Staring at a full house

Neil McVicar thought poker's sudden popularity was the best thing that could have happened to his business. Then, some big players wanted in on the action

RON DERUYTER

PHILIP WALKER, RECORD STAFF
Neil McVicar runs PokerSupplies.com out of his Kitchener home. Instead of competing directly against the likes of Wal-Mart and Costco, McVicar finds niche markets like top-of-the-line chips.

KITCHENER (Mar 30, 2005)

Neil McVicar's timing couldn't have been better, or so it seemed.

The aspiring entrepreneur set up Canada's first online poker supplies store in 2002, about a full year before poker emerged from smoke-filled basements to become a mainstream sport with a huge following on TV.

Orders for poker chips started rolling in, turning a fun sideline into a fast-growing business. McVicar figured he hit the jackpot.

"It did kind of go to my head for awhile," he says. "There was some daydreaming about giving up my day job."

McVicar, a 28-year-old Kitchener resident who started playing poker in 2001, became a bit of a celebrity in poker circles. His picture appeared on the cover of Canadian Poker Player in March 2004. The magazine christened him "Canada's chip king.''

But, alas, his reign was short-lived.

The unbelievable popularity of poker proved to be a curse as well as a blessing. Big retailers, including Wal-Mart and Costco, joined the game and offered prices McVicar couldn't match.

"When I look back, I have to laugh because the industry went exactly where I wanted it to go," he says. "It was exactly the best-case scenario. But I was just one person. I didn't have the capacity to take it to its full potential before other fish jumped into the sea."

McVicar's story says a lot about the popularity of poker. It also says a lot about the nature of business.

Business is about identifying an opportunity, filling a need. But, as McVicar discovered, it's also about resources and strategy.

"Welcome to the story of business," says Dave Scharf, founding editor of the magazine that put McVicar on its cover. "No matter what the industry is, as soon as there is a huge opportunity, the guys who have much deeper pockets than the little guy arrive and it becomes a real struggle for the little guy to carry on."

McVicar still runs the business, PokerSupplies.com, but his dreams of untold riches have folded.

McVicar, who continually flips chips between his fingers during an interview at a poker table in the basement of his semi-detached house in Kitchener, is philosophical about the experience.

"I can say I got in while the getting was good. I enjoyed a great ride for quite a long period, being the only poker guy in the country."

PokerSupplies.com was created because of the Friday night poker games McVicar played with five buddies.

The rule was you needed chips to host the game at your house. McVicar went online to buy a set, but he could only find American suppliers.

A light went off.

"I only knew six poker players counting myself and half of them bought chips from the States," he says. "I thought if half the poker players in the country couldn't buy chips here, and half were like me and would rather buy from a Canadian source, there would be a market there."

McVicar had no business experience or training, other than an entrepreneurial studies course in Grade 10, but he liked the idea of doing his own thing and being self-reliant.

"I saw a hole and wanted to fill it," he says. "If it made money in addition to that, that would be great. "

The business started slowly.

McVicar wasn't too web savvy, so his website didn't appear anywhere near the top of the list in Google searches.

Mainly selling to family and friends, it took him four months to sell the first 3,000 chips he bought from a wholesaler in Florida. After accounting for shipping costs, duties and other expenses, he didn't make any money.

McVicar faced a dilemma common to fledgling entrepreneurs.

He wanted to accelerate his sales, but he was paying for new inventory out of his cash flow so he couldn't afford to grow too quickly.

"At any given point I only had 3,000 chips. If I advertised and put myself out there, I wouldn't be able to handle the influx of orders."

McVicar's slow turnover also hurt his margins. Without bigger volumes, he couldn't buy directly from low-cost manufactures in China.

Everything changed when he got a call from someone who said he needed 40,000 chips for a chain of casino training schools he was starting.

McVicar had only 2,000 chips in his basement at the time, but he said he could fill the order. He quickly found a supplier in China, got a business loan and ordered 100,000 chips.

But the buyer disappeared, without paying the 20-per-cent non-refundable deposit he had agreed to. It turned out to be a stroke of good luck.

"It put me in a position where I could really put myself out there and fill the orders," says McVicar.

The arrival of his stacks of chips coincided with the spike in poker's popularity, a turn of events McVicar attributes to Chris Moneymaker, a recreational poker player who parlayed a $40 US entry fee for an online tournament into a $2.5-million US win in the 2003 World Series of Poker

"He wasn't a professional player, but he beat a field of 800 people," says McVicar.

"Everybody's eyes opened to the fact anyone could go into it and buy a few books and learn the game. And with some luck you could be on TV within a few months."

Instead of selling 1,000 chips a month, McVicar was selling 1,000 to 2,000 a day. He added other products, including tables and books.

The rapid growth was exhilarating, but also exhausting. After coming home from his job at a local high-tech firm, McVicar would spend two hours answering e-mails and another two hours packing orders.

"I was looking at 12- and 13-hour days every day. It was crazy."

McVicar considered quitting his job so he could devote more time to the business. But his wife, Anne-Marie, who married him in January, convinced him it was too big a gamble.

It's a good thing he listened. McVicar's reign as chip king lasted only 10 months. Major retailers cashed in, flooding the market with chips.

"It is impossible to compete with the likes of Costco and Wal-Mart on price," he says.

"The only way to keep ahead of them is to offer chips they don't have and poker tables and what not."

McVicar now sells top-of-the line chips -- a set of 500 goes for $275 -- that poker players won't find in stores. He also caters to customers who can't or won't buy from big chain stores.

"There are plenty of cities in Canada that don't have Wal-Marts or Costcos, and there are people in places with those stores who just prefer the convenience of ordering from their homes, so the market is still there."

McVicar, who has become quite a serious poker player, winning or losing up to $1,000 at his Friday night games, keeps his hand in with a couple other poker-related ventures.

He runs PokerForum.ca, an online poker chat room that has more than 1,000 registered members. He does it for fun, but points out there will be opportunities to earn advertising revenue as the number of members grows.

He also hopes to make some money by selling the rights to more than 20 poker-related Internet domain names he had the foresight to register.

McVicar is content with the way things evolved, but he can't help but wonder what would have happened if he had gone all-in.

"If I didn't have my fiancÃ©e reasoning with me to keep my day job as security, I probably would have ended up quitting my job," he says.

"I'm not sure if that would have been the worst thing in the world. I guess I'll never know. But I do know that I could have done more with it if I had given more time to it."

rderuyter@therecord.com

Q & A

We asked PokerSupplies.com's Neil McVicar:

Q. Will poker continue to grow in popularity?

A. "What is really hard to forecast is whether poker's popularity is going to be its own worst enemy. Either it will become so popular, it won't be exciting anymore, or it will continue to climb for who knows how long."