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By Kent Larsen
How Jonathan Coon Started $100 Million Business in BYU Dorm Room
DRAPER, UTAH -- LDS Entrepreneur Jonathan Coon is a millionaire now, but
even he didn't see it coming when he started selling disposable contacts
from his BYU dorm room. Coon's inspiration, reached when he saw another
retailer's flier and decided he could do the same thing from his room, is
now known as 1-800-CONTACTS, a publicly traded company with sales during the
first nine months of 2000 in excess of $100 million.
Initially, Coon struggled to make much of anything fromthe business,
managing to earn a couple of hundred a week. But the little success he had
influenced him to switch his major to business, and eventually led him to
get an MBA from BYU. There professors helped him refine his business plan
and grow his business.
At the same time, Coon met his business partner, John Nichols, who owned a
Santa Monica, California company that also sold lenses, Discount Lens Club.
In 1995, the two merged their companies, and went after the most critical
thing they needed to make the business plan work: a phone number.
But, of course, it wasn't just any phone number they wanted. It was
1-800-Contacts. Since no one answered when they called regardless of when
they called, they knew the number wasn't being used by another business. But
since no one ever answered, they couldn't discover who owned the number.
Eventually, Coon and Nichols hired a private detective to find the owner,
started negotiations and purchased 1-800-Contacts for $163,500.
They soon discovered that the number was worth every penny. During the first
month after they started using the number, July 1995, but before they
advertised the number, they got 2,000 calls, leading to an additional
$38,000 in sales and doubling revenue from the month before.
But the growth required more investment, and fueled Coon's plan to take the
company public. In 1996, when Coon started looking for an investment bank to
help the company go public, he told analyst Jeffrey Stein of McDonald
Investments in Cleveland that that 1-800-Contacts would have sales of $20
million in 1997, a nearly 600% increase over 1996 sales were $3.5 million.
Stein says, "He ended up delivering on everything he said he would."
Coon says he made the prediction to build credibility, "One of the things
that I had learned from going to an MBA program was, the way that you build
credibility with an analyst at an investment bank is to predict the future,
and then deliver it," Coon recalled recently.
Now, the company is still growing, and analysts say that the future is still
bright. Consumers are looking for ways to cut the amount they spend on
disposable lenses, but increasingly want the convenience of disposables.
Analyst Dan Ries of C.E. Unterberg Towbin says spending on replacement
contacts in the US is about $3.8 billion a year, and is growing at 3%. This
means 1-800-Contacts currently has only 3.5% of the market.
Sources:
Contact lens retailer focused on business
USA Today 29Nov00 B2
By Jim Hopkins: USA Today
BYU Grad's Foresight Pays Off Big, 1-800 CONTACTS now a $100 million company
Salt Lake Tribune 29Nov00 B2
By Jim Hopkins: USA Today
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