A Digital Mom and Pop

Dyscern, which each week sells more than 1,400 iPods, PDAs, GPS devices, digital cameras and BlackBerrys, mostly through eBay, has in a few years gone from being a small home business to one of the fastest-growing retailers in the country, according to Inc. magazine, with projected sales of $12 million this year. It has done that largely on the backs of family and friends.

Their rise as an eBay success story illustrates the growing pains felt by many companies that begin as mom-and-pop shops and grow quickly into much-larger businesses. As Dyscern looks beyond eBay and its own modest Web site, its owners are preparing to face bigger challenges, such as whether they need to hire executives with expertise their team doesn't have.

"As we look to future growth . . . we will bring in other professionals who have experience and fill in the team," Canty said. "These people will likely be found outside of our friends-and-family circle."

That is a crucial step for a rapidly expanding family business, says John A. Davis, faculty chairman of the Families in Business program at Harvard Business School. "You can't rely too long on family members for employment. You're going to need skill sets pretty quickly that the family doesn't have," he said.

Until now, Dyscern has been able to put off the tricky question of hiring outsiders because of its executives' mix of talents. As a former AOL guy and techie, Frischling, 35, continually buzzes with new ideas and directions for the company. Canty, 36, a University of Maryland business school graduate, takes a more cautious, by-the-numbers approach.

"Bill and I do not always agree. These disagreements certainly have the potential to be a bit more emotional than any I have had with previous companies," Canty said. "Since I control the finances and Bill generates the ideas, most disagreements center on funding these ideas."

For example, Frischling once suggested that Dyscern sell and install high-definition televisions and also proposed that the company embed video games into its the pages of its Web auctions. Canty vetoed both ideas. They have agreed, though, to start making digital picture frames, their first foray outside retailing.

One of the company's more heated debates was over a major issue facing small businesses: health-care costs. In the first few years, when Dyscern had four employees, the company paid for all health benefits. As the company expanded, health costs shot upward.

Canty and Angerer, the third partner in the business, argued that health costs were becoming too expensive and that employees should pay a portion. Frischling countered that it was the company's responsibility to pay in full. The three were blunt about their views, a common thread in their business discussions. "You can be honest rather than being diplomatic," Canty said.

In the end, they compromised on a lower employee contribution. "I do agree with Bill philosophically, but economically it was impossible for Dyscern to continue without employee contributions," Canty said.

Dyscern started in 2002 in the couple's basement shortly after their first child, Lucas, was born. After a test selling ink-jet cartridges, Canty moved into portable electronics. Frischling was still working for AOL, but well past midnight they would work together on the business. At the end of the first year, as sales neared a half-million dollars, Angerer joined the operation.

In 2003, the business moved to the Sterling site. The couple borrowed a little money from family to fund the expansion, but there were no other investors. Frischling eventually quit his job to join Dyscern full time.

Frischling, Dickstein and Canty pop into each other's offices frequently with quick half-sentence questions and statements, indecipherable to an observer. On a recent afternoon, Frischling walked into Canty's office and said the name of a big-box retailer, just two words. She responded, "Queries." He repeated the name of the retailer (not for print, he added). She again responded, "Queries." He left.

Frischling was reminding Canty to bid on a set of electronics from a retailer; Canty was reminding Frischling to program a certain screen in the inventory software. It all took less than 10 seconds.

In business meetings, that idiosyncratic style extends beyond Canty and Frischling. Dickstein, 38, knows she has to put something directly in front of Frischling's face for him to pay attention. "I find myself treating Bill like he's my husband," said Dickstein, who joined the company this summer. "I know exactly what he's going to say."

In Dyscern's 10,000-square-foot warehouse next to the offices, workers spend most of the day receiving, testing, packing and shipping products. One person is testing iPods to make sure they hold their charge, another is applying tracking labels and a third is packing the devices.

A circle of workers in the warehouse also have personal connections to each other. One recommended his brother and a close friend for Dyscern jobs. Another suggested a cousin. Another offered her brother. They often play soccer in the company parking lot.

Hiring by word of mouth was a more effective way to add staff because unemployment in Loudoun County is low and there's little demand for warehouse jobs, Angerer said. "Our employees know our expectations and the job requirements. They only recommend individuals that they know will last."

Angerer, who says he tries to keep his work and family lives separate, is impressed with how Frischling and Canty are able to work together. But they say one of their enduring challenges is allowing work to follow them home. Hours after the birth of their daughter, Amelia, Frischling was on e-mail doing work for Dyscern. "We'll go out on a date and end up talking about a deal," he said.

But the couple haven't done much to create barriers between work and personal life for the rest of the team, either. They have regular dinner parties for Dyscern employees -- a.k.a. family and friends.

On a recent Sunday, they all gathered with their spouses and children in the company's old headquarters: the basement of Frischling and Canty's Great Falls home. Apart from the people present, there were constant reminders of work.

Standing with Angerer and another friend, Frischling showed off his new iPhone when he blurted out, "We've got some gorgeous new Sony" digital cameras ready to be sold.

Canty sat in the middle of the room, on the floor, amid scattered toys and a colorful slide set. Within an arm's reach: A line of 40 outlets the couple had installed into the wall of the basement, where she would test electronics before shipping them.