All are young entrepreneurs ready to take on just about anything to make their businesses work. And although their chosen professions are diverse, all point to the same prerequisites for success: Follow your passion, ignore the naysayers, and above all, don’t give up.
The respective paths of each of these entrepreneurs took them to business school before taking them to the bank for business loans. Entrepreneurship does not require a business degree, they point out—but it can help a business owner avoid some of the pitfalls of running a business.
Meet Chantelle Ludski, Steve Manning, Jim Kucher, Angel Chi, Eric Valenzuela, and Mattias Starck, six entrepreneurs who eschewed traditional corporate employment and, instead, struck out on their own. Much of what they have learned since they started their startups they didn’t learn in business school, they say. But what they did learn at school about the nature of running a business was crucial to their success.
|MBA ‘00, London
It’s taken “sheer bloody-mindedness” to keep Chantelle Ludski on track to her goals for fresh!, her organic coffee shop and wholesale organic food operation in London. After all, a business that promoted organic foods in the marketplace was not the kind of startup that got noticed, especially in 1999.
“Here I was trying to start a business at a time when people only wanted to give money to the dot-coms, and I was telling them I wanted to sell organic coffee and sandwiches. That didn’t always appeal to them.”
Originally an attorney from Cape Town, South Africa, Ludski came to London in 1992 to obtain international experience in corporate law. She worked as corporate counsel for a company in the food and drink sector. Because of her love of the food business, however, she started her first restaurant with a partner in 1995. Soon after, she decided to earn her MBA.
While at business school, she quickly realized that there was no coffee shop on campus, in spite of an obvious demand for the beverage. As a result, she decided to open one herself, with a twist. The shop would sell only organically grown coffee and other edibles. “I had been an organic consumer for years,” explains Ludski. “It just grew from there.”
Although she knew that her business plan had to focus on organics in some way, not everyone thought her idea was a winner. “People told me that organics would not be enough, or they told me not to focus on organics at all,” she says. “But I think you just have to stick to your guns; otherwise, you end up doing something so far from what you originally envisaged, there’s no point in doing it at all.”
Since the cafe opened its doors, fresh! has garnered a flurry of media attention, from a front-page feature in the Sunday Times to an article in The Observer. “I was doing a so-called ‘old-economy’ business at the height of dot-com mania, and it was kind of quirky. People were really interested,” Ludski comments.
Ludski also believes some of the media interest stemmed from the fact that she is a woman working in a traditionally male-dominated arena. “Not enough women run businesses in the United Kingdom,” she observes. She points to the latest report from the Global Entrepreneurship Monitor indicating that men in the U.K. are two-and-a-half times more likely than women to be entrepreneurs.
Statistics like that often make her a newsworthy oddity for the media. “When I was on the front page of the Sunday Times, the editor told me, ‘We want your picture, because we’re tired of guys in pinstriped suits.’”
But the organic foods trend in the United Kingdom soon proved that she was on the right track. With one popular retail location and a wholesale warehouse, Ludski employs 14 people and is now looking for the best ways to grow the business. But being “the boss” has its disadvantages.
“One of the hardest things about being founder/CEO/ managing director is that you don’t have a support system,” she says. “When I worked for a large law firm, I could just walk down the corridor and talk to my boss or a colleague when I was stumped by something or when I was having a bad day. But when you’re running your own business, you don’t have that facility.”
In many ways, she has found that the network of professors, professionals, and fellow students that she met in business school provides that support system that she might otherwise lack. In addition, the MBA helped her to “think smarter,” she says. “It helped me to avoid some mistakes altogether. And even though I still make mistakes, I recover from them faster.”
Although entrepreneurs are still a minority in the United Kingdom, their numbers are growing, says Ludski. She credits the rise and fall of the tech sector for an increasing interest in entrepreneurial endeavors. “There are more people in the U.K. who are thinking of starting their own businesses than there were ten years ago,” she observes. “We’ve got the whole dot-com era to thank for that.”
But as more people look into starting businesses, she has one suggestion to business school faculty: Focus more on failures. “In business school, you tend to hear only about success stories. Even in the media, you don’t buy books about failures. I don’t think that equips us very well to know how tough it really is,” believes Ludski. “It would be very helpful to meet more people who have failed. Knowing about failure doesn’t mean that you shouldn’t start your own business. It just shows students that they need to think about it and plan very carefully.”
Go with the Flow
|MBA ’01, University of
|Baltimore Robert G.
|Merrick School of Business
|Inc., Baltimore, Maryland
Jim Kucher says that when he came home from his first night of business courses, he felt as if he had “struck gold.” With a background in product development, Kucher took immediately to the entrepreneurial program at the University of Baltimore that assigns students to investigate somewhat obscure technologies invented by the government; then, they try to find commercial applications for them.
“The theory is that if you can build a business around some wacky government technology, then you can surely open a bookstore,” says Kucher. He discovered a number of federal technologies that could be adapted to commercial use, just waiting to be discovered. The program assigned students to conduct an opportunity analysis, to see if the technology could be profitably introduced to the market; then students began commercial planning, to see if there was a way to capitalize on that opportunity.
Kucher, who also has a bachelor’s degree in English, earned his MBA the old-fashioned way—over seven years of night school. “I thought that getting my MBA would be an interesting experience. I never had firm plans to start a business.”
But it was during this process that Kucher and his partner Cindy Leahy discovered what is called “differential pressure flow sensor technology,” which was first developed by Michael Deeds, an engineer with the United States Navy. Flow sensors were originally made to gauge how fast a torpedo moves through the water. But they can be adapted to measure the speed of motor boats and airplanes or the flow of product through industrial pipelines, explains Kucher. The technology looked so promising that Kucher and Leahy started Wickford Technologies Inc. to produce the sensors for public use. They hired engineers as consultants to help them adapt the technology. Each unit it produces will cost $550; the company will pay royalties to the U.S. Navy on the product that it sells.
“It is the start and first phases of growth that inspire me.” —Mattias Starck
Wickford Technologies’ first product launch was planned for spring 2002. Already, says Kucher, they have received letters of intent from companies in the marine equipment manufacturing industry, as well as one letter of intent from a gasoline pump company.
The network of support that Wickford Technologies now has at the University of Baltimore is a big boon to its launch, says Kucher. Two professors from the university’s entrepreneurship program sit on the company’s advisory board. This network also introduced Kucher to the Baltimore Development Corporation, a business incubator.
With that network behind them, Kucher and his partner hope to mine a treasure trove of technology waiting to be adapted. Once they have successfully introduced the flow sensor technology in the market, Kucher and his partner hope to adapt other technologies as well.
Procuring financial backing has been a tough task, however, admits Kucher. “We couldn’t have picked a worse time economically to launch the business. Entrepreneurs existed in a bubble two years ago, when you could walk into a venture capitalist’s office with a sketch on a cocktail napkin and walk out with $10 million. Now people want to know, ‘Have you made a profit yet?’”
And this is a good thing, as business undergoes a “return to sanity,” says Kucher. “I think that most of the long-term effects of recent events are actually positive for the business community,” he points out. “Approaching the investment community is still a challenge, but people are starting to come out from under their desks, with much more realistic expectations. People are still inventing and innovating, but you don’t have this pressure that you have to be a billionaire in six months or you’re not a success.”
This new atmosphere is good for the development of healthy, successful startups, he concludes. “Navigating through that kind of environment has been a godsend, believe it or not. We have developed a ‘New York, New York’ kind of attitude—that is, if we can make it in this climate, we can make it anywhere.”
The Thrill of the Startup
|MBA ’95, Jönköping
Some entrepreneurs can make entrepreneurship a business in itself, so to speak. Mattias Starck, a founder of Luthor Industries, an information management technology company, is now on his third business— and counting.
While attending business school, he and his friend Mathias Josefsson had their first idea for a startup. They noticed that many of their fellow students had ideas that were really the seeds of small businesses. “We wanted to create a springboard for business ideas among MBA and Ph.D. students. We decided to create the Creative Center, a business incubator.”
Starck and Josefsson worked for more than year to plan and find funding for the business. A Swedish technology foundation eventually gave them the capital to start the incubator. Since the Creative Center opened in 1996, it has helped start more than 150 new ventures, says Starck.
“It was a very insightful period in my life,” he says. “The Creative Center was my first phase of self-employment, when I was an ‘entrepreneur for entrepreneurs.’” In 1999, however, Starck and Josefsson turned over control of the Center to new coordinators, so that the two partners could pursue a new startup opportunity.
Between 1998 and 2001, the partners started a company called Litium that developed business-to-business platforms for small- and medium-sized companies. That company now employs 20. How ever, once Litium had found its way, the partners wanted yet another opportunity to start fresh.
They joined with another student who was finishing his doctoral thesis on field innovation at Jönköping International Business School to found Luthor Industries, a company that develops knowledge management systems for businesses. The systems are much like Web portals that provide users easy access to information important to their jobs and the company’s growth. Users can input information that they’ve learned themselves, search internal databases, or search the Internet, explains Starck. “Businesses can create a unique business environment map that distributes information about competitors, customers, society, investors, research, and development.”
Today, Luthor Industries has ten employees and holds a joint venture in Milan, Italy, with four employees. Most of Luthor Industries’ clients are in the financial and technology sectors; they use the dynamic information systems to assess credit risks or share information to create a more dynamic business plan within the same company.
“The most important parts of our business plans have been to form the right entrepreneurial team,” says Starck. “The team and investors in the company need to believe in its vision, and then rely on the team to work extremely hard and industry-wise to get there.”
For Starck it’s all about the creative process that goes into each new business venture. “The early phase of a business brings new challenges,” he notes. “But my biggest struggle has been to leave something behind that has meant everything to me, that I have put my heart and soul into.”
The nature of business is change, says Starck, so he has made change a prerequisite for his professional growth. “Change is actually something beautiful,” he says. “It is the start and first phases of growth that inspire me.” Business school gave him the self-reliance and the ability to handle— and even take advantage of—the changes that are so inherent to the world of business.
Starck believes students should be able to acquire more hands-on learning, so that they can get emotionally involved in their goals, and “feel fear, uncertainty, joy, and passion in learning.” That sort of passion is the foundation of Luthor Industries, and, Starck hopes, of more startups to come. “My loyalty to Luthor Industries is set for the next five to ten years. After that I hope to have the opportunity to step aside and look at a successful, sustainable, and fast-growing business. Then it will be time to find and form a new team.”
Even as the founder of several businesses, he stops short of calling himself an entrepreneur, a term that he believes is really a badge of honor. “I would never present myself as an entrepreneur,” he says. “That is a recognition. It’s something that someone else calls you.”
A Born Entrepreneur
|MBA ‘00, University of
|Denver Daniels College of
Entrepreneurship can be taught, but it often can’t be learned, believes Angel Chi. “Many people think entrepreneurship is only about independent thinking,” she says. “But you need to have the desire to have more and the drive to make your business succeed. It’s something a person is usually born with.”
Originally from Taipei, Taiwan, Chi came to the United States in 1983 to attend the University of Denver. She earned her bachelor’s degree in mathematics in 1987 and her degree in accounting from its Daniels School of Business in 1989. Although her degree was in accounting, her passion for investments led her to open Chi Investments, a registered investment advisory firm, in 1993.
The firm offers a full range of financial services, including securities transactions, stock and bond purchases, mutual funds, and insurance, to a variety of clients in the United States as well as to companies in China and Taiwan. In addition, Chi manages the Chi Global Growth Fund, a portfolio worth $100 million.
“In my business we not only manage portfolios, we manage expectations.” —Angel Chi
Her accounting background has proven to be a crucial foundation on which to build her business. “I didn’t want to be an accountant,” she says, “but I think accounting is a very important business language. No matter what kind of business you’re in, you have to be able to understand account statements, balance sheets, and tax consequences.“
In Chi’s business, especially, she needs to know what the account statements say between the lines. “There are often 100 companies saying they’re the greatest, but we only have money to buy two or three. We need to determine quickly which companies stay on our radar screen and which ones we leave behind,” Chi explains. “An accounting background helps. We take the balance sheets apart, looking not just at one particular number but at the entire financial history so that we can spot trends. We compare those trends to the industry to see if they make sense.”
Chi’s growing client base in China has inspired her to add another division within her company, the China Development Institute. CDI’s mission is to educate Chinese executives about the ins and outs of the U.S. market. With staff members who can speak English, Mandarin Chinese, Taiwanese, and Cantonese, Chi is uniquely prepared to serve this segment of the global market.
“In the last few years the investment deals going in and coming out of China have increased, and so has the number of our Chinese contacts. We’re carving out that part of our business as a separate entity, which deals specifically with the Chinese market,” she says. “A lot of industries in China are still in the fledgling stages. Chinese executives and government officials would like to learn from U.S. companies how to collect and use data, how to set out a policy, and how to set business priorities.”
CDI also is working to facilitate relationships between a number of higher education institutions in China and the U.S., arranging faculty visits, student exchanges, and other joint ventures. She hopes that this work will strengthen financial relationships between the two countries.
The time and energy it has taken Chi to bring Chi Investments and the China Development Institute to fruition has been more than what is required “to raise a baby,” she jokes. And although business school prepared her well to lay the proper foundations for her business, she believes the sheer volume of information that she must absorb on a daily basis may be more than many of today’s business school graduates are equipped to handle.
“Academia is still trying to figure out how to deal with the information overload that we all are experiencing,” Chi observes. “The flow of information has become a deluge, making managing it a key part of business. But it has been a constant struggle to deal with so much, so quickly.” Chi believes that teaching students techniques to cope effectively with such an onslaught should be a crucial part of their education.
Not only that, she adds, but making them aware that the Internet isn’t the only source of information may also make them more valuable in the workplace. “Once I asked one of my employees to look up some information that I needed,” Chi recalls. “That person went to the Internet and when she couldn’t find it there, she told me that it didn’t exist! Often, we simply need to go back to the basics—go back to the yellow pages, go back to the library.”
In an information age, attention spans also tend to be short and expectations high, Chi concludes. During short-term gains and losses, she makes sure to keep her eye set on long-term growth for her clients—and for her business.
“In my business, we not only manage portfolios, we manage expectations,” she says. Even though people have experienced a “reality check” in the last two years, Chi finds she still often needs to remind them to keep their eyes on the long term. That’s true for anyone who’s investing, and for anyone who owns a business, she says.
“We need to set our sights on what’s going to pay off in the long run,” she advises. “We need to stay with the basics, and know why we’re in business.”
“Among entrepreneurs there’s almost an anti-academic feeling, that you really can make it without business school.” —Eric Valenzuela
Nice Guys Finish First
|BBA ’01, Loyola
|College of Business
|The Best Computer
|Guys, Los Angeles,
When Eric Valenzuela won the “Social Impact” award from the North American Collegiate Entrepreneurial Awards, sponsored by Saint Louis University in St. Louis, Missouri, it was not just for his computer consultant business that he began when he was 16. It was what he chose to do with that business that may have gained him the nod.
When Valenzuela was a young teen, his parents saved to buy him a computer. This gave him his start. First, he helped the teachers in his school troubleshoot problems on the computers in their classrooms. Soon, they asked him to go to their houses to set up their home systems. It wasn’t long before word about his services spread, and he was working for the likes of surgeons, lawyers, even employees at Merrill Lynch.
Valenzuela’s business, called The Best Computer Guys, not only uses his own expertise, but also the skills of the high school students he often takes with him on house calls. “When I see kids in the same situation I was in, I’ll have them come with me to Merrill Lynch and learn about the business by being a gopher. That’s how they start to learn about computers.”
In addition, these visits also show them a world that they might otherwise perceive to be out of their reach. “Before I started this business, I had never been to a mansion. But my clients opened their homes to me,” he says. “I thought it would be great if I could go to high school students and do the same thing. I see the kids I work with as I saw myself when I was their age, a young Hispanic who hadn’t really seen the world yet.”
Although Valenzuela initially went to Loyola Marymount to pursue an engineering degree, he decided that a business degree would better develop his entrepreneurial leanings. At first, he says, the details involved in putting together a formal business plan threatened to overwhelm him. He feared that perhaps the business he had built when he was a teen wasn’t on a solid foundation after all.
“There was a critical point when I was formalizing the business plan. Everyone was telling me that I needed to get a fictitious name, I needed insurance, I needed this, I needed that. I began to think that I couldn’t do all of this, I couldn’t start the business.” But a speaker at a weekend entrepreneurship academy gave Valenzuela the encouragement he needed.
“The speaker told us, ‘Do not build obstacles for yourself—build solutions.’ That stopped me. As a result, I don’t worry about red tape.”
Those who become too intimidated by the details often abort their entrepreneurial efforts before they even start, Valenzuela has found. Therefore, he now lives by the methods that worked for him in the past: Build relationships with clients and, more important, don’t sweat the small stuff.
“I have found that sometimes it truly is better to ask for forgiveness than permission,” he jokes. “For example, when I started out in high school, I didn’t know that I wasn’t supposed to put fliers advertising my services in the teachers’ mailboxes at school. The principal told me not to do it again, and I said I was sorry. But I already had my first 50 clients.”
Now 23 with his business in full swing, he has achieved a balance between an informal management style and a formal management structure, creating a business plan and completing competitive analyses of the market. That more formal approach has given him—and The Best Computer Guys—a competitive boost.
“Among entrepreneurs there’s almost an anti-academic feeling, that you really can make it without business school,” he says. “Now that I have graduated, I can see my business much more formally. For example, when a customer owed me money, I’d just write it down and ask him to pay me later. But I now have an accounts receivable department! I now know not to let my emotions get in the way in my accounting procedures or my management style. You don’t realize that you’re learning until after you finish.”
Valenzuela regularly speaks to disadvantaged Hispanic and African American students at junior high schools in the Los Angeles area about what it takes to start a business. Through The Best Computer Guys, he also funds a program in which he works with a group of teenagers to develop their entrepreneurial and management skills. The students offer services to the community ranging from mowing lawns to sweeping dirt, says Valenzuela. Their reward? Disneyland, of course.
“I tell them that I could pay for them to go, but then I’d go broke! But I told them if they work at these jobs and get paid, they can use the money they earn to pay for the trip themselves,” he says. “I’m teaching them about working and doing something with their experience. I want them to learn entrepreneurship, and to know it doesn’t matter where they come from—they can succeed if they work at it.”
In addition, Valenzuela now has three employees working for The Best Computer Guys whom he trained as teenagers. He has taught them everything he knows about computers and developing customer relationships. Soon, Valenzuela hopes to leave them the business to carry on its goals, while he goes on to pursue a law degree.
“I’m looking forward to law school and a political career,” he says. “Because of my social interests I know that if I want to make social changes, it won’t be from making money in a business, but in a legal or political arena. If I don’t like graffiti, for example, I’m not going to stop it in a computer business. I need to do it by getting involved.”
A Silent Strategy
|MBA ’97, University of
|Oregon Charles H.
|Lundquist College of
|Invasive Plant Control
After Steve Manning received his master’s degree in park management ten years ago, starting a business was not at the top of his list of priorities. He went to work for a 3,000-acre park where he sought ways to control the overgrowth of non-native plants that compromised the health of native plant species. While there, he supervised a group of volunteers who worked to keep the unwanted plants under control.
“The park spent very little money on invasive plant control at that time,” Manning recalls. “But I noticed that most of the volunteers came, learned the techniques, and then tried to do it at their own properties. I decided then that this was something I wanted to pursue as a business.”
He enrolled in the MBA program at the University of Oregon. The day he graduated was the day he started up his business at full strength, offering invasive plant control services to natural recreation areas in the Midwest and Eastern United States.
Invasive Plant Control enters a natural environment to eradicate non-native plants that have run amok. For instance, he explains, “kudzu is called ‘the vine that ate the South.’ It covers ten million acres in the Southeastern U.S. And it’s spreading.” The plant originates in China where many natural predators keep it well in check; not so, he points out, in the United States. “They found a small, scattered patch of kudzu in China about ten feet wide. When they broke open the stems, they found about 100 different species of bacteria, fungi, and insects feeding on it.” In the U.S., by contrast, he says, “there are zero species feeding on it.”
Plants such as the kudzu are the basis of Manning’s work. “This opportunity was just sitting there. The scientists and environmental managers knew that it had to be done, but not many did anything about it,” says Manning.
Manning credits much of his business success to what he calls a “silent marketing strategy,” he says. “One book I read in business school was Co-opetition by Adam M. Brandenburger, Barry J. Nalebuff, and Ada Brandenburger. That book has been invaluable to me in learning how to create partnerships with organizations and other suppliers, and silently market the business through those partnerships.”
“Without a really good marketing scheme, you can forget about your financials.” —Steve Manning
With this strategy in mind, Manning made getting the word out about his business his top priority. He traveled to Washington, D.C., where he lobbied the heads of 19 different environmental agencies. He talked with them about invasive plant control; he asked them for advice on the best ways to write a government bid. He got to know the higher-ups at the U.S. Fish and Wildlife Department, the U.S. Geological Survey, and the National Park Service. And he made sure they got to know him.
“I never went in saying, ‘Hey, will you give us a job?’ I went in and tried to help them with a problem. Then, when it came time to do the work, they knew they could ask us. It’s a silent marketing strategy that has worked very well for us.”
Like many entrepreneurs, Manning had to weather a tough time during the dot-com boom and bust, which made it difficult to find startup capital. However, it also taught him to build a more solid foundation for his business before moving forward. “Computer software and Web-based businesses were receiving $10 million in venture capital, while we couldn’t get $100,000 without really begging,” he remembers. But in the end, he believes that being overlooked simply encouraged him to work harder and smarter.
Invasive Plant Control now serves about 40 active clients. Costs for its services range from $30,000 for a onetime project to $1 million for a five-year contract. Manning’s resolve to let the business grow slowly and deliberately, he says, is one secret to his success. Another secret, he adds, is that he has worked to create partnerships, not just a client base.
For example, the company has created invasive species councils in the cities where it works. He and his staff discuss the problems of non-native species with land managers, private land owners, garden club members, and others working with natural landscape. This initiative not only educates the public about the importance of planting native plant species and controlling more invasive varieties, it also keeps Manning’s business at the forefront of this industry.
Manning notes that what is taught in business school at large is often different from what is taught in entrepreneurial programs. “Most people who are teaching business don’t understand this field. Ninety percent of the questions people asked us were about our financial projections. They didn’t focus on what we have found to be most important, the marketing side,” he explains. “But what I learned through the entrepreneurial center at the University of Oregon was that without a really good marketing scheme, you can forget about your financials.”
He adds that having a realistic time frame for growth has also been a crucial part of his success. “I’ve learned that you really can’t start a business in just two years. You have to have a long-term strategy in which you slowly build its base. Then, 20 years from now, you have such a strong base that it will never go away.”