What’s most important here are Loeb’s insights into starting a new venture: “The central rule is to do whatever it takes to get going as fast as possible,” he says. Loeb did not negotiate any kind of exclusive deal with credit card companies before launching the business. “Worrying about exclusivity is a high-level problem,” he says. These are the kinds of issues that, at the outset, “you don’t have the luxury to concern yourself with,” he adds. “When you approach a company like Citibank [with whom Loeb made his first deal], you need to make it as easy as possible for them to say yes. I paid them a flat rate so that they knew they would win rain or shine. Whoever was in charge of credit card inserts could say yes, and we did not need to move to high-level executive vice pres-ident–type of negotiations, which would probably have doomed the business from the start through delays.”
Loeb’s decision to offer a flat rate brilliantly secured the future of the business. “If I had offered a percentage of revenues, the credit card companies would have been constantly eyeing the potential profits of the business. Instead, I was assuming the risk, and it would have been a poor use of resources for them to try to recreate our business. In a sense, we became an outsourced revenue source for their previously wasted media. They won, and continue to win, no matter what. Then, how we make money is up to us.” In essence, Loeb made it as easy as possible for the banks to say yes and to keep saying yes.
Today, the Synapse Group is the provider of magazine offers on all of the major credit card statements. What’s striking is Loeb’s success in dominating this distribution channel with no exclusivity agreements. “I am a big believer in getting there first,” he says. “Once we established ourselves, we were found money to the credit card companies, and we have a mutually beneficial relationship.”
There are multiple lessons in Loeb’s experience for go-it-alone entrepreneurs:
