Erol Onaran
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Erol Onaran (February 17, 1934 - October 25, 2005), founder of Erol's TV, Erol's Video and Erol's Internet, was a Turkish-American businessman. He was born in Hungary, although he spent most of his young life in Istanbul, Turkey before moving to the United States in 1959. An electronics technician by trade, he opened Erol's, an electronics repair store in Washington, DC, in 1963.
[edit] Overview
Onaran would lead Erol's through a series of evolutions over the next forty years. Erol's TV achieved modest success in the 1960s and 1970s, selling and servicing color televisions and video cassette recorders in several locations throughout the Washington, DC suburbs.
In the early 1980s, Erol's TV began renting a handful of video cassettes at the flagship store in Arlington, Virginia. The popularity and profitability of those rentals led to the spinoff that would become the Erol's Video chain. By the late 1980s, Erol's Video would grow to become the largest privately-owned video rental chain in the United States, with more than 250 locations throughout the mid-Atlantic. Onaran would then engage in a fierce battle with rival Blockbuster Video before ultimately selling the chain to the company in 1990 for $40 million.[1]
In 1992, Onaran purchased the Erol's hardware service center from Blockbuster, and with the aid of son Orhan Onaran began once again selling and servicing electronics. In an attempt to capture market share from major manufacturers by trading on the family name, the company began selling custom-built personal computers in 1993 to individual users, businesses, and government agencies.[2]
In an effort to provide additional value to computer purchasers, Erol's began offering dial-up Internet service in 1995. Erol's Internet offered unlimited access to the then very basic internet for a flat monthly fee, as opposed to the "by the hour" model employed by larger Internet Service Providers such as America Online (AOL) and CompuServe. To raise money quickly, Erol's slashed monthly fees if customers were willing to purchase yearly contracts in advance, providing much-needed cash to fuel the company's growth. The model proved successful, as Erol's would sign up nearly 300,000 customers by early 1998. However, the company was operating at a loss even as the brand continued to grow. Needing an infusion of capital, Erol's began preparing for an initial public offering (IPO) in the summer of 1997. Paperwork filed in preparation for the IPO demonstrated just how cash-strapped the company had become: As of September 30, 1997, Erol's showed a balance of $500,000 with obligations to provide services to customers amounting to $40 million. Just two months after announcing the intention to take the company public, Onaran surprised the industry by agreeing to sell outright to RCN Corp., a telecommunications firm based in Princeton, New Jersey for more than $120 million. The terms of the sale included the assumption of $40 million in operating debts. Onaran would receive $35 million in cash in the sale, as well as more than $20 million in RCN stock.[3]
After the sale of Erol's Internet to RCN, Onaran would retire from business, leaving his family to run the electronics business which was not included in the deal. His health would fail in his later years due to alcoholism, and gambling and lavish spending reduced his wealth considerably. With debts mounting, he returned to his native Turkey, where he died October 25, 2005.
[edit] References
- ^ Weiner, T: "The Video King And I", "Washington Post Magazine" page W16. August 18, 1991
- ^ Hamilton, M: "Building Business on a Name; Personal Computer Company Sees Value in the Erol's Reputation", "The Washington Post" page F11. December 12, 1994
- ^ Knight, J: "In Bypassing IPO, Erol's Grabs an Offer Too Good to Refuse", "The Washington Post" page F7. January 26, 1998
