The other day, I was approached by our radio show producer, Rory Webb, who asked me, “Ron, how did you fund your first start-up?”

It’s funny…it’s been almost 40 years since we started that first company and this was the only time I have ever been asked that question.

I asked Rory, “What do you mean by funded?” To which he replied, “I mean how did you pay the bills when you were starting your first company? I know that you’ve never taken any money from friends or family or banks…so I’m just curious.”

I got a big smile on my face. I probably didn’t even answer him for a minute or two as I more or less replayed the history of ISR in my head (the company was called Information and Systems Research – but that was quickly shortened to ISR). It seems like maybe just two weeks ago that my partner and I were starting that business.

“Rory, to tell you the whole story, I’d have to take you back to my junior year in high school. Are you sure you want to make the time investment because this may take a few minutes?” He nodded his head and so away I went.

“Okay, it all started with my junior year in high school. I was 15 years old and I had a buddy who was 16 and had a car. We found a job in McKeesport, PA (at the time, I lived in Dormont) and the job was basically working for a candy manufacturer, painting the machinery in a brand-new plant they had just built. The name of the company was Thurman’s Chocolates, and the chocolates were branded under the name of Tris Anne. Apparently, these are the names of the two daughters of the company founder, Mr. Edward Phillips.”

I went on to say that I “kinda, sorta” knew Mr. Phillips through a family acquaintance. Frankly, the only time I ever remember meeting him was at a funeral or something like that.

All I do remember is that we were being paid the princely sum of $3 an hour. Not bad money for 1966.

I busted my butt that summer. I didn’t walk from job to job, I sprinted. Mr. Phillips would see me and just shake his head. He couldn’t understand how he had found such an energetic and enthusiastic worker.

But the truth of the matter was that I was in training for my senior year as a starting wide receiver for Keystone Oaks High School, and I was wearing ankle weights under my pants as I saw this as an excellent way to both get paid while staying in shape. But once I realized that Phillips was in awe of my constant motion, I probably overplayed the hand even more.

I finished the job and went off to football camp. On the last day there, Mr. Phillips came up to me and shook my hand and said, “You are the hardest working kid I ever met in my life. If I can ever do anything to help you, please don’t be afraid to call me.”

Since I don’t eat chocolates, I couldn’t think of anything he could do for me, but I filed his offer away anyway.

Fast forward to my senior year in college. At the time, Westminster had just switched to a new academic gimmick called “4-1-4,” which basically meant you could spend your senior year doing an independent study. I thought fondly of six weeks away from campus and signed up. But before signing, I drove to McKeesport and met with Mr. Phillips. I remember the meeting like it was yesterday.

When I worked in the factory, I remember the managers and Mr. Phillips bemoaning the fact that their business was extremely seasonal. They sold their fine chocolates and candy gels at Easter, at Christmas, and, to some degree, at Halloween. Beyond that, the plant went unused. I remember it being one of the biggest problems they had.

Since I had spent the remaining summers of my college career working in the steel mill, I knew that millworkers toiling in 100+ degree conditions gobbled down salt pills by the handful (for those who don’t know, the theory is that salt pills help replace important fluids and minerals lost while perspiring).

I had been thinking for at least two summers about a product idea. The concept was to take a product already made by Thurman’s – basically this was a jellied, sugar-coated candy -- and mix in salt with the sugar coating. We even had a name for this product. We suggested they call it “Old Pep Salt Gels.” I told Mr. Phillips that he could sell them to steel mills up and down the Mon Valley. (By the way that shows you the difference between a student in 1970 and 2010. Any student with that same idea today would be selling those salt gels worldwide. Since I had only once ventured beyond the scope of Pittsburgh in my life, the Mon Valley looked like a pretty broad market segment.)

Anyway, I did the study, wrote the report, and presented it to Mr. Phillips. He was ecstatic. Moreover, Thurman’s actually made those salt gels.

Once again I found Ed Phillips pumping my hand. “Son, that’s twice that you’ve helped me out. Again, if there’s anything I can do for you in the future, don’t hesitate to call.”

It wasn’t very long before I did call Mr. Phillips for the third time, and this time the payback was mine.

You see, in 1973, after about 1-1/2 years of working for other people, I had started my first business. Good old ISR. We were in the software business, but we had no customers. I thought of Ed Phillips. I thought, “We know how to write inventory control systems, maybe he’s interested?”

He obviously was more than willing to take a meeting with me. But after explaining what we could do for Thurman’s, he shook his head and said his company was “not big enough” to justify a mini-computer and custom-written software. (We had become by that time a Digital Equipment Corporation (DEC) OEM – we added value by providing custom-written software for business applications.)

As I got up to leave, figuring that I had completely struck out, Mr. Phillips said, “However, my two sons are starting up their own company right next door and perhaps they can use your services. My son, Tom, is in the next room, why don’t you go talk to him.”

I went into the next room and sitting behind the desk was a young Roger Staubach look-alike by the name of Tom Phillips. His dad briefed him on what we did and he responded, “Dad, not only am I interested, Scott (his brother) and I have already concluded that we can’t run this business without some sort of automation.”

Every start-up needs a “sugar daddy” client. And, the earlier they find that sugar daddy, the better. Consolidated Products Systems (CPS) – we even came up with the name and logo for the two brothers -- became that sugar daddy. And, with our help, they ended up creating one of the largest candy consolidators/shippers in the country. There’s no way in hell they could have possibly done it without our software.

Over the 10-year period that we worked for CPS, we grossed close to $4 million in revenues. I’d say our margins on those dollars were at least 40 percent.

“And that, dear Rory, is how we ‘funded’ our first start-up,” I said to my glassy-eyed listener. (Actually, I think I actually got through to him.) “ISR, my first start-up was funded by revenues from a real customer.”

I went on from there to start at least seven more companies, all of which were funded in the same way – that is, by the first or second customer. And, whenever a student or a caller to my talk show asks the question, “But where do I get the money to support us during start-up?” I always reply, “Just find a damn customer! Then, use the profits from that deal to support your start-up.”

As the years have gone by, I see less and less companies doing this. Why? It probably goes hand-in-hand with our modern-day society. It probably also relates in some way to the fact that there are so many angel and venture capital investors willing to throw their money into private equity.

And, it probably also relates to tax policies that reward losses.

Whatever it is, it’s the same mentality that results in young people graduating from college with six-figure debt. The same young people that then immediately go out and lease or finance much more of a car or domicile than they will ever need.

Is it wrong to take money from someone who is willing to invest it into your equity? I guess not.

But what I do know is that the only time in my life that I “relaxed” with one of my start-ups was when I actually had a whole bunch of money to put into that start-up. Sadly, I watched close to a million dollars disappear in a start-up that lacked the sense of urgency that all of my other “broke” start-ups had. Isn’t that interesting?

Sometimes I think I’m just a dinosaur.

But for those of you willing to pay the price, anything is possible with a great idea and a willingness to do whatever is necessary to first find a customer that can also double as your “bank.”

Try it some time. You’ll like it.