FASTTRACK/LK1st/dt2nd SOS Survival Products Inc. Year Founded: 1989 Headquarters: Van Nuys Core Business: Supplying disaster relief and emergency supplies and training to corporate and government customers Revenues in Fiscal 1991: $100,000 Revenues in Fiscal 1998: $950,000 Employees in 1991: 2 Employees in 1998: 7 Top Executive: Jeff Edelstein, president Goal: To continue growing revenues and expanding customer base Driving Force: Need to be prepared for disaster By R.W. GREENE Contributing Reporter Over the past decade, SOS Survival Products Inc. has seen its sales propelled by fears of such natural disasters as earthquakes, floods and landslides. But these days, business at the Van Nuys-based supplier of disaster-relief and emergency supplies and services is dominated not by worries about natural disasters, but by growing concern about what will happen on Jan. 1, 2000 the so-called Y2K problem. On that day, doomsayers contend, the computers that run the nation’s power grids, government institutions and financial networks will go awry, ruined by a pervasive computer glitch. The computers that run the country will seize up on the first day of 2000, according to this dark scenario, when they are confronted with the digits “00,” which they will interpret as referring to the year 1900 rather than 2000. Civil unrest and disaster will supposedly ensue. While many experts discount this apocalyptic vision, judging by SOS’s sales it is a widely held one, says Jeff Edelstein, the firm’s president. He estimates that about 70 percent of his present business is from customers with Y2K worries. He expects the proportion only to increase as the fateful day draws closer. In less than 10 years in business, Edelstein has seen his sales climb from about $100,000 annually to almost $1 million, and his mailing list grow from 375 addresses to 33,000. Y2K aside, it’s still a fact of life for Edelstein and his company that disasters are good for business. In the aftermath of the Landers earthquake of 1992 and the Northridge quake of 1994, SOS’s business skyrocketed. After the Landers quake, sales tripled to $300,000; after the Northridge quake, business was so intense that customers put up with two-hour waits to purchase supplies in the retail showroom next to the warehouse, and the crowds lasted for six months. Edelstein has heard plenty of comments about how he profits from people’s fears. “We’ve gotten lucky with timing,” he admits. Edelstein, now 30, started his business in 1989 while finishing up a degree in marketing at San Diego State, first by joining, and then buying out a family friend who had a side business selling emergency equipment. He already had some experience in retailing, working in the hardware store his family had owned since the mid-1950s. In the beginning, he did everything by himself, quickly outgrowing his business’ 10-foot by 10-foot storage unit and taking over a small warehouse space in Van Nuys, which he expanded to 1,400 square feet in 1991. The company currently occupies about 6,000 square feet and employs a full-time staff of seven. Instead of relying solely on walk-in and individual business, Edelstein early on began marketing to corporate customers and government agencies, especially school districts. Because such customers tend to be more organized about disaster preparedness, they help to smooth out the peaks and valleys of the balance sheet. Rather than catering to fear after a disaster has occurred, Edelstein prefers to focus on disaster preparedness. “It’s true you sell to people who are afraid after a disaster,” he says. “But people aren’t really afraid before a disaster.” As a result, a large part of his work is devoted to education and training, services for which he does not charge. Rather than sell a school district anything and everything, he says he instead will work with officials to customize first-aid or search-and-rescue kits, and will instruct them on how to use them properly. “A lot of schools have been steered wrong,” he says. He and his staff travel often to conferences of educators and disaster professionals, not only to hawk their wares, but also to participate in discussions of new disaster-relief techniques. One of SOS’s customers says that kind of service sets the company apart from other vendors. Pete Anderson, director of emergency services for the 600,000-student Los Angeles Unified School District, which bought almost 2,000 search-and-rescue kits from SOS, said that when the district invited several vendors to attend a recent disaster-preparedness conference, SOS was the only one to accept. “They appear to go above and beyond just the business side,” said Anderson. “They’ve done quite a bit of research they are more interested in the whole field (of disaster relief), not just the deals.” Edelstein says he is in the business for the long haul. That differentiates him from many disaster-supply competitors, he says, many of whom sprang up overnight after the Northridge quake, sold bad supplies at a high price, and then went out of business. In contrast, Edelstein reduced his price on his cheapest D-cell batteries to 50 cents a pair in the weeks following the Northridge quake. “I had 10,000 of them, and I can still make money off them at 50 cents,” he says. “It felt good to be able to give people what they needed.” Even now, the SOS retail store is a cornucopia of esoteric hardware: orange safety vests, sledgehammers, dust masks, bullhorns, stretchers, museum wax and Sterno. Fire ladders that hang out of a second-story window are mounted on a wall next to a large map of California which has a 4-foot-long Band-Aid stuck over the Bay Area. The store’s cheapest item is a tongue depressor that goes for 3 cents, part of an array of small items that families can use to customize their own first-aid kits, rather than buying the pre-made kits that Edelstein also sells. The most expensive item is a generator that goes for more than $600. Of late, because of Y2K worries, generators have been a hot seller. So have solar-powered and hand-cranked items such as radios that need no batteries. “People are terrified that nothing will be available for six months,” says Edelstein. A significant portion of Y2K business is coming by mail and phone orders from church groups, many of which are taking the Y2K disaster scenario extremely seriously, Edelstein says. Then there are customers like the guy who told him recently that his Y2K disaster kit consists of 12 rifles and 12,000 rounds of ammunition. Edelstein plans to keep growing slowly and steadily by expanding his mail-order business, getting more contracts with government agencies, and starting a Web site. He has no plans to expand the business by establishing more retail stores, because the increased overhead is not worth it, he says. He does plan to expand his showroom to include a play area for customers’ children, and a mock earthquake-proofed office so that people have better idea of what to be prepared for, whether an earthquake or a computer-driven Apocalypse. “This is my life,” he said. “It’s very rewarding what we do it’s something that’ll help people.”