GLENDALE, Calif. – During its height of operation – with over 1,800 credit union clients – CUShopper looked like a juggernaut that would be a force in the credit union industry for years to come. Faster than its rise, the company plummeted out of existence. The company's business was based on a simple premise, yet one unique to the credit union industry. It formed deals with major manufacturers for big-ticket consumer goods such as PCs, televisions and high-end electronics. Members would get attractive pricing on these items and when it was time to make a purchase, their credit union's financing option would be prominently positioned to help the CU bring in lending dollars, whether it was from plastic or special CUShopper signature loans. Members learned about the deals through the CU's Web site or direct mail campaigns. One dot-com-like attribute of the CUShopper product was that it was free to participating credit unions. Only months before its demise, CUShopper was ranked No. 66 on Inc. magazine's list of the 500 fastest growing private companies. CUShopper appeared to be on the right track for becoming not only a successful private company, but a public one. "The company blew up from the inside out," said CU Shopper co-founder and its former chairman and CEO Adam Wicks Walker. "It wasn't market problems that destroyed the company, it was our own internal management and financing issues. We tried to take the company too far, too fast," said Walker. Saying CUShopper was just one of the many dot-com failures to bomb in the last few years isn't accurate, says Walker. Although it had an elaborate Web presence and framed its site within its credit union clients' own Web sites, only about 10-20% of its sales came in through the Web channel. The bulk of the company's sales were a result of direct mail campaigns, where members called into CUShopper's call center to place their orders. CUShopper diversified its product mix too quickly, said Walker. Starting out with PCs and high-end electronics, CUShopper eventually moved into jewelry and vacations. It took money to move into these new directions. "There was some competition threatening. The idea was to make the company larger," said Walker, who had a vision of bringing the company public. "We were going in five different directions at once, trying to do too many things simultaneously. You end up needing more people, more management, and it's not as cohesive as it once was," said Walker. The true problem boiled down to financing. The company was started with only a couple of million dollars from internal funding from its founders and some angel investors, but as it started to grow and the company moved into more areas, it went out and brought in a substantial amount – nearly $18 million – in venture capital money. Things snowballed downward from there, said Walker. "We had some pretty heavyweight guys wanting to get involved in the company. When they came along, they saw me as a dangerous start-up guy who didn't have an MBA and any grey hair," said Walker. To the outside world, signs of trouble were hard to spot. The company moved from about a 15,000 square-foot building into a 100,000 square-foot building. It occupied about 50,000, with an option on the other 50,000 square-feet in the new building. It also beefed up its staff to over 200. One bad plan the investors brought with them, said Walker, was a regional sales force that would call on credit unions in-person. "That's really expensive," he said. Walker said the VC leaders eventually pushed him out of the top spot. "The new CEO didn't know a thing about credit unions and frankly he didn't care, he just wanted to make money. I can't believe I didn't see that as a mistake, I allowed it to happen," said Walker, who saw the VC problem quickly get personal. Walker's brother and father also played integral roles in CUShopper's start-up phase. The VC leaders wanted them out as well, said Walker. "My dad Doug was running all the credit union relations. He was instrumental. William Widmaier was also instrumental. The investors wanted them out immediately. It was just the wrong plan. They really changed the dynamics of things," said Walker. Widmaier was also a co-founder who worked with Walker at Earthlink (a successful ISP) before the two left to form CUShopper. Looking back,Walker admits that CUShopper may have been better off charging CUs for its product, but said revenue was steadily coming in from member purchases, though the company always kept tight wraps on its sales figures. Walker says he regrets a number of things-that he grew the company too fast, that he let banker money become the fuel for CUShopper, that credit unions were adversely affected by the company's failure, and that the value he believes CUShopper was bringing the industry is lost. "It's a real shame it was lost. It did cause some trouble for credit unions, especially the guys who got the company off the ground. It's been quite awhile, I wonder if anyone wants to hear from me," said Walker. Walker is now involved in a few more start-ups, one which is very close to becoming a company. "Start-ups are just in my blood," said Walker. At this point, none of his ventures are aimed at the credit union industry. Interestingly, despite its complete financial dismantling, CUShopper was able to avoid declaring bankruptcy because there were not enough creditors suing it. Walker said he did the best he could to work with the creditors, but knows some were still burned. "I really regret that." He also noted that there are no lawsuits pending involving CUShopper. [email protected]