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With all that pizzazz, it's little wonder that Rubin is a serial entrepreneur. His precocious start running a ski-sharpening business as a 12-year-old has led, via about a half-dozen sporting-goods ventures, to his present Net adventure: Global Sports. That's where he's bringing some very unlikely partners together under one roof: big brand-name sporting-goods retailers -- from the largest U.S. sports-store chain, Sports Authority, to the Sports Chalet boutique shops. What Global Sports offers these behemoths is the chance to take the headaches out of selling online. They want to reach online customers but aren't eager to bear the startup costs. So that's where Global Sports fits in, building and managing the Web storefronts, inventory, order-taking, and shipping, while the retailers handle the marketing. "This is the model that will work," boasts Rubin. GUTS AND GLORY. It's a heck of a time to try to prove that. E-tailers are struggling to survive as the very future of consumer e-commerce is being questioned. Now, possibly more than ever in his 16-year business career, Rubin's retailing expertise and risk tolerance are being tested. Just getting rivals together in the first place a year ago was a monumental task. Now, Rubin's will to succeed, and his ability to persuade partners to stay the course, are key to Global Sport's future. Some industry watchers think he has it in him. "I never thought someone could get a bunch of competitors to partner with one another," says Lauren Cooks Levitan, an analyst at Robertson Stephens. "It shows what a driven person he is -- and it's a testament to his experience in managing companies and making strategic alliances happen. Michael is a very persistent person. He is very committed to pulling this off." He'll do whatever it takes. Consider Rubin's initial meeting with the venture capitalists at Softbank. In the spring of 1999, Rubin was in the middle of transforming his seven-year-old sporting-goods manufacturing and distribution company, Global Sports, into the e-commerce service he now runs. To make that happen, Rubin needed venture funding. So around midnight one night in May, 1999, he called Mary Meeker, Morgan Stanley's Net power broker, for advice. Meeker was on the West Coast but quickly put together a meeting with Morgan Stanley's investment team. At 6:30 the next morning, Rubin was in the bank's Manhattan offices, poring over information about potential investors. Later that same day, he met with Softbank, setting the stage for the VC fund to take a 28% stake in Global Sports. This around-the-clock devotion to work defines Rubin, says Steve Murray, vice-president for finance at Softbank Inc., who has received his share of midnight calls. BREAKING THE MOLD. Although Rubin says he saw the dot-com meltdown coming, he deliberately put himself in the middle of the firestorm. Indeed, what persuaded him to jump into Net business in the first place was his conviction that Net startups didn't have a clue about retail. A phone conversation over Thanksgiving, 1998, with Michael Conn, a retail analyst at Gruntal & Co., first started Rubin thinking about the problem. Optimism about e-tailing was running high. But when Conn asked Rubin what he thought about the sky-high valuations that upstarts were getting, Rubin was downright skeptical about their long-term potential. The problems with niche e-tailers like eToys or Garden.com seemed clear to Rubin: He saw the high cost of creating a new brand from scratch and thought that category-specific companies would never do more than occupy niches in consumer e-commerce markets. To Rubin, it meant those companies couldn't possibly live up to their rich valuations. But because he was convinced that consumers really did want to buy online, he began thinking about what might work. At first, he toyed with starting an online division at his existing company to sell athletic shoes and off-price sporting goods. He quickly decided that the cost of marketing his own brands would be too high and that the Net venture would end up being just a niche business. So during a week's vacation in St. Thomas at the end of 1999, instead of spending quality time with his girlfriend, Rubin got up close and personal with his laptop and put together a variety of business plans. What Rubin came up with was a company that would handle e-tailing for other companies. Although companies that managed different parts of the chain -- like warehouses and call centers -- did exist, Global Sports was the only one at the time to take over everything except marketing. In exchange, Global Sports and its partners would split the revenues. PROJECTING CONFIDENCE. In January, 1999, Rubin set to work. By May he had signed up five of the top 10 sports retailers, including Athlete's Foot and Sports Authority. In November, 1999, Global Sports launched its first six Web sites, which have since grown to a total of 13. The company, which typically gets 92.5% of a sale and pays its partners 7.5%, is expected to lose about $55 million this year on revenues of $42 million -- up from revenues of $5.5 million last year, estimates Robertson Stephens' Levitan. Revenues are expected to double next year, with the company projecting a profit by the middle of 2002. Much of the company's fate will hinge on how the partners promote the sites. Rubin argues that the name-brand recognition of established companies is powerful in attracting people who are shopping for sporting goods online. So far, Rubin has been able to crank up sales without investing much in marketing himself: Global Sports was able to cut sales-and-marketing expenses from $9.5 million in the second quarter to $8.6 million in the third quarter, even as revenues increased 16% sequentially. "What Global offered us was the opportunity to have an online presence without having to take our eye off the ball -- which is managing more than 200 stores," says Janis Altshuler, vice-president for e-commerce at Sports Authority. But only time will tell how devoted Rubin's partners are to the service. Rubin also has lined up strategic investors to help boost the company's prospects -- and its balance sheet. In June, 1999, and again in April, 2000, Softbank invested a total of $80 million in Global Sports. This past September, cable company Comcast Corp. and shopping channel QVC Inc. agreed to invest $40.8 million. To concentrate on the Net venture, in mid-1999 Rubin sold his other existing businesses, which manufactured shoes and bought and sold overstocked goods like clothing, shoes, and sports equipment. Rubin got an early start as an entrepreneur. At age 8, he ran neighborhood ventures: selling vegetable seeds door-to-door and organizing a snow-shoveling business with friends. He sold custom stationery he designed on his Apple computer and sold baseball cards at camp. TEEN TYCOON. Rubin founded his first real business after returning from summer ski camp in Oregon when he was 12. Mike's Ski Tuning, which sharpened and cleaned skis, was run out of the basement of Rubin's home in Lafayette Hill, Pa. A year later, it morphed into a ski-swap and consignment business that brought in $25,000. At 14, he opened a ski shop that rang up $125,000 in sales. He topped that off by buying two local sports shops. Out of high school, Rubin, started KPR Sports International, a company (named after father Ken and mother Paulette) that bought and sold excess sporting-goods inventory. In 1994, Rubin decided to branch out, launching the Yukon footwear line and acquiring, a year later, a 40% stake in Ryka, a publicly traded company that designed and distributed women's footwear. Rubin claims he was born with the entrepreneurial bug. There certainly doesn't seem to be any strain of that particular virus in his family, though. His father was a veterinarian, his mother a psychiatrist. One older sister is a psychologist and the other a cantor. Certainly, his mind was pretty much always on work -- he says he didn't really enjoy school. When he was in the 11th and 12th grades, he got out in the afternoons to run his business. He did try college at Villanova University for a few months but left because he was bored. Rubin no longer suffers from ennui. Dot-coms are walking through the Valley of Death, and Rubin's company is making the trek alongside them. After trading as high as $24, Global Sports is treading water at around $8. The prevailing sentiment right now about e-tailing is dismal. For a guy who has made his living by buying up distressed merchandise, that's not the most uncomfortable place to be. Green covers the Internet for Business Week from New York |
