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© 1986-2004








Rats & Runaways

A Post-Mortem on Prognosis

By MATT WELCH

Budapest Business Journal, March 7, 1995

My small business finally died last week.

Prognosis Weekly closed its doors after four years of publishing 108 issues of Prague's first-ever English language newspaper. The paper leaves behind some great memories, some damn good journalism, hundreds of touched lives and thousands of dollars worth of bills it can't possibly pay.

I was one of six founders who, all under 25, conceived of the paper in a pub in November 1990. Since then, I worked as culture editor, paste-up guy, distribution manager, marketing director, staff writer, Bratislava bureau chief, managing editor and senior editor, before finally jumping ship four months ago to come here. Over the years, I've gathered priceless data on how exactly not to run a business in post-communist Central Europe or elsewhere, and thought I'd pass along a few pointers.

1) Never believe the local real estate guy. He is lying.

In the winter of 1990, we decided to leave our first apartment/office in Prgue when a runaway teenager who'd just stolen money from his parents moved into our two-bedroom commune with 10 of us and our new 386-SX computer. We had been paying a total of $20 in monthly rent for the apartment, so we were surprised when the Czech real estate guy told us the best deal we were going to find would cost a minimum 500 deutsche marks a month and be an hour from downtown. "He's got all the connections, so I'm sure he knows better than us," one of us said.

So we moved into a smaller apartment in the dead of winter with no heat and a lecherous landlord who would burst in at all hours. Later, we would find a large office smack in the center of the of the city for 800 DM a month, and no staffer would pay more than about $100 for an apartment for another two years.

2) Don't use the accounting books as lids for the rat cage.

In the very cold winter of 1990 the same founder who believed the real estate agent bought what he believed to be three cute little mice as a Christmas present for his girlfriend. We dutifully named them Vaclav, Olga and Faust, and put them in a lidless glass cage. We fed them cheese. Soon it became evident by their pink tails and expanding girth that indeed they were rats. So we put our "accounting" book -- which contained one incomplete page with a list of the cash we thought we each had contributed to our venture, plus the "shares" our parents and friends had bought -- on top of the cage to keep the growing, muscular rats from jumping out. Within a day or two the book was in shreds, our notes destroyed and the rats running free.

3) Don't start a business without having a business plan.

This should be obvious to most post-Cro-magnons, but a shocking number of people that I've met have assumed, like we did, that if you work really hard and love what you do, then an appreciative public will reward reward you with things like high sales and full-page ads, even if you insist on running cover stories on Abkhazia and your ad rep is a long-haired Croatian guy with an earring and no experience.

4) Don't run a business without an accountant.

From what I understand, we haven't paid the Czech government taxes in two or three years. We could potentially persuade them to declare us hopelessly bankrupt, but first we would have to show them our books. We don't have any books.

5) Do not, under any circumstances, hire P. Kent Hawryluk.

Back when the staff was a handful of half-educated Californians and a couple of nutty young Czechs, we decided to let a buttoned-down Princeton grad into our tent, as business director. After five months of on-the-job training he steered a prospective investor in Prognosis away and started, along with the rest of our disgruntled business staff, the Prague Post. After another year he steered investors and job applicants away from the Post, behind the back of his partners, to start the now-defunct Budapest Post. Within weeks the staff mutinied, and started the Budapest Sun.

6) Do not forget to hire a human resources manager.

Over the years, the American recession, the continuing malaise of print journalism and the emergence of the Young-Americans-in-Prague media phenomenon combined to drop hundreds of resumes at our doorstep. We chose to read the handwritten ones from guys with no experience riffing Kerouac-inspired pages of poetry about "the death of the American Dream," and ignored resumes from people like Mike Stone, who went on to start this newspaper and most recently the Mexico City Business Journal. [Eds. Note, 2002: Stone subsequently denied this, if memory serves.]

Anyone who has ever hatched a small business that ran on sheer love and hard work (I never, for instance, earned more than $133 a month) knows what a fine way it is to spend one's time. They also know how difficult it is to pass through Phase Two, when novelty become normalcy and you find out whether it can survive without that frantic initial energy. During its happy and troubled little run, Prognosis was fortunate enough to give a few people hope that there is a place in the world for bucking the odds and doing what you love to do because you love to do it.

That's fine and well. Just remember to hire an accountant.

© 1986-2004; All rights reserved.

r. We had been paying a total of $20 in monthly rent for the apartment, so we were surprised when the Czech real estate guy told us the best deal we were going to find would cost a minimum 500 deutsche marks a month and be an hour from downtown. "He's got all the connections, so I'm sure he knows better than us," one of us said.

So we moved into a smaller apartment in the dead of winter with no heat and a lecherous landlord who would burst in at all hours. Later, we would find a large office smack in the center of the of the city for 800 DM a month, and no staffer would pay more than about $100 for an apartment for another two years.

2) Don't use the accounting books as lids for the rat cage.

In the very cold winter of 1990 the same founder who believed the real estate agent bought what he believed to be three cute little mice as a Christmas present for his girlfriend. We dutifully named them Vaclav, Olga and Faust, and put them in a lidless glass cage. We fed them cheese. Soon it became evident by their pink tails and expanding girth that indeed they were rats. So we put our "accounting" book -- which contained one incomplete page with a list of the cash we thought we each had contributed to our venture, plus the "shares" our parents and friends had bought -- on top of the cage to keep the growing, muscular rats from jumping out. Within a day or two the book was in shreds, our notes destroyed and the rats running free.

3) Don't start a business without having a business plan.

This should be obvious to most post-Cro-magnons, but a shocking number of people that I've met have assumed, like we did, that if you work really hard and love what you do, then an appreciative public will reward you with things like high sales and full-page ads, even if you insist on running cover stories on Abkhazia and your ad rep is a long-haired Croatian guy with an earring and no experience.

4) Don't run a business without an accountant.

From what I understand, we haven't paid the Czech government taxes in two or three years. We could potentially persuade them to declare us hopelessly bankrupt, but first we would have to show them our books. We don't have any books.

5) Do not, under any circumstances, hire P. Kent Hawryluk.

Back when the staff was a handful of half-educated Californians and a couple of nutty young Czechs, we decided to let a buttoned-down Princeton grad into our tent, as business director. After five months of on-the-job training he steered a prospective investor in Prognosis away and started, along with the rest of our disgruntled business staff, the Prague Post. After another year he steered investors and job applicants away from the Post, behind the back of his partners, to start the now-defunct Budapest Post. Within weeks the staff mutinied, and started the Budapest Sun.

6) Do not forget to hire a human resources manager.

Over the years, the American recession, the continuing malaise of print journalism and the emergence of the Young-Americans-in-Prague media phenomenon combined to drop hundreds of resumes at our doorstep. We chose to read the handwritten ones from guys with no experience riffing Kerouac-inspired pages of poetry about "the death of the American Dream," and ignored resumes from people like Mike Stone, who went on to start this newspaper and most recently the Mexico City Business Journal. [Eds. Note, 2002: Stone subsequently denied this, if memory serves.]

Anyone who has ever hatched a small business that ran on sheer love and hard work (I never, for instance, earned more than $133 a month) knows what a fine way it is to spend one's time. They also know how difficult it is to pass through Phase Two, when novelty become normalcy and you find out whether it can survive without that frantic initial energy. During its happy and troubled little run, Prognosis was fortunate enough to give a few people hope that there is a place in the world for bucking the odds and doing what you love to do because you love to do it.

That's fine and well. Just remember to hire an accountant.

© 1986-2004; All rights reserved.

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