By Jane M. Von Bergen
INQUIRER STAFF WRITER
How cool is it to be two brothers in your 20s, running a thriving Web business out of hip industrial loft space while employing 40 college buddies and childhood friends?
Very cool — until you have to fire most of them.
"It was a big deal. We lost it all in three months," said Darren Hill, now 36, one of the brothers who founded WebLinc L.L.C.
Started as a Web-design e-commerce business in the mid-1990s, WebLinc, now housed in Old City, caught the e-wave, expanding in the excitement surrounding the Internet's then-untapped potential for marketing and sales.
But in 2000 and 2001, the dot-com bubble burst, the euphoria faded, venture-capital money evaporated, and a recession ensued.
Darren Hill and brother Jason, now 39, lost 75 percent of their revenue in three months in late 2000. They fired their friends in March 2001, chopping the staff from 40 to 11.
"Lots of the guys were our buddies that we met in college," he said, and is silent when asked if he has managed to repair all the friendships that burst with the bubble.
Business textbooks often describe crucible moments for enterprises — moments that challenge every fundamental, moments that affect all that follows.
"It was a depression and a learning experience," Darren Hill said. "Even when things are going well, you have to remember that things can go bad very quickly."
So searing was the experience that the brothers were determined to make sure it never happened again.
Darren and Jason were still teenagers when they started their business, then a high school sideline silk-screening T-shirts for bands in their parents' basement in Langhorne.
"But bands have no money," Darren Hill said. So they decided to go into the mail-order business, selling their shirts through catalogs.
Meanwhile, Jason Hill left for the University of Delaware, then Temple. Darren started at Drexel in 1994, just as the university first wired its dorms for the Internet.
"People did not understand what the Internet was," Hill said. But up for something new, the brothers decided to put their T-shirts online. Soon, friends and family were asking them to design websites for their businesses.
The brothers knew they were on to something. They partnered with an advertising agency, convincing the agency to offer e-commerce marketing to clients as an add-on. Employees began crowding into WebLinc's headquarters, Darren's apartment at 19th and Pine Streets.
The brothers got a break when the car retailer AutoTrader paid them $10,000 to put its car catalog online.
"The business grew incredibly from 1997 to 1999 along with the legitimacy of the Internet," he said. One in four customers was a retailer, like AutoTrader and Urban Outfitters. Three-quarters were start-ups, paying their bills with venture-capital money.
When the dot-com bubble burst, the start-up clients and their revenues vanished in one quarter. The layoffs followed. Those hard realities forced the Hills to look objectively at their business.
They decided to focus on their surviving e-commerce customers. What e-commerce lacked in starry-eyed "promise," it made up for in delightfully dull reliability.
"We knew they would pay the bills," Hill said.
WebLinc, which had expanded into larger space, contracted and began its battle for survival.
Its bank helped by being flexible on loan payments, but the brothers became determined not to be dependent on a bank's largesse. They made it a goal to buy their own building, "so we'd have assets to borrow against."
And now, a digression.
Shopping for cheap space, they learned about the former Revival nightclub building on Third Street in Old City. "We had come to this building when we were kids," Hill said.
They liked the bones of the former Mechanics National Bank, designed by renowned architect William Strickland in 1836. Because the building was vacant and rundown, the price was right. They were well into negotiations when the agent told them it came with a liquor license.
"We never expected to open a bar," Hill said.
But their burst-bubble experience kicked in. They would use the second floor for office space and open National Mechanics, a gastropub, on the first floor. If it didn't work, they could always sell the liquor license and expand into the whole building.
"It's been fantastic," Hill said. "It's great for recruiting. It's wildly popular" with the other tech types working in nearby businesses. "It's the social-networking hub."
The brothers had just built up WebLinc when the recession hit in 2007.
What happened then?
Nothing, except they got a good deal on the next building they bought so they could expand in Old City.
"The recession hit everywhere but e-commerce," Hill said. By 2007, the Internet had proved itself to be a viable alternative to expensive bricks and mortar, especially in tough times.
No layoffs this time — WebLinc expanded. It has 82 employees now, and needs more. Staff members earn recruiting bonuses for the right prospects. The challenge is finding enough talent quickly enough, yet retaining the culture as the firm grows.
Declining to provide revenue and profit figures, Hill said WebLinc has developed a reliable e-commerce chassis that can be customized for each retailer.
WebLinc is strictly a software business, and the smallest clients are spending at least $250,000 at a pop. Current customers include Urban Outfitters' Free People brand, Thomas Scientific, Smith & Wesson, and Trump Entertainment.
When clients hit $3 million in Internet sales, Hill said, "they become willing to invest in new systems. They want [e-commerce software] to link directly to their warehouse, to their financial system, to their vendors."
"People say it's social [networks] or [mobile] phones. But that's all irrelevant," Hill said. What matters is speed and agility — making it easy for retailers to capture the sale regardless of how the customer arrives at the online store.
The brothers plan to remain independent.
"We get five calls a week from venture capitalists interested in investing in us," Darren Hill said. "But why would we do that? The disadvantage of them is that their only goal is to get their money back as soon as possible. That's a distraction. You can't build the business when your goal is to sell it.
“The business is our goal. The goal is to have happy clients and have a good place for the employees to live their lives and produce great software."
Contact Jane M. Von Bergen at 215-854-2769 or firstname.lastname@example.org, or follow on Twitter @JaneVonBergen. Read her "Jobbing" blog at www.philly.com/jobbing.