Andrew zenoff

In an uncharacteristic show of frustration, Andrew Zenoff nearly tossed the phone into its cradle on his desk when his latest funding lead—number 182—had decided not to invest. With the 2003 winter holiday season in full swing, the 38-year-old seasoned entrepreneur knew that his fundraising efforts would now fall on deaf ears until after the New Year holiday.

Andrew stared out from the open office at a group of young mothers in the retail area—all cradling newborns—chatting with the nursing staff and with each other as they waited for the morning lactation class to begin.

Those new moms out there need us; that's why we're doing well despite a terrible location, a recession, and no money for advertising! So why can't I seem to convince investors what a great opportunity this is?! Am I—along with my staff and all of our satisfied customers—suffering from some sort of collective delusion?

He closed his eyes, breathed deeply, and calmed down. After all, he quickly reminded himself, his San Francisco–based DayOne Center—a one-stop resource for new and expectant parents—was doing just fine as it approached its third year of operations. What Andrew and his team were being told, though, was that, before funds would flow, they would need to provide additional proof of concept—a second center, sited and scaled to match the DayOne business plan. The chicken-egg challenge, of course, was that they would need about a million dollars to build that proof. Andrew leaned back to consider his best options for moving forward.

My Brest Friend

A graduate of Babson College in Wellesley, Massachusetts, Andrew was no stranger to entrepreneurial mountain-climbing. For three years, he had strived to build a national distribution channel for My Brest Friend, the most popular nursing pillow in a fragmented market. By 1996, he had secured an overseas manufacturer, office space in a San Francisco warehouse, and a few volume accounts that were yielding a decent—but far from satisfying—cash flow. He was still wrestling with the issue of how to educate the buyer about the advantages of his product when suddenly his venture had come under siege:

A nursing pillow company that was not doing well somehow thought that I had copied their design. There was no infringement, but they sued us anyway, and I decided to fight. The owner of this company was a woman with kids, and as the suit dragged on, my lawyers convinced me that, if this thing went to trial, a jury might side with her instead of a guy who has no kids and has never been married. If she won, they'd get an injunction against me, and that would be the end of my business.

That year I switched law firms three times, spent over $250,000 on legal fees, and ended up paying a settlement in the low six figures. I was emotionally drained, and nearly entirely out of cash, but I had managed to save my business.

A Question of Distribution

Following that painful settlement in the spring of 1997, Andrew set about to devise a more effective delivery model for his nursing pillow enterprise. He soon came to the realization that the solution he was looking for didn't exist:

We definitely had the best product in the category. The problem was that people needed to be educated to that fact—either outright or through trusted word of mouth. The various channels I had worked with—big retailers, hospitals, Internet sites, catalog companies, lactation consultants—each offered only a certain facet of what a new parent needed, and so none of them had been really efficient at delivering my product to the marketplace. What it needed was a combination of education, retailing, and community.

This case was prepared by Carl Hedberg under the direction of Professor William Bygrave. © Copyright Babson College, 2004. Funding provided by the Frederic C. Hamilton Chair for Free Enterprise. All rights reserved.

Later that summer, Andrew got a call from one of his customers, Sallie Weld, Director of the Perinatal Center at the California Pacific Medical Center. An active promoter of My Brest Friend, Sallie had come to a frustrating juncture in her own career:

During the mid to late 1990s, I had spent a lot of time and energy setting up a new type of perinatal center. New moms were coming in asking for support and advice on various products—breast pumps in particular. When we started carrying pumps, that sort of opened up a Pandora's Box; now people wanted other products to go with the pumps. Andrew's pillow, for example, was the best on the market, so we started carrying that.

And after a couple of years, this retail aspect of our childbirth and parenting education program began to turn a profit—and the minute it did, the hospital got greedy. They told us that we were not going to be able to hire more trained staff to handle the increased demand for our consults, and they said that all of our retailing profits would be channeled back into the general fund to support other departments. That was incredibly frustrating. I knew I was onto something, though, and I started a consulting business to help other perinatal centers. The problem was, they couldn't pay much for my services. That's when I decided to give Andrew a call.

They agreed to meet at Zim's Restaurant, an aging diner in the upscale Laurel Hill neighborhood of San Francisco. It was a meeting that would change their lives.

DayOne—Beginnings

In August 1997, Sallie and Andrew met at Zim's for coffee and carrot juice, respectively. Sallie explained that no single service provider had ever been able to adequately serve the various needs of new moms:

A hospital setting would seem to be the natural place to set up an educational support and product center for these women, but the bureaucracy just won't let that happen. There are also plenty of examples where nurses have tried to offer outside consulting services to new mothers, but while that's a great thought, they never seem to get very far without the business and retail component. And retailing without knowledgeable support is just products on a shelf.

After 90 minutes of brainstorming, the pieces suddenly fell into place. Andrew had found the unique distribution model he'd been searching for:

I said to Sallie, “Let's move these hybrid health-services retailing ideas into a private care center outside of the hospital—a retail center that could provide new and expecting parents with everything they needed in one place.” We'd be backing up the hospitals and supporting women at a critical and emotionally charged period in their lives.

This was like a lightning bolt of a vision for both of us, and at that moment, we decided that we were going to build a national chain of these centers. That was the beginning of DayOne.

Having already built one business from scratch, Andrew noted that he wasn't surprised that it was months before they were ready to take a material step:

I had told Sallie that, even though this sounded great, she shouldn't think about quitting her job at the hospital until I had a chance to lead us in an exercise to see if this business was a viable idea. I conducted a ton of focus groups, and every week Sallie and I would get together to talk about what I had learned—and what kind of center DayOne would be. After about nine months, in the summer of 1998, we decided, yes, this makes sense; let's do it.