9.9. CASE: DayOne

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 fund-raising 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 ...

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