Tightwads ride recession roller coaster straight to the bank – The Tightwad Gazette owners Amy and Jim Dacyczyn – 25 Best Businesses of the Year
I have an idea for a business, and I don’t think it’s bad,” Amy Dacyczyn said to her husband, Jim, during the winter of 1989. “What do you think of a newsletter for tightwads?” Jim was due to retire from the Navy in October 1991, and the two had often talked about starting a home business to supplement his pension.
“Do you have enough ideas to keep us going?” Jim asked. Amy roughed out two years’ worth of potential articles as they shaped their business plan over a pot of tea. That pot of tea became a pot of gold for 42-year-old Jim and 36-year-old Amy.
The Dacyczyns published the premier issue of The Tightwad Gazette in June 1990 with the subheading “Promoting Thrift as a Viable Alternative Lifestyle.” Two years later, riding the wave of a recession that has wiped out many businesses and providing a perfect antidote to the overspending of the 1980s, they have 95,000 subscribers. With 1991 revenues of $750,000, which doesn’t include a “substantial six-figure book advance” from Random House, these tightwads are rich.
If we had launched this 10 years ago, we’d have been paddling upstream,” says Amy, who writes, edits, and illustrates the newsletter and recognizes her fortuitous timing. “People would have been interested, but how would we have found them?”
The original business plan projected earnings of $12,000 a year. They envisioned a venture with a low start-up cost that might thrive during bad economic times. Amy’s writing flair and graphic design skills, honed as a designer for Sylvania and Polaroid, would enable them to produce an inexpensive but appealing product. After all, they had an intimate knowledge of their subject: In less than seven years, they had saved $49,000 from a $30,000 annual income while supporting four children. That enabled them to purchase their dream home, a nineteenth-century farmhouse with an attached barn. Today they also have nine-month-old twins.
The only question in their business plan was, Would tightwads fork over money for a newsletter? Arbitrarily, the Dacyczyns decided on a subscription rate of $12 for 12 issues. They figured if they could save readers $1 per issue, they could justify the cost of the newsletter. They raised $1,500 in start-up capital by selling photographic equipment, and printed a free sample issue.
In her lead story, “They Call Me the Frugal Zealot,” Amy admitted, “I am a compulsive tightwad.” On page seven, she answered the “$64,000 Question”: How do you recycle a vacuum-cleaner bag? She compared homemade popcorn with microwave popcorn and wrote “A Really Dull Article About Health Insurance.” In short, she showed that she could make the refined but somewhat dull art of being a New England skinflint into an engaging subject.
“We sent the newsletter to everyone we’d ever met and asked them to spread the word,” says Jim. “And we bought classified advertisements in Yankee and Mother Earth News, which barely paid for themselves.”
After three months, they had a mere 126 subscribers, so they mailed 10 press releases to Maine newspapers. That yielded two articles and 700 new subscribers over two months.
Those two articles opened the floodgates, and the Dacyczyns haven’t done any
advertising or promotion since. As the economy soured and reformed Yuppies and profligate consumers reacted to their spending sins of the eighties, the media found the Dacyczyns and made the newsletter a success.
In March 1991 Parade magazine put Jim, Amy, and their four children on its cover with the story “How to Save a Buck,” in which the magazine listed “10 Tightwad Strategies.” At the time, after nine months of publication, The Tightwad Gazette had 1,700 subscribers.
A month later the Dacyczyns appeared on the “Phil Donahue Show,” “The Today Show,” “The Home Show,” and “CBS This Morning.” They drove from Maine to the New York television studios in their Chevrolet Suburban station wagon with boxes of dry milk, 50-pound bags of oatmeal, and other props to show strapped Americans how to live on less.
During this blast of media heat, the business bloomed. The Dacyczyns received as many as 22 mail trays a day full of checks and money-saving ideas from tightwads around the globe.
Three weeks after Donahue, The Gazette had 30,000 subscribers. The Dacyczyns hired 12 people to open the mail. Jim bought a briefcase at a yard sale for a dollar and used it to cart tens of thousands of dollars to the bank. When the Dacyczyns entered the HOME-OFFICE COMPUTING contest eight months after the Parade article, they had 50,000 subscribers.
Since then they’ve enjoyed a second wave of publicity, from The New York Times, The Wall Street Journal, The Chicago Tribune, The London Daily Telegram, The Toronto Star, Money magazine, “The Today Show,” and “The Maury Povich Show.”
And the subscriptions keep coming. The Dacyczyns now employ 6 full-time and 10 part-time people. “In apparent contrast to our penny-pinching ways, we have never paid minimum wage for even the most routine tasks,” says Jim, who has retired from the Navy.
To keep up with the growth of their business, the Dacyczyns have evolved from the typewriter age to the computer age. To eliminate hand-addressing the newsletter, they invested $1,500 in an IBM PS/2 25 (since sold) and a Brother daisy-wheel printer. They have eschewed desktop-publishing software in favor of WordStar 5.0, as Amy figures it takes her only six hours a month to do pasteup. “Also, slicker is not necessarily better,” says Amy, who doesn’t own a laser printer. “I want this to look like a mother in Maine is putting it out.”
Jim found a used Tandon 286 with removable hard drives. Since the daisy-wheel printer was slow, he bought a dot-matrix printer for labels. And as the money began pouring in, they retired their spiral ledger and replaced it with Quicken to manage the books.
Not long after, Jim bought a 486 computer with a 210MB hard-disk drive, a CD-ROM drive, and a tape backup to handle the mailing list, which now consumes 50MB. To take full advantage of discounts offered by the postal service, he uses Arc Tangent Professional Mail.
What happens if the economy turns around and the subscriber base begins to disappear? “What we’ve shown is that a lot of people think like we do,” replies Jim. “I don’t know how much the economy has to do with it. We could lose 90 percent of the business and still satisfy ourselves. After all, we were just trying to make $12,000 a year.”
As Jim wrote in his contest entry, “Ultimately, we would like to be largely retired in the near future so that we can devote more time to our Six young children and to tightwadian pursuits.”
Amy’s perspective? “Like Paul Simon said, As long as people want to hear me sing, I’m going to continue to play,’ I say as long as there’s a need, I’ll keep pumping it out.” Is she running out of ideas? “Oh no, we’ve just scratched the surface. Why, I just heard about a way to make paper out of dryer lint. I’ll have to look into that.”
Jim and Amy Dacyczyn
RESIDENCE: Leeds, Maine
BUSINESS; The Tightwad Gazette; newsletter publishers
1991 REVENUES: $750,000
EQUIPMENT: Ares 486/33 and Tandon 286/10 computers; Brother HR-15 and Star NX-240 printers; Rena DA-300 address printer; Rena TL-100 labeler
SOFTWARE/ON-LINE SERVICES: Word-Star 5.0, PFS: Professional File, Quicken 4.0, Arc Tangent Professional Mail
Rx FOR SUCCESS: “Produce a unique product that gets lots of good publicity.”
COPYRIGHT 1992 Freedom Technology Media Group
COPYRIGHT 2004 Gale Group