From stock jockey to pajama magnate, Valerie Johnson is a great example of what you can accomplish when you think globally. When the world is your market, instead of selling to millions of people, youre selling to billions!
Whats more, its always winter somewhere in the world. So even though Valerie started a company that sells a cold-weather productfooted pajamas for adultsthat doesnt mean she has to live with meager sales when its summer in the United States. Using the Internet, she can always reach people looking for something warm and fuzzy to wear to bed on a cold night.
As you read Valeries story, note this statistic: In 1970, the U.S. stock market made up 66 percent of the worlds market capitalization; in 2007, the United States made up 42 percent, according to the investment management fi rm BlackRock. By 2030, we could make up as little as 27 percent of the worlds market. Its not that the market of the United States is getting smaller, its that non-U.S. companies are becoming more signifi cant players on the fi eld. And this is also true for entrepreneurs in the U.S. and throughout the worldthanks to the Internet, people all around the globe can be your marketplace.
Valeries journey from the high-stress job of stock trading to the comfort product industry is fascinating. The way she tells it, its really not such a stretch to change from stock trader to selling pajamas over the Internet. In fact, Big Feet Pajama Co. was fueled by the same dream that fueled her stock trading ambitions: she wanted to look beyond her small-town upbringing and talk to the world. And she wanted to make a good living for herself. Like most people, Valeries childhood dream was to grow up and be successful. Raised on a Thoroughbred horse ranch, her fi rst dream was to be a jockey. When she reached 5'9" at age 10, she had to give that up. Then she decided to be a stockbroker. After all, growing up around racehorses and racetracks gave Valerie an understanding of the thrill of gambling.
To me, the stock market was like legalized gambling, she says. And it wasnt just gambling with the locals, it was gambling with businesses far beyond her little Southern California town. She still remembers her fi rst stock, World Airways, and how much she loved thinking that she owned a piece of a business that flew airplanes all over the world. I just remember running out to the front yard every day to go pick up the paper and see how my stock did, Valerie recalls. And there was something elsethe people who sold her the stock seemed to have a pretty cushy job. I was kind of shocked when I bought stock and there was a commission
involved. I thought, Whoa, its my idea to buy the stock, why is he getting paid to write a ticket? Thats easy money; I should do that.
In reality, selling stocks wasnt such an easy job, but it did expose Valerie to the business world, and it opened her eyes to many new possibilities. Similarly, her high school job as the branch managers assistant at the local Dean Witter offi ce introduced her to the fax machine. When she saw that fax machine, she says it was like a window on the world opened up to her. I thought that was the most amazing piece of equipment Id ever seen, Valerie recalls. How is this paper getting from here to across the country? When the 1987 stock market crash happened, Valerie saw it as a good thing. I felt there were a lot of people who were going to be looking for a new broker, she says. I thought it was an opportune time to jump in.
To her parents dismay, Valerie quit college and moved to Los Angeles to become a stockbroker. Over the course of about seven years, she struggled her way up from selling penny stocks to a pretty good career selling stocks for Lehman Brothers. Eventually, she went to work for a small boutique fi rm where she got involved in planning the IPOs of dot-com businesses. While getting the word out about these exciting new companies, she came into contact with a lot of TV and print journalists. When the dot-coms crashed, Valerie bounced. But she took those media contacts with her and made a fateful change in careers, going to work for an investor relations fi rm.
Most of the time, her new job in investor relations was fun. Valerie would talk with business journalists about the workings of defense contractors, restaurant chains, and Vegas gaming companies. The job had a decent salary that was supplemented twice a year by a performance bonus. Plus, she occasionally appeared on television to announce her clients latest newsworthy ventures. Then came the day when she was asked to handle the Chi Chis restaurant debacle: tainted green onions worked their way into the restaurants kitchens and made diners sick. Some people even died. And there was Valerie, hired to stand in the fi ring line as journalists peppered her with questions. One reporter even hid in the bushes and jumped out at her with a TV camera when she went to her car. Still, she tried her best to do her job well. If youve ever felt unappreciated and taken advantage of at your job, you will be able to relate to this part of Valeries story. Even though her employer, the investor relations fi rm, ended up having a hugely profi table year, they didnt pass it on to Valerie and her coworkers. Instead of the usual bonus, that quarter she got nothing. Instead, the investor relations fi rm opted to invest in plush new offices for its executives. Valerie got angry. And then she got out.
Starting from Scratch
In the back of her mind, Valerie had had a quirky idea brewing. She had been thinking about a business selling one-piece footed pajamas just like the kind little kids wearfor adults. The idea fi rst came to her at a party when the hosts child wandered out of his bed wearing his footed pajamas. Everyone at the partymen and women, young and oldgushed about how cute and comfy those pajamas looked. Everyone had a pleasant childhood memory of wearing something like that, and they all said: Its too bad they dont make those for grown-ups; Id love a pair. Valerie thought to herself, That is a good idea. Im always freezing myself. So when her fi ve-fi gure
bonus didnt materialize, Valerie did some research and found that no one was making footed pajamas for adults. Bingo.
As she thought of the little boy in his pajamas, Valerie remembered her own days wearing footed pajamas. They brought back pleasant memories of cozy childhood moments and fun Christmas mornings. The reactions of the guests at the party were proof that other people had the same feeling, too. When Valerie was a little child, she couldnt pronounce the word pajamas so she called them her big feet. It felt like the perfect, whimsical name, so Big Feet Pajama Co. was born. Valerie had just gotten through some very stressful times, taking the heat for a company whose product sickened people, sometimes fatally. She knew the value of using memories of simpler times just to get to sleep at night. Valerie hadnt just found a quirky sleepwear option, shed discovered a product that evoked warm childhood memories. Valerie began talking to her great public relations contacts. She knew journalists and she understood that they were in the business of telling storiesand they were always looking for some real-life examples to illustrate trends. So she fi gured she could use her press contacts to get out word about her own business.
Even if you dont happen to have the kinds of press and TV news contacts that Valerie hasand not many people dothe ability to talk about your business to everyone you meet is a huge skill that everyone who starts a business should learn. You never know who youre going to talk to or whos going to know someone who could help you, says Maggie Gallant, founder of Spotlight Communications, a public relations fi rm she started out of her studio apartment in New York City in 2002. An entrepreneur herself, shes grown her little fi rm into a full-fl edged operation with several employees and clients like the Coca-Cola Co., Clif Bar, and MTV, as well as smaller boutique clients such as Booty Parlor and LeapFrog. Be your own mouthpiece! Maggie says. Keep track of people, let them know what youre doing. People want something to talk about. Instinctively, Valerie knew to do this. While you may be a little shy to talk about your business idea before its up and running, Valeries story shows it can be a good thing. Positive public relations is like a magnifying glass forming a beam of lightit can generate enough heat to cause a dry leaf to burst into fl ames. Getting the word out about your business creates buzz and energy that feeds off itself. Good public relations is not an end in itself, but it magnifi es what you already have. Valerie knew her contacts and stories would be an important step toward getting her business off the ground.
To hatch her plan, Valerie took a week of vacation from her investor relations job. In those seven days, she started the paperwork for incorporation, searched the fabric stores for the right fabric, and found a freelance costume designer who could work on designing a prototype of the pajamas. Then she spent a month running over to the designers house every night after work to perfect the design. Very quickly, Valerie had some prototypes of the footed pajamas. There was only one problem: she didnt know anything about the apparel industry.
Even though Valerie had a great idea, some prototypes, and some media contacts, she had to fi nd a way to get her product manufactured. Instead of getting bogged down with this step, Valerie resolved to give herself a crash course in the apparel industry. She went online and started looking for manufacturers. American manufacturers were too pricey and the ones who would even look at her product didnt have the greatest working conditions, so Valerie looked overseas. This wasnt as hard as it sounds thanks to an Internet site, www.alibaba.com, that brings together entrepreneurs and overseas manufacturers.
Using that site, Valerie found some Chinese sewing factories that would take her order for half what the U.S. manufacturers had quoted. But even though the Chinese factories had good prices, Valerie was uncomfortable. She wanted to be sure that she didnt get into a mess that could blow up in her face; shed heard horror stories about bad working conditions and child labor overseas. So she hopped on a plane and fl ew to China. If thats not underestimating obstacles, I dont know what is! It was nerve-racking, Valerie says of the trip. But using the contacts on the Alibaba.com Web site, she was able to visit the factories and discuss business pretty well. In the end, she put down $50,000 of her precious savings to order 5,000 pairs of pajamas from the manufacturer. Even if she failed to make a profi t, at the very worst Valerie fi gured she could at least break even by selling them
at cost on eBay.
It would be six months before the order was delivered, so Valerie kept busy studying her industry. Her biggest learning experience was attending the Magic Apparel Show in Las Vegas, where she was living at the time. Once again, Valerie had found a way to reach out globally. This once-a-year trade show brought sales representatives from department stores and boutiques around the world. They walked by Valeries ten-foot-square booth and looked at her prototype pajamas. The problem was I didnt know the lingo of the trade, so when someone would stop by to talk, I didnt know what they were asking me, Valerie says. She remembers ducking into the nearby lingerie-sellers booth to ask what the buyers terms meant. Were talking basic retail language, such as net 30, which means the buyers wanted 30 days to pay for the product after delivery. The guys in
the next-door booth were helpful but amazed that she didnt know the basics. They were cracking up and laughing, Valerie recalls. I was asking them, what should I say? How do I answer?
Little did Valerie know at the time that she was learning about more than the apparel industryshe was meeting face-to-face with some of her fi rst global Web site customers.
Looking back, Valerie realizes that trade show gave her something extremely valuable. It wasnt just about fi nding buyers to sell her product in their storesbecause realistically, she knew that most retailers werent going to sell her pajamas. Instead, that trade show was like a worldwide test market. Buyers from all over the world ooh-ed and ahh-ed over her footed pajamas. They all had an emotional reaction, just like the people at the party had reacted to the little boy in his footed pajamas. Everyone connected with the product emotionally, and many of them wanted a pair; so Valerie generated a signifi cant list of email addresses from people all over
the world who wanted to buy her pajamas for themselves as soon as they were available.
Meanwhile, all those phone calls and emails to journalists about what she was doing were starting to pay off. For instance, the fact that Valerie was prompted to start her business because she felt cheated out of her bonus found its way into a how-to article advising businesses on handling Christmas bonuses properly. And the way she used the Alibaba.com site to fi nd a manufacturer also wound up being used as an example in a story about small businesses going global.
Its tough to get that kind of media coverage, and we can all learn from how Valerie did it. The most interesting thing is how she would just call her journalist friends and chat about the personal details of her business launch adventure. In Chapter 7, Warren Brown talks about how frustrating it was for him when journalists would show an interest in his cake-selling business, but they didnt want to write about it right away; they wanted to wait and see whether he would make it through his fi rst year or fl ounder like many fi rst-time business ventures.
Valeries story shows its key to focus on the experience of launching a businessyou may learn some tips about unconventional ways to borrow money, how to start a business and juggle a day job, or even what to look for when scoping out offi ce space. Just start talking. Sharing some personal tidbitseven telling people you felt cheated and taken advantage of by your old employercould land you some great press. While she was waiting for her product to arrive, Valerie found another great way to reach beyond the city where she lived and into the world: a Web site for freelancers called Guru.com. It was there that she found a freelance Web designer to build her Web site. Months before she had any product to sell, the Web site featured photos of her prototype pajamas and asked, Would you like to be alerted when the Big Feet store opens? And it had a place for customers to enter their email addresses. In this way, Valerie collected thousands of emails from people who were interested in her remarkable footed pajamas. Now all she needed were some pajamas to fi ll the orders.
Taking the Next Leap
After nine months of planning, the 5,000 pajamas arrived at Valeries home. I didnt realize how many boxes there would be! says Valerie, noting that her fi rst husband thought she was crazy when the order came. We backed all the cars out of the garage, and the whole garage was fi lled to the brim with boxes. People were peeking out their windows wondering, Why is there a semi truck outside their house? Now Valerie had a garage full of pajamas and a Web site that was up and running. It was time to sell some pajamas. So she sent out email announcements that her Web store would be opening to all the thousands of people whose email addresses shed been collecting.
Then her Web designer fl ipped the switch to take the Web store live, and Valerie waited for the orders to come pouring in.
She didnt have to wait long. Within 60 seconds, we had our fi rst order. It was the funniest thing, Valerie says. In the coming months, Valerie spent 16 hours a day processing orders in the basement of her home. She boxed the pajamas, printed out invoices, printed out the wash and care instructions, and hand delivered the packages to the post offi ce. In those early months, she had enough orders to fi ll up her car every day. Within a week, she knew she needed more pajamas and quickly placed another order with her Chinese manufacturer. By Christmas, she was sold out, and the pajamas were backordered into January because the factory couldnt deliver them fast enough.
Within three months, the company was profi table. Valerie has been hanging on for the wild ride ever since. She experimented with key word advertisingspending $20 a day or so at fi rst, then increasing her key word advertising budget little by little. As profi ts increased, Valerie had more money to spend on click-through advertising along with key word advertising. She now spends from $500 to $1,000 a day on click-through advertising during peak months and reinvests all her profi ts into more improvements. She uses the profi ts to buy more inventory, hire more employees, rent more warehouse space, upgrade to more powerful servers, and enhance the Web site. Ive just plowed all of the profi ts back into the company, Valerie says. In her fi rst year, she got a call from the people putting together the Academy Awards gift baskets that go to the stars; her pajamas were chosen to go into the gift bags because they seemed like the perfect thing for someone who has everything. And the Big Feet snowball just keeps rolling faster.
Where Are They Now?
On a personal note, Valerie says shes happier than ever. In the past four years, shes gotten divorced, remarried, and started a family, all while tending to her Big Feet Internet business. Valeries career path has led her from the high-stress job of stock trader to selling the ultimate comfort item. Not only that, shes making great money! About launching Big Feet, Valerie says, Its the best fi nancial decision I ever made. Check out Valeries Web site at
Purchase Starting from Scratch, published by Kaplan Publishing, on Amazon. Part II of this book will be available next week.
Wes Moss is a Certified Financial Planner in Atlanta Georgia, a partner at Capital Investment Advisors Inc., and the host of MONEY MATTERS on News Talk 750 WSB the nations longest running call-in investment and personal finance radio show.