To an extent, every entrepreneur rolls the dice when he or she starts a new business venture. The most successful ones give themselves better odds through rigorous planning, careful execution and the creation of strong business models; the worst ones tend to take a more spontaneous approach and hope that lady luck will carry the day.
Buddies Bernie Ruoff and Larry Yurkiw of Caledonia, Ontario fall into the latter category.
The budding casino kings spent a decade developing Chuck 'Em, a three-dice casino game which they wanted the Dragons to back to the tune of $350,000. In return they offered up 20 per cent of their company, which valued it at $1.7 million dollars.
Let's have a quick summary of what was then brought to light:
Exhibit A: Their first business model was to have casinos feature the game, which produced better revenue than traditional dice games like Craps. However, this made them completely dependent on casino operations, and casinos are notorious for their resistance to change.
Exhibit B: The game was tested in an Ontario casino and was dropped after a few months. Bernie and Larry now planned to market it "on the Internet," which appeared to involve a completely different business model.
Exhibit C: They had invested $300,000 of their own money - robbed from their pension funds - to pay for the game's development, which included expensive travel and research. As a result, Bernie was now working as a roofer to make ends meet.
Exhibit D: They hoped a Dragons investment would cover their losses.
Robert pointed out they had spent too much on development.
Jim told them their valuation was "out of whack."
Bruce explained that Internet marketing was immensely expensive and doesn't always pan out.
Kevin highlighted the obstacle of having to train millions of people how to play the game.
Arlene said their story broke her heart.
"It's over, my friend," concluded Mr. Wonderful. "You gotta stop." Larry replied that one day he would make Kevin "eat those words."
But it was plain for all to see the dice they'd rolled had already come up snake eyes.
Tony Wanless is Certified Management Consultant (CMC) who concentrates on the SME segment. He is a frequent business plan writer, pitch guide, and business plan judge for competitions. His businesses include Knowpreneur Consultants, a provider of Content Marketing strategy and services to SME's, Reinventionist, an innovation consultancy to professionals who form their own independent businesses. He is currently launching tonywanless.com, which provides communication guidance and real-time digital editing services for leaders in the technology, finance and academic sectors.
Tony is also a columnist and blogger for BC Business Magazine and the Financial Post. A former financial journalist and editor, Mr. Wanless has a long history as a communicator, writer and advisor with Venture Capital and angel investors in Canada. He is a frequent business plan writer and pitch guide for technology start-ups and often acts as a mentor and judge in business plan competitions. Follow Tony on Twitter at @reinventionist
Posted on Jan 19, 2012 6:00:00 AM
