The Benefits of Bootstrapping: Kwame Kuadey Talks GiftCardRescue

In 2001, Kwame Kuadey was fresh out of college and contemplating his next career move. Friends and family insisted he should go to law school. But instead of following trials, Kuadey read Inc., Fast Company, and other business magazines voraciously.

Inspired, Kuadey enrolled in the Johns Hopkins Carey School of Business to pursue his MBA. After graduation he began working for Citigroup as a compliance manager, but he couldn't shake the feeling that working for someone else was keeping him from realizing his full potential. He wasn't interested in paying his dues for 20 or 30 years in order to move to the next level professionally.

"I was convinced I wanted to do my own thing," Kuadey says. "I was waiting for the right opportunity."

As any successful entrepreneur will tell you, the best business ideas are solutions to existing problems. The problem Kuadey was waiting for arrived in a conversation with a friend who was lamenting his stack of unwanted gift cards. He told Kuadey that he wished there was a way to sell them, instead of being forced to use them in the shops and restaurants where they had been purchased.

Kuadey immediately looked into the gift card resale market, and realized he had found an opportunity. He came up with GiftCardRescue -- an online trading post where the owners of languishing gift cards can trade them in for cash, and shoppers in the market for gift cards for their favorite shops and restaurants can score them at a discounted rate.

Kuadey used the safe haven of business school as a testing lab for his new idea, running it by professors and treating it as his independent project. When he lost his job at Citigroup as a result of downsizing in the wake of the financial collapse, he realized it was time to pursue his idea full time.

Rather than seeking outside funding -- an often quixotic and grueling quest for entrepreneurs with an unproven idea -- Kuadey elected to bootstrap his new company. He borrowed money from friends and family, and put up his own cash to cover startup costs. This demanded a strategic approach to expenditures -- he wasn't playing with an influx of corporate funds or a bank loan, this was money that belonged to the people he cared about most.

"There was a lot at stake," Kuadey says. "I was always focused on where the money was going."

Kuadey pared expenses wherever he could. Instead of shelling out for an expensive marketing and public relations campaign, he researched web video techniques and shot his own video content. He pitched reporters himself, and landed stories in top national outlets. He built the largest blog devoted to gift cards. It was a grind, but cost-effective.

He caught a break when he received a phone call from The Shark Tank, a stylized CNBC show devoted to startups where contestants pitched a panel of high profile investors on their ideas. The producers had seen the news coverage Kuadey had landed, and were interested in having him audition. Shocked, Kuadey had a friend shoot his audition tape, and before he knew it , was on a plane to Hollywood to begin shooting the show.

"Being on Shark Tank was the turning point," Kuadey says. "Before that we were doing things slowly. We hadn't received sustained attention that would lead to very fast growth. It wasn't web traffic that the show created, but the people who wrote about it afterward." 

After Kuadey's appearance, in which he secured additional funding for Gift Card Rescue, the business began growing quickly. In 2009-10, revenue increased 400%, and as of June this year the company will have done the same amount of business it had done in all of 2010. Located in Ellicott City, the operation now boasts seven employees.  

Kuadey attributes his company's success to the way it is presented to consumers. Instead of the traditional online marketplace model popularized by eBay, Gift Card Rescue is billed as a way for shoppers to save money because the cards are offered at a discount. 

"We're trying to target the budget conscious," Kuadey says. The cards the site traffics in are all guaranteed, and the site prevents fraud by inserting itself between card sellers and buyers to safeguard the transaction.

Kuadey has been active in Baltimore's tech-dominated startup market. He recently spoke at Ignite Baltimore on the realities of bootstrapping a business startup. His talk focused on dispelling some of the myths that surround entrepreneurs.

"What I realized is that there are a lot of misconceptions out there on how startups are portrayed," Kuadey says. "There is this hysteria that all you need is a good idea, and then you can write a business plan and get funding. The reality is that 90% of business startups are bootstrapped by money from friends and family. It's going to be a grind." 

While he's been impressed with how the tech community has coalesced around Ignite and other community-building efforts in Baltimore, Kuadey wants to see a more unified effort toward entrepreneurship in the city.

"It's been very fragmented," Kuadey says. "There are pockets of people gathering and trying to advance. For example, the Startup City designation they're trying to secure. We just haven't found a way to bring it all together. Baltimore is not like Boston or New York, but could be like Austin, with enough of a presence to have an impact."

Kuadey teaches a class on entrepreneurship at his church, Empowerment Temple in Bolton Hill, which encourages students to consider entrepreneurship as a career option and includes a 12 week boot camp on entrepreneurial basics. He pushes students to test their ideas to see if they're solving an identified problem, and hopes to teach folks the lessons he learned when he set out on his own. 

"I want to teach people how to do it in a smart way," he says. "In a way that gives you credibility and a chance to compete, without showing that you're just one person working out of your basement."


Jason Policastro is a freelance writer.


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Photos by Arianne Teeple

- Kwame Kuadey, CEO & Founder GiftCardRescue.com
- GiftCardRescue.com
- Kwame Kuadey
- Alexus Martin, processor, with GiftCardRescue.com
- Alexus Martin