be the dominant online store for textbooks. A 1998 Post feature told the story of its founding and early days. Recently the company announced that it had closed a $10 million round of funding. Another recent VarsityBooks.com press release claimed status as the most visited college-targeted Web site. And in my Download column today I report on two area executives who have just joined the VarsityBooks.com team.
Users asked Kuhn about what it's like to start a Net company, about online retailing and college-oriented sites and about the frustrations and joys of being an under-30 CEO.
Hi, welcome to Download Live. Send questions now for Eric Kuhn!
Shannon Henry: Hi Eric. Can you start off by telling us how you came up with the idea for VarsityBooks.com?
VarsityBooks.com's Eric Kuhn: I was practicing law, and tremendously intrigued by what was occurring with the Internet with respect to transforming inefficient industries. Bringing the textbook industry on-line struck me as an ideal opportunity; it's a required purchase, it's expensive and nobody enjoys standing in line at the bookstore.
Shannon Henry: How did you take that idea and make it into a business? Where did your money come from, your partners, etc.? And do you use your legal training as a CEO?
VarsityBooks.com's Eric Kuhn: We researched the industry, wrote a business plan and formed alliances with powerful players, including the world's largest book distributor. Partnering with industry experts enabled us to jump-start VarsityBooks.com.
Burke, VA: What percentage of college students are on the Net?
VarsityBooks.com's Eric Kuhn: Over 90% of college students are on the Internet regularly. One of the wonderful things about VarsityBooks.com is that our target customers, having grown up in the computer age, are the most wired segment of the population and the most comfortable with e-commerce.
Shannon Henry: What have you learned about how to raise venture capital? How much do you have now? Does it become a full-time job for someone - you - at the company?
VarsityBooks.com's Eric Kuhn: To date, we have raised almost $12 million dollars in financing. We closed our last round with FBR and the Mayfield Fund. While this is a large part of my job, it is also an incredibly important part to fuel our growth. To help manage future financings, we have just named a CFO.
McLean, Virginia: I noticed on the business' website that a local private boy's school -Georgetown Prep- is included in your list of school choices. Do you plan on broadening this niche? National Private Schools? Private Boarding? Trade? Correspondence? International US Universities?
VarsityBooks.com's Eric Kuhn: VarsityBooks.com has extended our service into Prep schools very recently. We recognize the vast opportunities and value of reaching students before they go off to college. Parents, as well as students, have embraced VarsityBooks.com because it allows them to save time and money.
silver spring, md: How has the development of your "brand" differed from the traditional players in the college textbook market? Is this a competitive advantage for your company?
VarsityBooks.com's Eric Kuhn: Unlike the traditional campus stores who have viewed the institution as their clients, we at VarsityBooks.com have focused our marketing attention directly at the 15 million college students. VarsityBooks.com is a brand built for students and one to which they can relate.
San Francisco, CA: Who is your greatest competition?
VarsityBooks.com's Eric Kuhn: Our greatest competition is the old way of doing business. When revolutionizing an industry, the greatest challenge faced is making customers aware of the benefits of a better way to do business.
Los Angeles, CA: What do you think about the valuations of some recent internet IPOs? Is this a bubble? If so, when will it pop?
VarsityBooks.com's Eric Kuhn: While it may seem difficult to justify the valuations of Internet companies by traditional standards -- when considering that unlike the biotech stocks of the 80s, which can be explained as a fad -- because the Internet represents a fundamental transformation of industries, valuations can be justified.
washington,dc: Has your location within growing washington technology community been a real advantage for your company? Have regional media outlets been supportive and followed your success closely?
VarsityBooks.com's Eric Kuhn: Washington D.C. has turned out to be a great place to grow a successful e-commerce company. Not only are there a growing number of talented service providers in the region, but there is also a vast talent pool on which to draw.
Richmond, VA: Will VarsityBooks go public in the near future?
VarsityBooks.com's Eric Kuhn: We see going public as a potentially attractive financing strategy in the future. Right now, we are focused solely on providing customers with a faster, easier and cheaper way to purchase college textbooks.
Shannon Henry: How will you compete with the Amazons and Barnes and Nobles? Do you offer large discounts? Or do you still consider brick and mortar college bookstores as the main competitor?
VarsityBooks.com's Eric Kuhn: While it is true that there are many on-line booksellers with great brand names, what makes VarsityBooks.com unique is our focus on the college demographic. Marketing to college students is very different than mass marketing.
Washington, DC: If you were starting your business today, what would you do differently?
VarsityBooks.com's Eric Kuhn: Where do I start? :)
Washington, DC: What is the biggest challenge you see for VarsityBooks.com in the next 6 months??
VarsityBooks.com's Eric Kuhn: With our rapid growth and success have come a number of challenges. Managing this growth over the next several months and distancing ourselves even further from the competitive landscape will be critical.
Shannon Henry: As one of the growing number of area CEOs under 30, who do you look to for advice? Who are your role models, in business or otherwise?
VarsityBooks.com's Eric Kuhn: Surrounding myself with trusted and experienced advisors has been crucial. Board members like Gene Riechers of FBR and advisors like Mike Joseph of KPMG have been invaluable resources.
WashDC: Why aren't Ivy League schools on your web site pick list?
VarsityBooks.com's Eric Kuhn: Right now we have a booklist from one Ivy League school, Dartmouth College. While we are constantly adding booklists to our site, students at ANY school can use our service by utilizing our MegaSearch engine. In fact, we have sold books to students at virtually every college and university in the country.
WashDC: You web site lists several schools with 'spring' next to them. Is VarsityBooks a cyclical business? Will you add 'summer' terms -semesters- to your choices?
VarsityBooks.com's Eric Kuhn: We have spring and summer booklists posted on our site and will soon be adding Fall 99 booklists. In addition, we offer much more than just textbooks, including study guides and bestsellers.
Shannon Henry: Oh c'mon. tell us some of what you would do differently. What has surprised you? What have you learned?
VarsityBooks.com's Eric Kuhn: We have learned a lot over the past year. One example is that I received a lot of advice to outsource critical tasks instead of doing them internally. While in many instances it is more efficient to outsource in the beginning, I have learned that at the end of the day, it is usually better to go with your own team.
Thanks for joining us today! Check out Linton Weeks' live discussion now.
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