A Dot-Com's Survival Story

VIPdesk is a nationwide service that will buy you tickets, send flowers, or do other chores. The company turned a profit in February

By Toddi Gutner

When I met Mary Naylor nearly two years ago, she was bustling around the country trying to raise $20 million for her Internet concierge service, VIPdesk. The company secures theater tickets, sends flowers, and does other gofer chores for customers of such corporate clients as MasterCard International and Citibank (C ). Naylor and I hooked up at Springboard, a venture-capital forum for women entrepreneurs. "I've shown up at so many networking and venture-capital events that people ask me if I have a clone," Naylor said in this column back in August, 2000. (See BW Online, 8/3/00, "A Springboard for Female Entrepreneurs")

Well, Naylor ended up raising $7.5 million, far short of her goal. Nevertheless, amid the wreckage of thousands of dot-coms, VIPdesk still stands. More impressive, in two years revenues have nearly tripled, to more than $11 million. It added 25 clients to its initial list of six, and now employs 89 people, up from 25. The Alexandria (Va.) company even became profitable in February.


  I was curious to know how Naylor pulled it off. First, she went into the venture-capital market with a backup plan. "We had several strategic growth plans at different funding levels," she said recently. Since she reached only about a third of her funding target, she spent less on technology and marketing than she originally intended, and scaled back her expansion plans.

While other dot-com startups tried to sell some pie-in-the-sky ideas, Naylor already had a healthy track record in the very business she wanted to transfer to the Web. VIPdesk (which dropped the ".com" about a year ago) grew out of Capitol Concierge, a $6 million operation she started in her mother's basement with $2,000 in 1987. Capitol Concierge assists Washingtonians who are too busy to stand in line at the motor vehicles bureau or plan a surprise party. Rather than market to individuals, Naylor sold her concept to office and apartment managers who then offered tenants the benefit.

In 1997, Naylor turned over Capitol Concierge's operations to a longtime employee so she could start VIPdesk. Naylor saw the Internet as the perfect tool to take her concierge services nationwide, and therein lies a big part of VIPdesk's success. Unlike other Internet companies that thought they could give away their services and make money on advertising, "we viewed the Web only as tool, as an alternative communication channel," says Naylor.

For example, a Mastercard customer who has the VIPdesk benefit can place a request using the telephone, a wireless handheld device, or the Internet. Say someone wants four tickets to a Baltimore Orioles baseball game. The request goes directly to an employee in the field or, if that person is unavailable, to a call center at the company's Virginia headquarters. VIPdesk then passes the request to one of its local business partners. Average processing time: 30 minutes. Clients pay an annual fee per person for service access; some 10.5 million people can use VIPdesk.


  Naylor gives much credit to her board of directors, which includes Mark Teitelbaum, an angel investor who backed Capitol Concierge. He still leaves late-night messages on her voice mail reminding her that "expenses follow sales." That has helped her maintain a bootstrap mentality. "We've been tightfisted and preserved our cash," says Naylor. To encourage savings, the company awards a monthly "penny-pincher" bonus of up to $400 to an employee who helps reduce expenses.

Clients also present her with new growth opportunities. For example, a banking client had developed a high-level benefits program that included many nonconcierge services such as travel perks. The company needed a master coordinator, so VIPdesk took on the job.

Among Naylor's challenges are signing up new clients. It used to take two to four months to sell the service. Now it can take 6 to 12 months to close a deal. Naylor hopes eventually to merge with a strategic partner, but has yet to find the right company. As a consummate networker, though, Naylor's likely to make a match.

Toddi Gutner writes the Hers column for BusinessWeek

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