This year, CELEB welcomes Tim Storm as the Entrepreneur in Residence. Storm founded FatWallet in 1999 for $100.00. By 2009 it had a reported revenue of 12.9 million dollars. A comparison shopping website, FatWallet allows its users to publish deals and rebate offers on products and services. The company is headquartered in Beloit, Wisconsin.
I had the opportunity to interview Storm about his perspective on entrepreneurship . . .and how he hoped to connect with Beloit students as the Entrepreneur in Residence. Find out more about our conversation below!
Hi Tim! My name is Yolanda. Nice to meet you! I just got to know that you have started an entrepreneur partnership with the students at Beloit.
Yes, so this year, I am the Entrepreneur in Residence at Beloit. We decided to put together a class this semester that would create a venue to talk about mentors from afar. […] We will basically do a book study and guide a discussion on entrepreneurship through those books.
Do you have the course within CELEB, or this course is independent of CELEB?
This course takes place down at the CELEB with Brian and Diep. I’m the one that’s running the class, but I don’t give any grades. I just show up and talk and answer questions, hopefully guiding the conversation. Most importantly, it’s to share my stories and what worked for me, and my experiences and the lessons I learned.
I once saw a Youtube video about the introduction of FatWallet. I remembered in the video that you said you started such a company because you wanted something as a consumer. So can you tell us more about why you wanted to start that company?
Ultimately, what it came down to was that I had a need that I was prepared to be able to solve myself, and that was solvable to me as a computer programmer and web developer. Previously when I went searching for a coupon online, the websites I found either were not up to date or they weren’t done professionally. That was a skill set I had, and I said “there might be some value here.” It really was something that I started as a hobby; I was not expecting it to grow into something beyond. Just “here’s a website with coupons. […]”
As a business that started in that hobby stage, I don’t think it would be realistic for me to say I was planning to grow the company into one which is recognized as one of the best places to work for in the country. That wasn’t a reality, I can see that. But later on, it was pretty obvious that I didn’t think big enough to understand what was possible.
By the time I sold the company, we had been recognized as one of the top 25 small businesses to work for two years in a row. That wasn’t what I set out to do, but it was the right thing to do as we grew the company and grew the business. It was interesting that initially it was me and the computer building a website. But over the next couple of years, as I stepped away from building the website, it became me building the business. In some ways, working with programming was more comfortable because I knew that aspect of it, but for the business, it’s a different skill set. I referred to my 12 years starting and operating the company as the best nontraditional education that I could ever asked for because there are so many lessons. That’s really why I got involved with CELEB because these lessons and stories are hard to fit into a textbook. You don’t know what will come to the door next.
As the founder and CEO, I discovered a few years into the business that all the problems that came through the door were hard. It was this frustrating moment, having to ask “Why is everything hard? Why I just can’t get something easy?” The answer was that I’ve already had a staff to take care of the easy ones.
[Making hard decisions] became what I had to do as a leader. To think through the methodology I would use in my decision making and how I would go about each decision . . .and then to give that toolbox to the people who worked for me. So sometimes even the hard [decisions] were taken care before they got to me. That was part of the training […].
I remember you mentioned in one of your interviews that when you hired people, you emphasized more on their values and their commitment to the company than their skills. So how did you know that this person is the person you want from the interview?
Basically, what we determined was that we could train programming skills. We could train customer service skills. But it’s hard to train integrity and commitment. So in an interview process, we would ask someone questions about their past work experience that would give them an opportunity to talk about how they dealt with a challenging situation. We looked for ways for them to describe this. For example, “tell us about a time where you struggled with what to do when you had this thing that was important at work and while you had this thing at home to deal with. How did you deal with that?” There are no right or wrong answers to that. But in hearing someone describing how they thought about the situation or how they dealt with . . . ultimately, what we are really asking is [whether the interviewee] has a core value called “balance”. We find it important. Sometimes it means that you are going to you kid’s kindergarten graduation. And sometimes it means that “I have to work late tonight. This has to get done.” or “There’s a problem that I need to address this.” It goes both ways. So we were looking for someone that can manage that core value. When we had questions, we would tease out that if it’s somebody who’s going to have a problem with respect or someone who like to have fun. These are the things we look for because it is certainly easier to train the skills than the core values.
We are all impressed with your story about using $100 to start up a company and selling it a decade later for millions of dollars. We are curious about how you used $100 in 1999 to accomplish that. Can you tell us more about it?
The initial investment at the time to start the website was $70. It was only to purchase a domain name. $70 was only to buy fatwallet.com. Then the other $30 was for a month web posting. Ultimately, in that first month, I made that $100 back through Amazon associated fees. People will find websites searching for terms like Amazon coupon. Amazon shared a percentage of the sales we generated for them back with us. The website started feeding itself with its own money at that point.
Did you start the company with other people together or just yourself?
It was just me. I think I had a friend of mine help with the database. I might have asked him “Hey Buddy, how you do this?” that type of thing. Ultimately, the website was me and my idea . . . sitting in front of a computer for hours to put something up. And [the website] wasn’t pretty. It wasn’t the amazing thing that was gonna change the world. But it was up and it was operational and did serve the customer that would land there because they came there. If they looked for Amazon coupons we had it. If they are looking for Barnes & Noble’s, we had it. If they wanted buy.com coupons, we had it. It was just the matter of looking through the store that I buy stuff from and doing a search of emails of what they sent out.
This sharing of information, it doesn’t take a lot of phone calls and meetings with companies. It was stuff that was already there. The affiliate on contracts and agreements to do revenue shares we have were already in place. I just needed to build a website that was easily used and easy to find.
How do you get the first group of consumers for your website?
At the time, there were search engines where you could submit your website for free. Right now, when we hear search engines, we think about Google. But at that time, there were Yahoo, AltaVista, AskJeeves, and Goto.com. The search engines were much more diverse than what they are now. Now there are two or three, but only one matters.
In 1999 there were some websites such as Goto.com which were set up where you could buy placement on their search engines for 5 cents a click, or just a few cents. That was very cheap. If someone clicked on my link at FatWallet, and they went through Amazon and bought something, then I’m making 25 cents on my click, but it cost me 5 cents. How many of those can I buy?
The search engine lets the customers find me and I let them find what they are looking for on Amazon. Amazon didn’t want to tell them directly because they wanted to differentiate between their price conscious consumer and their non-price-conscious consumer.
Ultimately, we found that from the beginning of the company, there were always amazing deals out there. In the later years, people asked me “how many deals do you take advantage every day?” Ultimately, the answer was “very, very, few.” The reason is that the best deal I can get is to be focusing on my company because that return is far greater than getting a $20 microwave. It’s just I don’t need another microwave. There were people that would love getting that $20 dollar-microwave because they could turn around and sell for $40 on eBay. That was a great deal to them. But I could spend my time working on my business and creating a greater world that way.
Yes, I also heard when you made 50 bucks but you gave back 30.
Yes. That was a struggle because we had competitors that were doing this cashback shopping line. What we found was that people would come to our website, and many found the deal they would take advantage of, and then they would go over to the competitors’ website that was giving cash back. They would compare the sale there, which meant that we weren’t going to get the commission. So we were giving the content of what they needed, but we weren’t getting the reward because somebody else is going to get the commission.
So it was something we wanted to do as a website . . . to share commissions. What we did initially was that we set up a separate website: fatcash.com. That was the cashback shopping model. How could we test to see if it made sense and then we can learn about the cash back shopping model? Eventually, we decided it was good for our business. It is something that we could make work. We are better off sharing than we were keeping it all for ourselves. We eventually rolled it into what FatWallet did and it just became a strong driver of traffic and revenue for it.
It is interesting. Like I was saying before, this hobby business became a good place to work. It’s something that was evolutionary. We are getting closer to our goals. The thing that we kept aligned with from the day that the website began to the day I sold the company was that the company existed to serve the people who visited the website. I would say that was the unique angle that we existed to serve the consumer as oppose to existing to serve the advertiser. I would tell the merchants and stores that we work with to purchase their coupons that the best thing they can do is to be our number two customer. Because we really stayed aligned with the people who came to visit the website. We understood we were satisfying them if we gave them a reason to come back. The merchants didn’t care about this anymore. So even though they are writing the checks, we still made sure we focused on the people who visited the website.
Speaking of your entrepreneur course with Brian and Diep this semester, how do you want to get CELEB students involved in entrepreneurship?
The people I’ve been working with down there are pretty amazing students. There are ideas out that are gonna be a challenge. Some that are bigger than what you really want to take on right at a college. This doesn’t mean that it can’t be done. It’s just you have to realize it takes a battle with resistance and takes more resources.
I built my company by having it feed itself, built in such a way where we won’t take risks from where we were that made one mistake away from going on a business. We didn’t take risk that way. We built it. We made a little improvement, little improvements and kept staying focused. One of the ways we want to look into business is to determine the minimum viable product. What is the smallest thing we can launch and test to see if this thing has some viability? For me, FatWallet was popping myself down at a computer for several hours and making a website to see what it will happen. I didn’t know that it was going to be all these great amazing things, but it was something that could be done and I did it.
I think that the lesson I learned is not only specific to FatWallet. They are lessons about entrepreneurship in general. How to be able to build those relationships with mentors that you can lean upon. We teach students to learn to use mentors from afar, and business authors.
When I started my business, I didn’t have someone I can sit across the table and ask them questions about the business. The students at CELEB got my email address. They can get in contact with me quickly to ask questions, and I will have a discussion with them. What I tell them not to ask is “What should I do?” Because I don’t have their answer. What I do have is ways of explaining how I dealt with a similar problem, the stories I could relate and how I will think about dealing with a problem. I can reply to them, “Here’s what I will do.” But I can’t say that’s the right thing to do. One of the lessons I learned is that someone else can do a task way better in their way, and I can do it way better in my way. I don’t like to tell somebody how to do their job. It actually is bad from a managerial point of view . . . don’t tell someone how to do their job unless you could hold them accountable for it.
How would you describe your classroom’s structure?
My stories and my lessons haven’t changed. I really seem to start with a discussion question and invite answers. I like to say, “Go ahead and ask me questions along the way.” We may go down a tangent, but we’ll go back to the main road. The real value in these stories will not be filled into a traditional business textbook. But they are the things that make the lessons real.
The value of telling a story. . . it is something that is a craft. Being able to tell a story that reinforces the idea that’s important . . .bringing to light core values or those messages about problem-solving. . . stories bring them to life in a way that would resonate with the listener. It is incredibly valuable.
You want the students to learn from your experiences and your stories.
Absolutely! Studies show that the acceleration of gravity is 9.81 m/s2. You can read that in any physics textbook, but it doesn’t mean anything. But if you show a watermelon dropping off from the Science Center, you take those measurements, and then you understand the acceleration of gravity. Those things provide more than a formula. The formula is important and I don’t want to take anythings away from that. But as far as having an understanding of the basic concepts, the stories are where they are at.
Why do you want to teach?
I really value the flexibility that I have right now. One of the things that I experienced running my business was, as I had the financial rewards, as I wasn’t worried about where my next paycheck was coming from, at a certain point, I had enough.
I noticed the cars in the parking lot as I was coming into work. I recognized that for each of those vehicles, somebody had a good job that was supporting their life and livelihood. That became a motivating factor of this – creating great value in the world. I wanted to keep driving forward.
I’ve had enough, but I would do more of this because it’s important. When time came for me to sell, I still had enough. I still had something to give, and I had lessons to share. As I share my lessons with others, it doesn’t take anything away from me. I have helped someone in a way that I will never been able to measure. It will give them something that will enable them to give to the world around them. That’s something I see value in as a human being. The more I can help someone else be in a situation where they are able to do the right thing because they have enough, the world will become a better place.
What was your interest in becoming Beloit College’s Entrepreneur in Residence?
Shortly after I moved the company to Beloit, I had a meeting with Brian Morello at CELEB. We got together a few times, had discussions and at one point last year, we had another lunch meeting together and Brian said, “Hey, here is the Coleman Foundation . . . we put a proposal in for a grant award that allows us to have an entrepreneur available for the students here. If we are able to get this grant from the Coleman Foundation, then it’s maybe something you are interested in.” And I said, “Yes absolutely!” The grant came in and here I am today.
We are so glad you are here.
Thank you! I’m having a great time.
In your class, what do you expect you students to learn?
The class we are doing right now is 5 sessions. We had our first session last week and it was the introductory session. We got a chance to meet the students. We keep the class at 10 students. It’s a small class size but allows to be very interactive. So we are able to hear everyone’s story and their connection to entrepreneurship. I shared my story that my parents were educators but I am an entrepreneur. I didn’t grow up seeing an entrepreneur in my life. There were challenges associated with that. But there are students whose mother or father was an entrepreneur, or perhaps they’ve had entrepreneurship experience themselves. So we got a chance to get everybody together.
In the class we have 3 books that we are reading through. The first one basically tells the entrepreneur story- it relates to every entrepreneur that I’ve spoken with. The second book we are reading is a book called Scaling Up by Verne Harnish. It talks about business fundamentals and the bones of running an entrepreneur business and the things you pay attention to. It goes into core values and cash flows. It’s not a really traditional textbook on business. But it’s about fundamentals. It’s the thing that you need to know and to align with. The third book we are reading is from one of my favorite authors, Seth Godin, who is a marketing guru. The book we are reading from him is called What To Do When It’s Your Turn (and it’s always your turn).
The reason why we selected that book was because we can talk about the entrepreneur’s journey, we can talk about how to do it. But there are all these things that pop up in your head about why you can’t or why you shouldn’t or someone saying that’s stupid. I don’t know how many times I was told that. There was resistance that you need to be able to face and push past when you have the right things aligned. It’s worthy effort and it’s hard. If the stuff was easy, everybody would be doing that. Entrepreneurship differentiates the successful from the unsuccessful. When it gets hard, it separates the different types of entities.
What is one thing you want every young entrepreneur to know?
I’m taking the time to think. I want to give you a good answer. I don’t think I’ve ever said this is the one thing that you have to know. The thought that came to my head is (as maybe I’ve mentioned) “if it was easy, everybody would be doing it.” An entrepreneur is much like an author . . . through his words [he] can breathe the world into existence. An entrepreneur is creating something that didn’t exist before. Making that thing reality, from an idea to creating value. It is an act of creation.
It can be an art. It’s science. It’s multidisciplinary thing. It’s hard. But it’s a completely worthy effort.
It’s hard to start.
It can be because you can find all the reasons to do something else. You can find “I’m gonna check Facebook.” “I’m gonna watch this video,” “Or there’s a game that I want to play,” “or I’m gonna go work out.” These are all fine things. They are fine. But you are doing it at the expense of creating something.
When does your partnership with CELEB begin and end?
It’s through the semester. We are meeting once every three weeks. There’s time to read the book and give some thoughts. We’ll regroup and talk about it.
Can people still sign up?
I think they kept it at ten students. But if there is somebody scrambling out right now, he has to check with Brian and Diep to figure out. I really don’t know the answer to that question.
Yes. I also think the small class size will be better for entrepreneurs to learn.
Yes, it is. Because the value is in the discussion. If it was about the books, why do we need the classes? Professors would say, “Here are three books, go read them.” But the value was definitely created in the interaction. At a certain size, it’s gonna break. I’m not saying that if there are 11 students, it’s gonna break. The size ten is just a number that seems to be a good start to fit in a room.
Thank you, Tim! Thank you so much! At the end, do you have a question for Beloit College students?
I think about what an opportunity this school has and how they go about creating a very wide set of skills. You don’t know at what point you are going to run into a situation where that’s coming in handy. What a gift that it is to have a diverse set of tools. I think about myself at 18, 19, 20, 21 years old, I see my own kids that are in that age group. I don’t know that I was aware of the value of this knowledge that doesn’t seem important to me right now. But coming later down to the road, I have that tool to reply upon. It could be something in Economics. It could be something in Psychology. Maybe you don’t remember that exact thing. Maybe you don’t remember the exact details in that chemical formula equation. But you knew it existed and you knew where to go to get more information. Sometimes it’s just that general awareness is a huge thing. So if I had something to say to a student it would be to start with a class that you may not be super excited about. But don’t dismiss the value. Because it may be something that could make all the difference in the world. You couldn’t foresee that at your age.
In high school, I played soccer. I played fullback for the most part . . . defense. I wasn’t super fast. I can kick the ball one way and I wasn’t afraid of anybody. Defense was my thing. After I stopped playing and I started watching the sport and see how other people play, I saw where I wasn’t aware of all of the things that were happening around me in the field. I think there are some truths to that beyond the soccer field: being aware of what’s happening around you and how you do to impact others. It’s just an awareness that is so easy to develop within a college age group: to be so centrally focused on what is right in front me. There are things that are impacting me, but at that age, I may not be directing my attention toward it. However, it will do me well to be aware of what those things are.
You didn’t thought that you are gonna be an entrepreneur when you were at college right? Or you have thought before?
No. When I went to a computer science engineering school and majored in engineering, I thought I would end up after school being a computer programmer, working in some company for the rest of my life. I assumed that was the path I was on. I ended up on the path and it worked out okay.
The result turned to be so good!
Yes. I think there are so many times where things don’t go the way we want them to be, the way we expected them to go. A few years ago, the reason we came to Beloit is the State of Illinois passed some laws in which I was gonna lost 40% of my business if I stayed in the state. So it was the situation; I had to move to Wisconsin or another state to avoid that law, which was later found unconstitutional. But we fought against that law. It was just a wrong thing for the state to have done. It’s not what we wanted, but ultimately, here we are in Beloit. Here I am with CELEB.
If without these things we fought hard against or these bad things that happened, it opened up other opportunities, just being able to keep plugging along. Keep looking for what other opportunities exist. The old saying “One door closes, but the other door will open.” is true. If I looked at the biggest challenges I faced over the course of the organization, inevitably they prepared me better for the next one.