Hot Dogs

Small Dog Electronics of Waitsfield is becoming a big fish in the world of e-commerce

by Larissa K. Vigue

Think different. Apple Computer's motto appears on striking black and white prints of famous faces lining the main corridor of Small Dog Electronics, an Internet-based reseller of new and refurbished Apple computers, peripherals, and software. Celebrated figures like Bob Dylan, Amelia Earhart, and Mahatma Gandhi symbolize how a little originality can go a long way.

Credit Small Dog owners Don Mayer and son, Hapy, with taking that sentiment straight to heart -- and to the bank. With $10 million in gross revenues for fiscal year '98, their 5-year-old business recently ranked 147 on Inter@ctive Week Magazine's top 500 list of e-commerce companies in the nation. The company processes and ships 200 to 300 orders a day, nearly half of which represent repeat business, from its headquarters on the Mad River Greenway in Waitsfield.

Don Mayer (left) and his son, Hapy, prefer their business like their dogs: small. Small Dog Electronics in Waitsfield generates $10 million a year, but employs a modest work force.

Rewarded with the "Apple specialist" designation for its commitment to the Macintosh platform, Small Dog has benefited from Apple's introduction of the colorful iMacs and iBooks, its hottest sellers. The innovative design that Hapy calls a work of art "are what brought Apple back" from near extinction, says Don. However, in an electronic world flooded with computer resellers, shopping around a good product doesn't guarantee a sale. "Computers are becoming commodities," explains Don. "It's like buying milk and eggs and everybody has basically the same price. So what reason are you going to give the customer to buy from you?"

By combining canine-inspired playfulness with good business practices, Don and Hapy provide two important reasons: Shopping at Small Dog is fun and creates a sense of family. Three "dog cams" allow viewers to watch workers in the office and warehouse. Little plastic dogs -- collected and traded online -- are shipped with every order. Updated daily, online newsletters with names like "Kibbles & Bytes" notify customers of the latest deals and often showcase social issues that are important to the Mayers, like world hunger.

The business was named after Don's Pomeranian, Imelda, one of four dogs that can be heard barking in the background in the Waitsfield office. The canine theme comes with a built-in marketing approach. "From the outside, dogs and computers don't mix," Don says, "but we've found that we have a phenomenal following of dog lovers all over the world who understand completely why they do."

"Don has cleverly discovered that dog people trust each other," says Dave Zahn of Montpelier's Signal Advertising, which consults on website design and helped create Small Dog's new television commercials to cater to Vermont customers. "This strikes at the heart of niche marketing on the Web. It's a novelty, but with some profound connections to the customer."

Many customers share their stories on the "My Dog" section of the business's website. They post pictures of the family pet and talk about their experience buying from Small Dog. The gimmick engenders a sense of community and makes for high-speed, word-of-mouth marketing. Christina and Gregor Nelson, proud owners of Jasper the Boxer, wrote in August to share the story of Jasper's adaptation to blindness -- and to thank the company for their G3/300 Minitower. "Small Dog provided sound advice, fair pricing and great service. We'll definitely be making further purchases."

Similar testimonials are the result of the company's commitment to service. Nearly all 12 employees are trained "Apple product professionals." A full-time technician answers customer questions days or months after a sale. Although most sales come from the continental United States, Small Dog has also fostered business in hard-to-reach places like Guam and Saipan because it invests time to work out shipping hassles.

Providing a service to computer customers had been Don's mission for a decade before Small Dog came on the scene. Nonetheless, it was his second career track. Nearly 30 years ago, he moved to Vermont from his native Chicago to study alternative energy sources at Goddard College. Interested particularly in wind energy, Don started North Wind Power Co. shortly after he graduated in 1974. "Back then, I was living up in North Wolcott on a farm that had no running water, so I started to use the technology to provide for myself. I felt that there was a need for businesses to also use that technology and that's how North Wind was formed." Although Don's technical side delighted in refurbishing the old windmills he purchased on trips to the Midwest, it was important to him that the company be about more than just "widgets." "In that case, it was very clear: Renewable energy was very important to me."

It also was important to the government. In the early '80s, when North Wind found itself juggling two Department of Energy contracts simultaneously, Don realized he had a choice: either hire more clerical staff or think differently and automate.

"That was about the time Macintosh was introduced," remembers Don, "so I started putting used Macs on people's desks and found that by the end of the day, they were able to produce useful work." Pretty soon friends and business colleagues were asking him to get Macs for them. Bonnie Barton, owner of Deerfield Screen Print & Embroidery, which supplies Small Dog with the logo-embossed clothing it sells, recalls the first of several Macs she's bought from Don. "In the early days it was hard to find anyone who knew anything." When she told Don what she thought she needed, he "brought it down, set it up, and got me squared away. He just took care of me."

After 15 years of focusing on alternative energy and selling windmills, the entrepreneur realized it was time to bark up a new tree. He promptly sold North Wind (still in business as Northern Power Systems across the street from Small Dog) and started Maya Computer Co., which sold Macs in the Mad River Valley. Four or five years later it had grown to 40 employees. "I found myself doing things that I really wasn't an expert at. I was dealing with personnel issues -- why this person wasn't getting along with that person. Frankly, all those dynamics of management just are not as interesting to me as doing the business we had set out to do."

The business processes and ships up to 300 orders a day, and was recently included on a list of the top e-commerce companies. Clockwise, from top left: Scott Olds, Art Hendrickson, Troy Kingsbury and Jerry Dell'Orto.

After Don closed Maya, he ran a Vermont subsidiary of the New Hampshire-based PC Connection and worked briefly at Portfolio Software in Richmond before realizing what he wanted to do was start another business. "I discovered early on in life that I could only work for myself and I was always starting businesses, even when I was a kid. I sold everything door-to-door, from machines that put stamps on envelopes to socks."

This time around he was determined to keep it manageable. "Smaller companies tend to do a better job than larger companies," he says. "A better job in terms of serving the customers, relating to their employees, and being a socially responsible member of their community."

Small Dog started in Don's living room in April 1994, a one-man operation until Hapy joined him as co-owner in January 1995 and they started hiring employees. Hapy, a 1993 graduate of Northwestern with a bachelor's degree in philosophy and economics, first worked with his father at Portfolio Software and then started Burlington's Kea Technologies before agreeing to take on Small Dog's operations and finance duties.

Brian Meyer, vice president for commercial loans at Vermont National Bank, where Small Dog is part of the Socially Responsible Banking Fund, watched the pair click from the beginning. "Don and Hapy complement each other very well; they work well as a team."

"If you ask Hapy and I what we like doing in terms of a business, it's making something from nothing," says Don. "When we started this, we did it on credit cards and our own hard work." Rather than drawing up a formal business plan projecting profits for each year, the partners spent their time making sure they could fulfill Don's intention of being successful while remaining small and friendly.

"It wasn't like we were thinking five years ago that in five years we'd have $12 million," recalls Hapy. "Our concept was more about our employees than anything else, to make sure that we're creating a comfortable environment for them."

In addition to competitive wages and what Don calls "one of the best benefit plans around," employees work in an atmosphere of comfort and fun. The warehouse and the operation's heart -- the room where orders are received and processed -- are painted in bright colors and warmly lighted. Employees take turns choosing the music that plays in the background. The hours are flexible as long as the work gets done. Everyone is encouraged to take breaks for games of basketball and squash, and no one wears a tie. "You can walk around in socks if you want to," says Linda Olds, who started at Small Dog a year ago typing labels for packages. These days she takes sales calls, works with UPS executives, and does accounting.

Olds' rise reflects policy at Small Dog: The Mayers like to promote people to reward their hard work. Don says there's something special about Vermonters that makes it possible. "I talk to colleagues in the business who can't find the quality of employees that we have. Our employees understand they are working hard for a purpose. A lot of them we've known for a very long time -- many have grown up with Hapy -- and when we find someone that we've known for 25 years, we're eager to grab that person because we know they're instilled with the Vermont work ethic."

Don cites a recent challenge to staff technicians to refurbish a number of used iMacs that Small Dog had purchased from a large retailer. "We needed to do them fast. So we said, 'OK, what do you guys want to work really hard?'" In exchange for an office pool table and cash bonuses, the job was completed in record time.

Visitors to the Small Dog website can watch activity in the office and warehouse through three cameras wired to the Net. Pictured: Dawn D'Angelillo, Mark Engelhardt, and Tom Thamm (right).

The necessity for such overtime highlights Small Dog's biggest challenge: how to retain a small work force in the face of growth. "They're so good at what they do," says Barton, "that it's hard for them to stay small." They handle growth by finding creative solutions to time-consuming tasks, like working with UPS to develop an automated system that allows customers to track packages via the Web instead of tying up the Small Dog phone lines. The company has the space to add staff -- and will as volume grows -- but neither owners have much interest in overseeing a much bigger Small Dog.

"I don't see me running a business with 30 employees," admits Hapy. "If five years from now we are doing $15 million with 15 employees, I would be ecstatic, but I don't know if that's possible. If not, we would definitely look at selling part of it off."

Possible spin-offs include selling the refurbished, end-of-life equipment the company specializes in liquidating under a different umbrella. Part of Don's job entails researching new business ventures that have led him and Hapy to register several new domain names in anticipation of branching out beyond computers. "Our business is not so much computer-related as it is Internet-related. We've developed a way to sell goods on the Internet safely and securely in a business model that we feel can be replicated."

"We've been socially responsible and profitable from the beginning," says Don. "Socially responsible businesses often talk about the dual bottom line and that's a very real thing. We do want to make a profit for the shareholders -- which in this case are Hapy and myself -- but I've always said that a corporation is a corporate body and as such, it's a member of the community."

As one happy customer says of Small Dog Electronics at the end of her "My Dog" message: "Long may they wag!"

Larissa K. Vigue is a free-lance writer living in Winooski. She'll complete her master's degree at Middlebury College's Breadloaf School of English this summer.