A normal business insists on starting by providing a high enough service level to attract all classes of new accounts. Usually, it loses money until it has accumulated enough of the nondemanding accounts to make a profit. In the case of a business with a long-established customer base you have the opposite case. You can actually lower the amount of money you spend to the point where the business is profitable. Then you can reinvest a part of the money this solidly profitable base produces to start offering premium service to new sign-ups and your existing base as well. Everyone will be delighted with your service and the business will even start to grow, attracting a certain percentage of even more of the profitable, low-maintenance accounts.

The lessons I learned acquiring Timetable I used many years later in the telecommunications business. When I bought the Genie on-line service from General Electric, everyone thought I’d gone nuts. America Online had clearly killed Genie in the on-line war. Everyone pointed out the over half a million clients who had quit Genie over the past three years. The service was a dinosaur. Could I possibly find a worse sinking ship to buy into? I, however, didn’t care about the hundreds of thousands of clients who’d quit Genie. I was looking at the tens of thousands of clients who’d remained. These guys had been on for years. Many owned old computers that wouldn’t work on any of the other modernized services. Sure, Genie was losing money because it was trying to replicate all AOL’s newsfeeds and proprietary content. When I looked at the usage figure, though, I discovered no one was accessing this content anyway. All our remaining users wanted was to be able to send E-mail, chat, play games, and get on the net. These services cost almost nothing to provide.

I took over Genie, cut the expensive stuff no one wanted, polished up the user interface, and raised prices. Most users stayed right on with us and suddenly we were making millions in profit on the dog everyone had laughed at. Soon we even started getting more accounts by going after the niche market of machines that only have an ability to show text without graphics. We may not be AOL, but unlike them, we make money every quarter.

Similarly, when people advised us to abandon the Internet business, I looked at how many long-term users we had and decided to cut back and just service them. Without the huge expense associated with holding the hands of new users, we turned very profitable. When some of the profits were plowed back into the service, we suddenly became the best in the country. Discerning clients who were already Internet savvy then started coming to us.

Much of what I did in the Internet business was based on what I learned from the Timetable books. I’d absorbed it all like a sponge. When IDT went public in 1995, I went back to the Timetable minutes once again for guidance. The directors of Timetable and Folder Distributors, Inc., held my hand across five decades and helped me make the critical decisions.


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