If you feel that the connection between selling bikinis and ATMs seems strained, join the crowd.
Before we made our decision to focus our company Triton Systems, Inc. on doing one thing and one thing only better than anyone else, we got involved in numerous other ventures. I remember in our early days, as we were struggling with our most recent failure, one of my partners commented that he had read where most successful entrepreneurs had failed an average of 17 times before achieving success. I scoffed at the time, but I later realized that we were pushing that many failed attempts at success before finally achieving our success.
Anyhow, one thing we did was become involved in business incubator development particularly based around the idea of technology transfer. The government had mandated that any government lab with funding in excess of a specified amount was required to have a technology transfer coordinator charged with developing a technology transfer plan for the lab.
While we had the pleasure to work with some very professional and capable individuals in this regard, many were not so much. Many lab directors saw this as a nuisance requirement and, thus, would often times assign their deadest wood to the task. In turn, these folks were clueless and desperate to find some way to meet their job requirement. Enter us with the Gulf Coast Breeder.
A good friend of ours was involved in raising venture capital at the time and managed to pair us up with a group out of the Delta who were looking for opportunities to create technology based jobs and were adept at securing grants to accomplish this. One of our early projects entailed the operation of what later became the City Of Biloxi’s incubator system.
Through this contract we became partners in a company which manufactured and sold bikinis.
There is no truth to my partner’s claims that my recent divorce influenced my interest in pursuing this particular business opportunity. I will admit, however, that when the opportunity arose to drive a van full of bikini models to a trade show in Orlando, I was quick to volunteer. To many men who may read this story, this opportunity may seem like a great one. It sure did to me.
About one hour into the eight hour drive, I wanted to kill myself.
Now these girls were definitely pretty, and sweet, and, for the most part, innocent. But their collective IQ was less than 3 digits. During the eight hour drive, I was forced to listen to details regarding the application of makeup and hair styling which no man should ever hear. I think that if they were to use this technique in interrogating terror subjects, they would cough up everything they ever knew within minutes. Of course, anyone who objects to water boarding would definitely be opposed to this technique.
So, you are still asking: “What does selling bikinis have to do with the sale of ATMs?”
Well, in the process of setting up distributors, I had the opportunity to meet some … shall we say … less than wholesome individuals – many of whom had missed the lessons my parents had taught me about paying your bills. One guy contacted us about being a distributor from down in Florida. He was about to get married and take a honeymoon, but he was confident he could help us nail down an order with a large chain in Florida. And he did.
Foolishly, we agreed to his one condition that he be paid his commission on the front end, so that he could proceed with his honeymoon. Now most of you are screaming, “Don’t do it!! Don’t pay the guy up front!” but, unfortunately, you weren’t there then. What we quickly learned was that this chain did buy a lot of product after insisting on extended payment terms, then they simply refused to pay for it when the time came. Our efforts to collect ended when they filed for bankruptcy, and the principal fled the country to return to Israel.
We had the same type of experience with many smaller businesses which required a great deal of effort to get paid. Now I love Florida, the beaches, the history, the weather, Mickey Mouse, the whole deal. Since Florida probably accounts for largest concentration of bikini purchasers in the southeastern United States, much of our business was focused there. But I quickly learned that in addition to the largest concentration of bikini purchasers, they also had the largest per capita number of scumbags. I never understood exactly why, but it’s true.
When It Came Time to Sell ATMs…
When the time came for Triton Systems, Inc. to set up a nationwide distribution system – we were doing so at the same time as the Japanese company Fujitsu. Much to their amazement, we did in six months when they had been trying for years. How did we do it? We had sold bikinis.
Our first attempt to set up distribution was with well-established bank equipment dealers. They liked our products, had great financials, and were very interested in selling our product. The problem, we quickly learned, is that they did not understand our market, nor did their banking customers.
You see, banks viewed ATMs as an alternative to bricks and mortar. And, just as a bank branch must always be open during the stated hours of operations; they required the same of their ATMs. But their ATMs required thousands of transactions per month to make money. Our market (convenience stores, bars, restaurants, etc.), could only deliver hundreds of transactions per month, so conventional ATMs were not cost feasible.
But our customers (convenience stores, bars, restaurants, etc.) wanted an ATM for their customers as a differentiator for their business to set them apart from their own competition, to help them avoid the credit card charges on each transaction, and to give their customers more payment options. To them, having an ATM which functioned 99.999% of the time was not important. Worst case, their customer would make their purchase using an alternate form of payment.
Soon, Triton was besieged by legions of one and two man organizations who clearly understood our market opportunity. If they could get a merchant to purchase an ATM, they would make some money on the sale, but they would also get a quarter or so per transaction. Now that may not seem like much, but you get a few thousand ATMs each making a thousand or so transactions per month and those quarters add up.
So they would order an ATM and, once they paid for it, we would sell them another, then eventually two, then three, and so forth. The obvious problem was that they were capable of selling 100 or more per month but, based on my bikini sales experience, there was no way we were going to provide these small operations, often times operating (literally) out of their cars, with a line of credit amounting to nearly three quarters of a million dollars. The solution came in the form of split funding.
We arranged with several lease companies to work an arrangement whereby once they approved a merchant lease, we would ship the ATM to the merchant location. Once it was installed, the leasing company would pay us directly for the wholesale price of the ATM then pay the balance to the distributor. Thus, they could, in fact, sell hundreds per month without the necessity for an enormous line of credit. This served us very well with only one or two exceptions.
Since it was often times impossible to predict which of these tiny distributors would be successful, using this approach, we could deal with any and all. In less than six months, we had established a distribution network much to the amazement of Fujitsu which ultimately abandoned their US banking operations – of which we purchased a portion.
The distributors also did well. After we completed a liquidity deal to “take some chips off the table,” I suggested that one of our larger distributors consider doing the same. In 1994, they were one of the tiny operations I mentioned earlier. They took my advice and, when they had their business appraised three years later, it was valuated at $30 million dollars. That’s a whole lot of quarters.
Disclaimer: Frank Wilem is an author, speaker, and all around funny and entertaining guy. On this blog, his stories are based on his real life experiences, often with a satirical twist.
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