Some people seem to be natural-born entrepreneurs

Early Adapters

Roy Niederhoffers dad thought his son should play outside more. In 1979, then-13-year-old Niederhoffer spent lots of his time in his room, playing on one of the first computers, a TRS80. When he developed a clone of the popular Space Invaders game, he sent it to a company that advertised for such games in a magazine he read.

At first my dad said, What are you doing upstairs in your room like a Gollum; play outside like the other boys and quit wasting your life, Niederhoffer recalls. But that attitude changed when the royalties to the game started amounting to a few hundred dollars a month. Quickly, Niederhoffer cut out the middleman. He and three of his junior high school friends churned out 40 more programs and then sold them on their own. Niederhoffer worked on the school newspaper, and knew typesetting, so he put together a 32-page catalog and did a direct mailing to names purchased from computer magazines.

We wanted to take credit cards, and a rep from MasterCard came to our house, he said. He saw these two 14-year-olds and asked when our dads were coming home so he could talk about their business. He was amazed it was us, yet he allowed us to take credit cards. That taught me anything was possible.

After the New York Times ran a front-page story on the teenage entrepreneurs, a distributor called and asked if they could make him 300 programs. To meet the demand, Niederhoffer hired dozens of classmates. Two of those went on to found a billion-dollar company that makes teleticket machines. We picked smart people, taught them how to program, and bought them computers, he said. I also gave every cute girl I had a crush on a typing job to get them up to my room.

The venture paid for Niederhoffers Harvard education, and then some. Today, he operates a capital management firm that handles $1.2 billion in assets. The banks of computers in his office, he says, are just a larger version of his old bedroom operation. Just like then, he still hires smart people and believes in the power of direct marketing.

Managing his 32-person staff at R.G. Niederhoffer Capital Management (http://www.niederhoffer.com) is no strain either. Until a few months ago, his billion-dollar management firm had fewer employees than he had at age 14.

First Failures

Mike Harts dad also gave his son advice on his first business. Like a typical 16-year-old, Hart felt he needed a car as much as food and air. But his father told him to buy a truck so he could do snow removal and pay for the vehicle. Hart followed the advice and discovered two things: 1. It doesnt always snow in the winter; 2. He wasnt Mr. Fix-It. It cost more to keep the old Jeep truck running than he made plowing. It was my first experience with business loss, he said.

For his next job, he selected a field that he had more personal experience with: beer. While a student at Bowling Green State University, he delivered kegs to fraternities and sororities. He noticed that these organizations bought a lot of glassware and apparel imprinted with their logos. He flipped through some of the catalogs that national imprint companies sent to campus and saw the prices were outrageous. No one was making these items locally, he says. Since I was calling on the social chairmen for beer deliveries anyway, I sold them the imprints, too.

He bought the items wholesale, designed the artwork and printed them. The business became so successful that he hired students at three other colleges to sell for him as well. In his senior year, as a full-time business student, he made $30,000 running his business.

His grade-point-average suffered, but the practical lessons in salesmanship and hard work taught him more than the classroom. Today, as owner of his own 50-person marketing firm in Maumee, Ohio, he remains the new business engine and devotes half his time to selling. Now I understand why my dad got up at 4 a.m. and started writing things on a yellow tablet, says Hart, owner of Hart Associates (http://www.hartinc.com).

Fish Tales

Some people seem to be natural-born entrepreneurs. But Cynthia McKay, owner of Le Gourmet Gift Basket Inc. in Denver, was drawn into her first business three decades ago because she had a heart for fish.

At age 13, McKay purchased a couple of tropical fish for pets, which she presumed were the same sex. She presumed wrong. The laws of nature took over, and soon she had too many offspring for her tank. She faced a difficult moral decision: to flush or not to flush.

I just couldnt, says McKay. I was a humanitarian.

Rather than give the swordfish away, she decided to sell them. She was after all, the daughter of a corporate executive who had her investing in stock at age 5. She trotted from door-to-door with plastic bags full of fish, which she sold for 50 cents apiece. The market turned out to be surprisingly strong, because she gave out plenty of free advice on their care and sold them for far less than fish stores did. People also found it very appealing that this young girl was showing up at their door with a bag of fish, she says. I got a lot of tips.

She immediately invested the profits in more fish. But then she learned a valuable lesson in customer service. About 10 percent of the fish died.

Dead fish are generally considered a bad omen, and the buyers didnt return. The solution, she felt, was rapid expansion. She needed more tanks, and more fish to replicate quicker. Soon she had 22 tanks scattered around her house. But even with the expansion, the fish werent moving any faster. Then came a rude awakening: Parent fish will eat their young if not separated.

Over three years of running her fish business, McKay made $1,500 C good money for a young teenager in the late 1950s. But she also learned sound principles about running a business: Know your product, practice good customer service, limit your inventory, and have a business plan. Oh, yeah C she also learned that business can be a fish-eat-fish world.

She applied these principles when she started her present business years later. As with the aquatic trade, she found the gift-basket business by serendipity. She received a shoddy gift basket and thought she could do better. Remembering her swordfish experience, she kept her prices low, ranging from $5 to $60, and provided exceptional customer service. And this time, she drew up a business plan, albeit one originally written on a cocktail napkin. Today, her home-based Le Gourmet Gift Basket (http://www.legift.com) has some 500 franchisees. But she only has one goldfish.