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How Make It Work fell off the fast track

By   /   Monday, July 9th, 2012  /   6 Comments

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With a fleet of red Mini Coopers, Eric Greenspan built Make It Work into a tech support empire that stretched from Goleta to the Mexican border along the California coast.

Starting with Santa Barbara in 2001, the company’s technicians fanned out across the Southland and rolled all the way to San Diego, the Mini Coopers calling on homes to fix reticent laptops and recalcitrant iPods. On radio station KNX in Los Angeles, heavy advertising and later Make It Work’s own co-hosted show rang the phones at the company’s call center. Make It Work was to be to Best Buy’s Geek Squad what In-N-Out Burger is to McDonald’s.

On June 25 the wheels came off. Make It Work careened to a halt and shut down.

Two dozen technicians lost their jobs. From Santa Barbara to San Diego, Make It Work’s customers lost hundreds and even thousands of dollars on pre-paid support contracts that became worthless. The Mini Coopers went back to the leasing company when Make It Work could not make a payment.

Greenspan said the failure financially ruined him. He said he has no car after losing his company Mini Cooper. He said he has lost his lake house and expects to lose his Montecito home and enter bankruptcy because he personally guaranteed more than half a million dollars of the company’s debt. “This was my lifeblood,” he said. “I can’t even pay my son’s orthodontist bills.”

But those close to Greenspan describe a founder and CEO willing to take home a six-figure salary but unwilling to take direction from board members or investors even as his company struggled.
Greenspan had a way of forcing people out when he disagreed with them or suddenly stopped finding them useful, these people said.

Former investors and insiders describe Make It Work as a once-promising business that sputtered to operating on a razor-thin cashflow. In its waning days, the company withheld paychecks to executives and relied on fresh infusions of capital from investors and an increasing number of pre-paid service contracts to generate cash.

“The CEO let his ego get in the way of building a great company from a powerful idea,” said one early investor, who said he liquidated most of his stock at a profit before Make It Work fell on hard times.

Eyes on the prize

Greenspan and Make It Work set out to build a coast-to-coast services company at a rapid pace, conquering a few key markets with an eye toward garnering a large venture capital infusion to go national.

The Geek Squad, Make It Work’s Volkswagen Beetle-driving competitor, went national only after Best Buy purchased it. Even there, its founder, Robert Stephens, left Best Buy earlier this year in frustration.

In tech services, a nationwide buildup by a lone firm was unheard of. “It’s usually a rollup strategy, with a larger company coming in with a lot of resources and buying up smaller companies,” said Eric Egolf, president of Santa Barbara-based business tech-support firm CIO Solutions. “I’ve not seen anyone take a national approach from an organic growth model or a franchise model.”

Make It Work rested on the idea that consumers would pay a premium for better customer service for in-home tech support. Even angry customers who lost money on now-worthless pre-paid contracts praised their technicians and clamored to find out how they could keep in contact with them.

But in 2008 as the recession took hold, the premise of the business began to break down, Greenspan said. Customers cut their average amount of time with Make It Work technicians from 90 minutes to 60 minutes.

“People were watching the clock,” Greenspan said.

The Apple effect

Greenspan said he couldn’t tell whether this was because of consumer belt-tightening or what he called the “Apple effect,” the idea that user-friendly devices and Apple’s Genius Bar, along with self-healing operating systems from Microsoft, were gradually making his company obsolete. Investors disagreed. Gadgets still don’t work together seamlessly, and shareholders felt the company needed a new direction.

Make It Work tried a range of fixes. Co-founder Jeremy Anticouni co-hosted a tech-talk show on KNX 1070. The company made a deal with Costco to market its support services in Southern California. It was not enough. Sales dipped.

“There were several nights were I lay sleepless trying to figure out how to keep the business open the next day. And on each of those nights, we did it,” Greenspan said.

Greenspan turned to investors for new capital, and increasingly the company became  reliant on pre-paid service contracts. The contracts had been offered since 2003, but by early this year they ramped to 90 percent of the company’s cash flow, Greenspan said.

When asked why he continued to sell service contracts with clouds over Make It Work’s fate, Greenspan pleaded persistence.

“If you stop your cashflow, then you’re out of business anyway. You have to keep going. You have to keep trying,” he said. “You don’t give up because you see opportunities like Costco and Amazon on the horizon and you count on shareholders to step up.”

Customers lost thousands

Earl Mann is a 69-year-old project manager for a modular home company who lives in Fontana, just east of San Bernardino. He first used a computer in 2001. He heard Make It Work’s Anticouni on the radio and decided to try the company’s services.

“All of these guys were excellent, excellent IT guys. I really enjoyed them,” Mann said. “They hired nothing but the best.”
Last year, Mann negotiated to purchase a large block of 100 hours from Make It Work at $65 an hour, a bargain rate. Mann cut a check for $6,500. But soon he heard Make It Work advertising deeply discounted hours regularly.

“I just had a bad feeling,” he recalled. “I thought, ‘This company is in trouble.’”

Mann doesn’t know whether he’ll get any money, but he wants to see his technicians, Carlos and Nick, again. “I don’t know what [Carlos] is going to do,” he said. “I know that Nick is freelancing right now.”

To the moon

In person, Greenspan projects a magnetic enthusiasm. He addressed business issues with persuasive and direct answers. He signed every email with an astral “to the moon.”

But one investor complained that Greenspan abruptly cut off suggestions that might have allowed the company to adapt and survive. “Once he had your money, he didn’t really care about your opinion any further,” said the investor, who sold at a profit before the collapse.

Greenspan said some of the ideas from investors, such as offering remote support, didn’t pencil out to a profit. Other ideas needed funding. Franchising would have cost nearly $40,000 in legal fees alone at a time when the company struggled to make payrolls.

“How are you supposed to do any of that stuff without cash?” he said. “While our shareholders and board were very good to us and helped us, they didn’t live it day to day and didn’t understand how hard it is.”

Never again
Make It Work failed. The questions — Did the company try to expand its territory too fast at the expense of finding a profitable business model in its existing markets? Was Greenspan’s pay too high for a company that tapped and re-tapped outside investors for operating capital? — are now moot.

Greenspan said that if he had it to do over again, he wouldn’t. “I might assist a startup, but I don’t want to be the guy at the top again,” Greenspan said. “It’s too painful. I’ve lost too much.”

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6 Comments

  1. Robert says:

    Anyone hear of class action lawsuits against Greenspan, please post.

  2. @Kathy says:

    Check out http://techniciansleague.com/jficarra/ for Joe and many of the other MIW techs.

  3. Kathy says:

    I too lost $ by pre-paying for service. I did get a call from a company that was offering their services at a discounted rate for former MIW customers. They promised to send me an email with the information, but I never received it so they probably typed my email address wrong. I would like to get in touch with Joe Ficarra who was my MIW technician as he is excellent, but he’s nowhere on the internet to be found. I would gladly pay for his services, even though I already paid MIW.

  4. Brandt says:

    Make it Work was a great business idea and far ahead of its time in the tech service market. The company should have succeeded considering the firepower that it had in concept, investment and market experience of staff and investors.

    While market factors certainly affected its recent demise, there is no question that there were a number of opportunities to “change the game” over the years that were regularly recommended, but never followed.

    As far as subscription businesses go, there are plenty examples of successes — NetFlix, now Blockbuster and even the Pacific Coast Business Times have all thrived on subscription models. Customers pay with an expectation of service. And that service is delivered.

    Per Bill’s point above, proper care was not taken to safeguard customer’s faith in the company by forwarding their hard earned cash with the promise of future service through their pre-paid subscriptions. That was also certainly the case with this investor’s dollars, too, where faith and hope were both lost a long time ago.

    You can only borrow from “Earl to pay Eric” for so long . . .

  5. Bill says:

    When someone prepays for a service you need, by law, to have a cash reserve in the amount of the prepaid purchases. These people who bought prepaid contracts should never have lost their money. That’s a ponzi scheme otherwise. You stole from them.

  6. Eric Greenspan says:

    My salary was set and approved by the board, always. I personally cut my salary several times since 2008. In 2012, I hardly took a salary. I’m losing my home because of it. Enough on that.

    Regarding the pre-paid customers, I am sick about this. We have tried to put our technicians in touch with the customers and have asked them to work something out if they continue supporting them directly. It’s all we can do. There are no deep pockets here.

    The investor complaining here sounds much like someone I know and can tell you this is a personal matter. Ironically, it was their advice that led us to depend on the pre-paid support agreement. I fought it against it at first.

    The industry is dying, that’s all there is to discuss here. Here’s further evidence:

    http://consumerist.com/2012/07/layoffs-to-leave-best-buys-geek-squad-short-several-hundred-geeks.html

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