Born and raised in Bulgaria, moved to the US in 1992 at age of 40.
Started Abacus America, Inc. in San Diego in 1992 with 100 sq.f. office one desk, one computer, no employees and rent of $100 mo. The initial idea was to provide consultations about Bulgaria and post communist opportunities to the American businesses. Advertised the services, just to realize that no one cares and all I got was calls from fellow Bulgarians asking how’s the business and if they should do the same.
Decided to stick to my core knowledge (computers) and started selling computers soon thereafter out of 1500 sq.f. strip mall location close to the Miramar Naval station. The economy was in dire straights at the time, but who was to tell me. The rent was cheap and I managed to hire the first two employees for cheap. Waited a week for the first customer to walk in the store. When he did he asked for a shower door. Apparently the space was occupied by a shower door company before us.
Next thing we learned is that there is a band of crooks that targets new business like ours. This is how we learned the hard way all the tricks of forged checks, theft, swap and return, stolen credit cards, lawsuits, attorney fees, fake witnesses, lies and you name it. This is just on the client side. On competitor’s side we saw competitors who maintained below our cost prices by not reporting and paying taxes, not paying benefits to their employees and providing warranties they never intended to honor since they were closing their business each year just to reopen another one.
One day a guy came along asking to buy several computers for a “monastery” where the monks are programmers. Two weeks later the whole group committed mass suicide and the local TV station was at our store shooting a report with the sales person who served them.
Another day a fully equipped military chopper landed on the lawn in front of our store. Two pilots in full combat gear came out and walked into our store. They purchased a computer cable and we asked “don’t you guys have cars”.
So it was kind of “fun” and learning period for us, but I had a family to feed and there were no profits in this business. Not to speak that none of my computer engineering skills were needed to run this business.
That’s why I would go to the large computer trade show Comdex every single year in the early 90-s trying to find new products and services and to escape from the retail.
Tried several things including purchasing early version CD- disk writer with a size of a night stand for $7,000. It was supposed to “burn” CD disks for clients who wanted to free up their expensive (at the time) hard drive space. It was pioneering move with correct business plan. What the business plan did not foresee was the rapid price drop of the technology. Just two years later the CD burners were selling for less than $100, and the hard drives tripled their capacity thus wiping out my investment and business plan.
Things changed dramatically in mid 90-ies when the strike of the Internet. We’ve decided to put all of our resources behind it. We started as an ISP (Internet Service Provider) providing dial-up services off of modem banks that we hosted at our improvised “data center”. We were so excited about the new services and technology that we forgot to send bills to our customers for 3 months. Our vendors didn’t do the same tough and we were squeezed again. Desperate search began for a billing software to send bills to clients and track payments. Apparently no such thing existed for the newly born ISP industry. We bought some half baked quick solution that didn’t work well and decided to write our own Billing Software that we named after one of the most beautiful mountains I’ve ever seen. Rodopi Software was born. It worked so well that we decided to sell it to competitors for additional revenue.
We were not alone in the Interenet “gold rush”. We’ve counted over 30 competitors in San Diego county alone soon after we started the ISP business. Regardless, we worked hard and delivered to our clients. One smart decision at the time was to bet on large integrated banks of modems as opposed to multiple single modems. Although the latter were 10 (ten) times cheaper, the competitors who have chosen that route were soon buried under tons of cables, problems and customer complaints and cancellations. As soon as the DSL technology emerged for Internet connectivity we embraced it. It was way too expensive to build our own so we were reselling the services by a company called Covad (now defunct). At about the same time we embraced another novelty technology – Wireless Internet provided by a company called Ricochet (now defunct).
The ISP time was a great time, however I as a CEO had the obligation to look 5 years ahead and present a vision and build a strategy. Unfortunately, I couldn’t see bright horizons for the ISP business. It was all about wires and connections and obviously the ones that had the wires, the networks and the capital to invest in fiber and even more wires are going to dominate the business. We couldn’t survive in this capital intensive battle without an access to capital.
Why not access to capital? Two major reasons. First, lack of personal and corporate credit history. Second, neglecting the importance of good accountants and financial reports. The latter one is my personal mistake. Being technologist to the bone, I thought that Investors would be as crazy about technology as I was and would throw money at me. Nothing like that happened and we suffered from lack of capital all the way to 2006 when we sold the company. Meanwhile we saw Internet companies which got funding with two page business plans and no revenues or profits. Those were the hey days of the Internet before the crash of 2001. We realized that our lack of ability to raise capital was a blessing in disguise after year 2001 when the majority of our well funded competitors went out of business. I still remember Investors who “didn’t like” us were salivating and bubbling of optimism about investment opportunities with mp3.com for example. Just few years later mp3.com was out of business and we were still in business and growing.
I went ahead of myself here. We’ve made one major decision long before the Internet crisis in 2001. The decision was to focus on data center based services such as web hosting as opposed to the ISP business. As mentioned above we looked at the ISP business as highly capital intensive for those who wanted to stay in this business. Also we believed that the telcos will awake and will claim their share of the business which would be all of it. We were right about both and soon all 30 independent ISPs in San Diego were wiped out by competition from large telco and cable companies.
Providing data center related services allowed us to be our own boss and to control our expenses and growth. It also allowed us to provide services nationwide and worldwide unlike the ISP business.
The crash of 2001 did not affect us much since we didn’t have debt unlike many of the players in the Internet industry. To the contrary we managed to find an excellent 44,000 sq.f. building to lease as our headquarters. The previous tenant was an Internet company that invested over $4 million in infrastructure. We bought all of it for about $350,000. Although a great deal the money to get it done was another issue. We didn’t have that kind of money sitting around. Since we were getting $4M worth of furniture and equipment we thought that we could use it as collateral to get a loan of $350K only. While this is a reasonable thinking normally , not so in the midst of the Internet crisis if you are an Internet company. Every possible lender we approached was scared to dead by the word Internet and again we’ve got no funding this time around. The seller has already pledged the contract to their creditors and the creditors were threatening that they were sending the trucks to reposes everything shortly. This is how I missed my son’s graduation from Columbia University in New York.
(to be continued)