Alumni Entrepreneurs Turn Big Dreams Into Big Business
Craig Walker's workday lasts about 15 hours. Ada Polla went more than three years without a salary. Mark Smith and Pete Messman often feel like they're operating on faith. Nicole Miller put her wedding on hold for two years.
For all these graduates of Georgetown University's McDonough School of Business, the uncertainty and excitement of entrepreneurship trumped the stability and balance of a more traditional business route - with its lure of steady paychecks and built-in vacations. These graduates started companies with products as varied as a skin-care line and a renewable energy source, but their shared experiences are countless. No matter the product or service, the funding source or company structure, entrepreneurship is a roller coaster that these graduates say they would ride over and over again.
"There's something about being an entrepreneur that's great and wonderful," Miller says. "You have a vision, and with your education and your tools, you have an idea how to get there."
Tapping Phone Frustration
Craig Walker (MBA '91), cofounder of GrandCentral Communications Inc., always knew he wanted to create his own business, but he didn't know what or how. "I'd sit there in college and come up with, say, the best onion peeler," he says. "Entrepreneurship has always been inside me, but trying to figure out something that makes sense is really hard. It's got to be something you personally experience." Or, in Walker's case, something that personally drove him crazy.
Walker was tired of not having control of his phone setup. When traveling, he would get off a flight and have to check three voicemail systems. He would call the phone company and get billed $20 to turn on or off any feature. He had no way to archive important messages. "I was personally frustrated," Walker says. "It seemed like a broken system."
Walker's fix was GrandCentral, a Webbased voice communications platform that helps users manage all their phones through one single, lifetime number that forwards calls to all of an individual's phones. When he started GrandCentral, Walker was armed with his Georgetown MBA and a law degree from UC Berkeley and had spent years working in Silicon Valley's startup telecommunications industry, largely on the venture capital side.
He worked with one venture capital firm that invested in DialPad Communications, a Voice over Internet Protocol (VoIP) company that provides worldwide phone communication using the Internet. The company grew like a weed, Walker says, but it began losing $4 million a month as the Internet bubble grew in late 2000. So Walker was placed in the role of CEO and also served as chief financial officer and general counsel. One of his first tasks was cutting down the staff of 150 to 15. He went on to guide the company through Chapter 11 bankruptcy and turned it into the most profitable VoIP company in the industry. In 2005, Yahoo acquired DialPad, and Walker stayed for a few months until he got the entrepreneurial itch again.
From the get-go, GrandCentral created a lot of buzz, as Walker apparently had tapped into a global frustration. The product gave users just one phone number and one voicemail and also allowed them to listen in as voicemail messages were being recorded and to switch a call from cell phone to desk phone. The company received coverage in The Wall Street Journal, Time, Newsweek, and The New York Times. And in 2007, for the second time, a Silicon Valley giant came calling when Google presented an offer Walker could not refuse.
"On my 42nd birthday, June 2, 2007, we joined Google," Walker says. "I've been at Google since then." Walker serves as group product manager for real-time communications. His department includes Google- Talk, and he oversaw the March relaunch of GrandCentral as a Google product called Google Voice.
Walker says Google is very entrepreneurial for a large company and encourages experimentation. But for now, he dedicates a significant amount of time to management tasks, whereas he used to spend every waking hour on the product. Still, the hours are only slightly shorter than they were when he was working as an entrepreneur. On an average day, Walker wakes up at home in Danville, Calif., at 6:30 a.m. and catches the 7 a.m. WiFi-equipped Google shuttle, aboard which he works until the shuttle arrives at the company's headquarters in Mountain View 75 minutes later. He's on his computer through meals (provided by Google), hops on the 5 p.m. shuttle, gets home at 6:30, plays with his kids, eats dinner, and picks the computer up again from 10 p.m. to 1 a.m.
Walker has learned that many business dealings boil down to common sense, which makes him especially appreciative of his Georgetown education. "Georgetown is a Jesuit school, even at the business level," he says. "There's that embodiment of common sense, and it's helped me get through things, from foreign investors to raising money to getting acquired."
Although he was not the most dedicated student, Walker says, he is making up for it now. Out of the blue, he is discovering a lot of material he did not think he fully digested in school. "What's surprising and really delightful is that later in life, what I learned became useful," he says. "I didn't even remember what I learned until I needed it; then it came to the forefront."
Developing a Thick Skin
Ada Polla (MBA '04), founder of Swiss antioxidant skin-care line Alchimie Forever, was no stranger to entrepreneurship when she arrived at Georgetown's McDonough School of Business. Her parents, both doctors, opened a medical spa in Geneva in the 1990s, and Polla wanted to expand their limited line of skin-care products. But she and her father had differences of opinion on the path she should pursue.
"He encouraged me to take the more traditional route," says Polla, speaking from her office at 25th and M Streets in Washington, D.C. She says her father thought she should first work for Estee Lauder or L'Oreal after graduation. Instead, Polla decided to start her company while she was a student to see if it was a viable business she could run full time after graduation.
Polla had the confidence to take the plunge before she had acquired all of her business tools, in part because of the entrepreneur-friendly environment in the United States.
"The mindset here is, 'Just try it, and if it doesn't work, you'll be stronger. Or you can just close and start another,'" she says. "In Europe, that is not so accepted. The U.S. is very pro-entrepreneur."
So Polla used Georgetown's McDonough School of Business as a laboratory of sorts. She took an entrepreneurship class with adjunct professorial lecturer Jim Hunt, who now sits on her company's board of advisers, and enlisted classmates as free consultants in developing her business plan. She found it exciting to work on a real business instead of one simply created for the class.
"Professors liked the idea that when they suggested something, I brought it back to the business," Polla says. "The business school experience was more targeted and fun, because I saw what I was working for." Besides the concentration of brainpower at Georgetown, Polla says the access to tools - from the library to a free Lexis- Nexis account - was invaluable.
During the summer before her second year of school, Polla returned home to Geneva and named the brand, worked on developing new products and redesigned the packaging. By the time school started, she was juggling classes and the launch of Alchimie Forever. She would hustle from class to local dermatology offices and boutiques, where she tried to sell her products. She didn't sleep much.
Today, Polla is head of Alchimie Forever, which has small offices in Washington, D.C., and Geneva. She grew the business from the five products her parents created solely for their clients to nearly two dozen products for men and women. Those products now are sold in high-end boutiques in the United States, France, Switzerland, and Canada.
Polla says despite the recession, sales of mid-range personal care products like Alchimie Forever still are strong, perhaps more so than super-premium brands. "A woman might forgo a $300 dress," Polla says. "But for women or men to give up their favorite moisturizer, things have to be a lot worse."
Alchimie Forever is projecting a 35 percent increase in sales this year after a 28 percent increase in 2008. The company is continuing to expand to other countries and may build retail space in Washington and Paris.
Polla, 31, says starting a business has been difficult. She just started paying herself a salary last fall, and she ran the business out of her home for a while. But she says it's easier to do when you are young, renting, and childless. Although Polla still lives frugally, she says upon graduation from business school, she put two things behind her forever: Ikea furniture and ramen noodles.
The "Ultimate Lesson" in Business
Nicole Miller (MBA '99), one of four co-founders of exam preparation company FIRE (Finance, Insurance, Regulation, and Education) Solutions Inc., remembers then-adjunct professor Jonathan Silver telling her entrepreneurship class about starting your own business, "Everyone will tell you it's a lot of work. And it'll be more work than you can possibly imagine." Miller can now attest to that fact.
"I don't recommend starting a company to anyone who wants to have a life," says Miller, 41. "You have to put your entire heart, body, and soul into a business when you're starting it." After nearly a decade of doing just that, Miller stepped down as CEO of the San Francisco-based compliance and online training provider in mid-February to spend more time with her husband and two young children at their home just outside of Paris. She remains on the company's board of directors, still owns a percentage of its stock, and is making herself available for consulting during the leadership transition.
Miller teamed up with classmate Juliana Lutzi (MBA '99); Lutzi's father, Roy (a teacher in the field); and Nicole (Kinnan) Stone (MBA '98) to found FIRE Solutions right after she graduated. Miller worked as the company's chief learning officer, chief operating officer, and, finally, CEO.
"The field we went into - exam preparation - isn't exactly sexy, but it's critical," Miller says. "When you get hired by a broker-dealer and you need to pass this exam, companies usually give you one chance to pass. It's a make-or-break thing. We've developed this system where there's so much support, test-takers shouldn't fail it. I'm very proud of it. We've helped thousands of people get into their career of choice."
FIRE Solutions now has 16 employees and has worked with more than 280 financial services firms. Out of the four co-founders, only Roy Lutzi is still actively involved.
"When it came time to choose between business and family, I chose business for several years," Miller says. "The company was the most important thing in my life. Now, it's family."
Miller maintains her pride in the company, but says she now regrets putting her personal life on hold for so long. She says if she starts another company in the future, it would be a small, personal enterprise. But for now, her business is raising her family, working on crown molding in her house, and using power tools.
Whatever her next venture, she says she will be prepared; she knows she has had the best schooling possible by starting and growing a company.
"It is the ultimate lesson in business," Miller says. "It's a wild ride."
A Sweet Idea for Energy
Less than a year after the graduation party at which they first talked about the opportunity that would later become Claren Power, Mark Smith (MBA '07) and Pete Messman (MBA '07) found themselves communicating with Barclays Bank about investing $50 million in their company. Today, Claren Power develops and operates clean and renewable energy projects that use sugar cane waste as the fuel source.
"Barclays found our business on the Internet a few days after we'd started the Web site, and they were very gung-ho," Smith says. He and Messman made a due diligence trip with the Barclays team to Brazil, where Claren Power does much of its work. They had the go-ahead from one of the team's two managing directors to move forward and pitch their investment committee. Smith and Messman felt confident the funding would come through, but they soon learned that significant differences of opinion were brewing between the bank's managing directors, and Barclays ultimately pulled out.
The experience was rough, says Smith, but it offered an important lesson. "After that," Smith remarks, "we realized we needed to give ourselves a number of paths to success - not just count on one."
Looking back, Smith and Messman laugh about the Barclays experience, saying they were completely unprepared to deal with an investor of that scale. In retrospect, they say, it was a conversation they had no business entering into at the time. But today, both have confidence in themselves and their ability to generate large returns for their clients and investors.
"Sugar cane is as good a source of bioenergy as there is in the world," says Messman, 38. "We know the idea's good, we know the time is right, and we know there's nobody better than us to bring the piece parts together into a cohesive story."
The power-producing process begins when Arlington, Va.-based Claren Power partners with a sugar mill and builds a modern "cogeneration" facility, meaning a facility that generates heat and power simultaneously. The mill provides the sugar cane waste, called bagasse, as the fuel source. Claren Power handles every step in the development cycle: sourcing of equity and debt; permits, design, and construction; transmission and interconnection with the electrical grid; ongoing maintenance and operation of the facility; and management of the sale of electricity and carbon credits. Once operational, the mill gets its heat and power for sugar operations and generally receives 20 percent of the facility's net profits. Claren Power and its investors receive the majority of the revenue. The energy company now has pulled together more than $1 billion worth of such cogeneration projects in Brazil, says Smith, 36, a former managing director for the U.S. Chamber of Commerce who led efforts to pass the Central American Free Trade Agreement.
In the economic downturn, short-term credit has become largely unavailable, and some investors have vaporized. Still, Smith says their business model has gotten stronger for a couple of reasons. First, because sugar mills have felt the squeeze caused by frozen credit markets, Claren Power's partnership model has become more appealing. Second, the owners of the mills understand that a cogeneration program would give them a consistent and guaranteed source of revenue. Finally, the partners say long-term financing is still available for projects like theirs (for example, through the Brazilian National Development Bank), but you have to know where to look.
Because the business began right after graduation, Smith and Messman essentially have not had down time since before they arrived at Georgetown. On one hand, Messman says, it is a lot of pressure - especially on his wife and family. But, as a friend has reminded him, the two of them are living the dream of all business school students. "It's so rewarding, so fun, so painful," Messman says. "But you gotta do it. It's why you go to business school. You throw your hat in the ring and see what you can do."