Entrepreneurism 101

By Samantha Drake

(This article first appeared in the Spring/Summer 2012 issue of Haverford magazine.)

For Ryan Frankel '06, his latest entrepreneurial endeavor was inspired by some bad Chinese food.

It all started with a meal in Shanghai. Frankel says he isn't sure what he ordered, because the economics/Spanish major couldn't read the menu. But whatever it was, it didn't agree with him.“I was ill beyond belief,” he recalls.“I woke up in a world of pain.” He managed to get to a pharmacy, only to realize he couldn't communicate what he needed.“That was a lightbulb moment for me,” he says.

Frankel, who got his M.B.A. at the Wharton School at the University of Pennsylvania, teamed up with fellow Wharton grad Kunal Sarda to found VerbalizeIt (verbalizeit.com), an interpretation service that is available by telephone 24 hours a day.

“VerbalizeIt levels the playing field for international travel,” says Frankel. The service, launched this past February, provides instant access to 1,300 trained translators around the world, who communicate directly with travelers or on their behalf. VerbalizeIt is unlike a phrase book or a machine-based translation service because it allows for a live conversation with interpreters, who can ask questions as well as interpret slang and tone of voice, Frankel says. It also doesn't require a smartphone.

Another difference is that instead of corralling interpreters at a call center, VerbalizeIt uses a“crowdsourced model.” Inbound customer calls are routed from a virtual call center directly to the phones of interpreters around the globe who take calls whenever they have spare time. So far, VerbalizeIt offers translation in English, Spanish, Mandarin Chinese and Hindi, the languages most in demand by the market, he says.

Frankel is just one of a number of entrepreneurs to come out of Haverford, where many a Ford has hatched the concept for a first venture while still living on campus. Helping to encourage that kind of initiative has been the John C. Whitehead '43 Fund in Entrepreneurial Studies, created by entrepreneur Herbert Slotnick '44 to honor Whitehead. Since its launch in 1992, the fund has helped place more than 200 students in summer internships related to entrepreneurship, small business, venture capital or finance.

In March, the fund helped support a daylong conference titled Fords and the Entrepreneurial Spirit, which brought alumni speakers to campus to talk about the challenges of striking out on one's own. Sponsored by the Career Development Office, the conference featured 12 Ford panelists who talked about social entrepreneurism, finding startup funding and what's required to weather the early years of an enterprise.

One thing is certain: The business world is unforgiving for the unprepared. A tough economy winnows out ill-planned schemes with Darwinian efficiency. The U.S. Small Business Administration reports that 552,600 new firms with employees opened in 2009, and it predicts that, based on previous figures, just half will survive five years. The survival rate for one-person start-ups is much lower because they are easier to open and close, according to the agency.

Though no two journeys are alike, the lessons learned along the way by alumni entrepreneurs, about money, people, the business world and themselves, are instructive.

The Calling of Entrepreneurship

Jonathan McCoy (Mac) Gamse '93 thought he wanted to be a lawyer when he was at Haverford, but a post-graduation stint at a large law firm ended that ambition. Gamse was then accepted into an analyst program at Goldman Sachs. But he changed his mind at the last minute and joined an educational software start-up instead.

“It was the worst financial decision of my career,” says Gamse, the keynote speaker at Entrepreneurial Spirit conference. But it turned out to be the best life decision he ever made. Working for the start-up, he learned the art of sales, a vital skill for any entrepreneur. He also discovered that he possessed a real interest in education. Today, after working at other educational organizations, including Sylvan Learning Systems, and launch- ing several start-ups, Gamse is a respected leader in curriculum development and the founder and CEO of Meritas LLC (meritas.net), an international network of college-prep schools based in Northbrook, Ill.

Entrepreneurship is not necessarily a logical progression, Gamse says.“Look at your career as a mission you want to achieve.” Figure out what skills you need to accomplish that mission, and then let nothing get in the way of developing or learning those skills, he advises.

But regardless of what your mission is, you have to figure out how to fund it, Gamse points out. Entrepreneurs must be able to balance their passion for the work with the realities of the business world, he explains.

Caroline (Isaacs) Latterman '02 is in the process of trying to do just that. Latterman founded Linguistic Consulting LLC (linguistic-consulting.com) in New York to give teachers the tools to help students, particularly African Americans, speak and write standard, or academic, English. Latterman, a linguistics major, taught in the Teach America program in Louisiana after graduation, and she says other teachers' negative approach to African American students' use of non-standard English made her uncomfortable.“I was really struck by how teachers talked to their students about their speech,” she says.“We know that teachers' attitudes directly affect student achievement.”

Latterman recently conducted a six-week pilot program at a Harlem high school, working with ninth-grade English teachers on strategies to evaluate students, help them improve their English skills and show students they are valued. The significant improvement in students' writing skills exceeded her expectations, she says.

Latterman acknowledges her services can be a hard sell, because the issue of teaching African American students standard English is a controversial subject. Fighting perceptions and misconceptions is difficult, but even more daunting, she says, is the continual hunt for financial resources to support her consulting business.“I knew it would be a lot of work,” she says.“I didn't know it would be so hard to find funding.”

As Latterman investigates various grant opportunities, she is working on her Ph.D. dissertation, which looks at ways to change teachers' attitudes towards non-standard English.“I would like to expand at some point, but I'm not there yet,” she says.

For Love and Money

Social entrepreneurs, like Latterman, face common problems. They have a burning desire to solve a community problem, such as addressing an environmental issue or improving the education system, but they usually have to do it without market support. Social entrepreneurs must have“commitment and a real drive,” says Jay Carlis '99.“It's going to take that internal motivation to grind through the challenges you will face.”

Carlis is vice president of the retail division of Radnor, Pa.-based Community Energy Inc. (communityenergyinc.com) Founded in 1999, Community Energy's mission is to develop and market alternative energy sources, such as solar and wind power, to help protect the environment.

Championing the environment and helping develop clean, renewable energy sources is a lofty goal.“There is an assumption that social good flows from environmental benefits,” notes Carlis, who majored in sociology at Haverford.“But you have to prove that there is a business, that money can be made.” In other words:“No margin, no mission.”

Community Energy recently ventured into a new area: electric-vehicle charging stations. The new project illustrates the issues that social entrepreneurs face.

The company opened a charging station in Wayne, Pa., this past December with funding from a state grant to explore a potential business opportunity, says Carlis. Before people buy electric vehicles, they need to see that the charging stations are available, he explains. The company has to attract users first, so it can attract investors.

The charging station, one of the company's three, won't revolutionize the auto industry any time soon, however. It made $30 in its first month of operation.

But while there may be less potential financial reward and less instant gratification for social entrepreneurs, says Carlis,“every day we get up, and we know that we are trying to make the world a better place.”

For any business, but particularly for social entrepreneurs, effectively commu-nicating an organization's story is essential to growth and can help raise funding, says Carrie Barnes '97, the founder of Elise Communications in New York.“Having a core message as well as a company mission are important,” says Barnes whose firm promotes primarily missionbased organizations or businesses with a product that benefits society.“Nike wanted to be the number one running company in the world. They now have market share. Apple wanted to design intelligent computer products that were essential to daily life. They are. I think entrepreneurs need to think along these lines. And they need to believe they have no competition. If you are always looking behind you, you won't get ahead. I never looked at other agencies' progress. I focused on building my niche and differentiating Elise by offering services to a sector that was new and exciting: the social innovation field. There was less money there, but more interesting work.”

Barnes, who previously co-founded Portland, Ore.-based public relations and marketing firm Bluedot Communications, counts among her Elise clients the Aspen Network of Development Entrepreneurs, which invests money and expertise in small and growing businesses in developing countries, and the Lemelson Foundation, which seeks to improve the lives of the poor through innovative design and invention. She also shaped the messaging for and planned the launch of Paul Polak's Out of Poverty: What Works When Traditional Approaches Fail, garnering wide attention for the book and its first-time author.

Building visibility in the marketplace or community is essential for any new operation, but crafting that message requires focus, says Barnes.“Your ‘ask' needs to be clear from the beginning. Time is precious and your audience wants to know what you're selling and why within the first few minutes, if not seconds, of reading about you or interacting with you.”

As for her own entrepreneurial path, Barnes says she was inspired to launch her first company by her husband Phineas Barnes '98, a former entrepreneur who now works for a venture capital firm. She also credits networking as a crucial tool for getting ahead in the work world. In fact, she got her first job in communications, working for a program at MIT devoted to raising the visibility of inventors, through a Bryn Mawr alumna who'd advertised the post in a (now defunct) Bi-Co networking newsletter. Later, looking to expand her contacts in the media industry, Barnes created her own community by reaching out to Fords at Time, The Dallas Morning News and The Wall Street Journal.“I have no fear. I can talk to anyone,”she says.

Seek Feedback and Hire Smartly

Entrepreneurs must take care not to fall so much in love with their ventures that they don't heed feedback from others, especially potential customers, cautions Skip West '77,president of Maxsa Innovations LLC (maxsainnovations.com), in Fairfax Station, Va.

Founded in 2003, Maxsa specializes in developing automotive accessories, solar lighting and consumer products such as electronic parking aids. West, who earned a political science/sociology degree from Haverford, says one of his primary focuses at the company is to zero in on what customers really want.

Maxsa is a wholesaler and doesn't sell directly to consumers. So, to solicit input on new or potential products, West meets with buyers and distributors and attends industry trade shows.“Talk to your customers,” he advises.“I can't stress that enough.”

West also recommends telling as many people as possible about your ideas to see what they say. If enough people tell you they aren't interested in the product or service, then forget about it, he adds.

While it's obvious that adequate funding and a solid customer base are crucial to launching a successful start-up, a talented workforce is a sometimes-overlooked resource. In fact, failing to hire the right people to power the business can doom an enterprise, say alumni entrepreneurs.

“Not getting top-shelf talent in your company can sink it,” says Ty Ahmad-Taylor '90, CEO and founder of Fan-Feedr in New York City (fanfeedr.com), an online source of aggregated, teamspecific sports information. FanFeedr, launched in 2008, grew out of Ahmad-Taylor's desire to keep up with his San Francisco Bay Area sports teams.

The economics major, whose previous employers included The New York Times and MTV, launched the site, started out financing it himself (known as“bootstrapping”), and then enlisted a family friend as his first outside investor. With initial funding in place, Ahmad-Taylor says, the best move he made was hiring two talented engineers right off the bat to handle the technical side of the business.

On the flip side, Ahmad-Taylor says his worst move was hiring the wrong person and then keeping that person six months longer than he should have. The mistake hurt team morale, but it confirmed the necessity of investing his time and energy in recruiting the right people.

Selecting people who will fit in with the company's goals and culture is a huge part of running a company, agrees Nick Farina '10, CEO of JetZet (jetzet.com), a social network for frequent travelers that's headquartered in the Chicago area. Farina, who received a Whitehead Internship at Haverford, started his first business as a high school student and later launched Voltage Digital, an advertising and marketing agency.

Farina points out that the head of the business sets the tone for the rest of the company. Working for a start-up has its drawbacks—low pay, long hours—“so you have to create a culture that is exceptional.” The leader needs to make people feel valued and excited by the work, he says.

Don't Go It Alone

You can't learn everything by yourself,” says Mac Gamse, who urges new entrepreneurs to seek all the help they can. Partners, mentors, senior management and spouses can all contribute valuable insight and support.“People put way too much pressure on themselves to have all the answers,” says Gamse. The truth is, the higher up you get in an organization, the less control you have. As a CEO, you don't need to have all the answers, but you do need to know what the next question is, he says.

Entrepreneurs must choose who they are going to work with wisely, and that goes for business partners in particular, says Jennifer Houser '90, the New York-based founder of the Upstart Bootcamp website, online courses and books. The Upstart Bootcamp business (upstartbootcamp.com), which offers entrepreneurs advice and guidance, grew out of Houser's frequent discussions with other start-up founders.“I realized founders face a lot of the same issues,” she says.

Houser launched her first start-up— a café in the north dorms—as a sophomore economics major after she and her roommates lamented the lack of gathering places on campus at the time.“The student center wasn't there back in the day,” she says. The student-run, nonprofit café opened with funding from the administration and soon became a popular gathering place. Since then, Houser, who has an M.B.A. in new product and venture development from MIT Sloan School of Management, has started five companies and raised $40 million from venture capitalists and angel investors. Her last startup, Motionbox (a consumer video-sharing company) was bought by Hewlett-Packard's Snapfish service.

“Partners are so important in starting a business; I highly recommend it,” says Houser, whose partner in that café venture at Haverford was her roommate, Karen Tenkhoff '90, who continues to be a trusted friend and business collaborator today. But Houser advises that it is important to be selective about the people you work with, since entrepreneurs are as“married“ to their business partners as they are to their spouses. Partners need to be in agreement about goals, values, risk tolerance, time commitment, roles and responsibilities.

Marc Grossman '07, who went on from Haverford to get an engineering degree at Caltech through the cooperative 3-2 program, initially started out alone in his venture Greenbotics (greenbotics.com), working to design a prototype robot that could clean solar panels cheaply and efficiently. But for the official launch of the company in August 2011, Grossman enlisted two friends, Kyle Cobb, a graduate student at UCLA's Anderson School of Management, and Cedric Jeanty, a fellow Caltech graduate.

The company has also benefited from the help of three other graduate students from the Anderson School of Management, who have volunteered their time to get Greenbotics off the ground by creating a business plan and reaching out to potential customers and investors.

Through their efforts, Greenbotics placed second in the U.S. Department of Energy's First Look West clean energy challenge and won $60,000, along with a trip to the White House to pitch the business. The Greenbotics team also won $10,000 in a“Fast Pitch” competition at the California Clean Innovation Conference at UCLA.

Grossman, who got the idea for Greenbotics during a stint as an engineer with solar thermal plant eSolar, says the company is currently going through a friends-and-family round of financing before seeking venture capital in the fall.“We're doing great,” he says.“We've received good customer support, and we're making our way through contract negotiations with our first few customers. The hardest thing has been sustaining the necessary pace to get to market this summer.”

No Shortcuts

Ultimately, there are no real shortcuts to success.“To be successful, you have to work harder than anyone else,” Gamse says.“The people that I know who are successful entrepreneurs work all the time.”

But working hard does not simply mean putting in long hours, it means doing your homework and positioning yourself better than anyone else.“Always be as prepared as you can possibly be,” Gamse says.“You may not be the smartest person in the room, but you can always be the best prepared.”

“Welcome any task that gets your company off the ground, no matter how menial,” advises Carrie Barnes, who also counsels patience:“Success does not happen overnight. You have to chisel away at it.”

For VerbalizeIt co-founder Frankel tenacity is an essential trait for the would be entrepreneur. Frankel and his partner, Sarda, who have been laboring steadily at building VerbalizeIt, saw their work pay off recently. In an exciting development for the new company, VerbalizeIt was chosen to participate in the highly selective startup accelerator program TechStars. Frankel and Sarda are spending 13 weeks in Boulder, Col., this summer in a communal workspace with 11 other startups. They'll get access to a huge roster of business mentors, and, in exchange for a six percent stake in the company, TechStars provides $18,000 in upfront funding and a $100,000 convertible note they can use to develop the business.

The summer culminates with demo day,” says Frankel,“where we present our product and vision to an audience of investors from around the world.”

Whatever happens, he says, the process will be invaluable:“We will have 18-hour days of intensive engagement with mentors who can challenge us on our assumptions and open up doors for VerbalizeIt. We can focus on customer and product development and determine the right strategy for our future.”

Frankel's advice to new entrepreneurs? Don't give up when the going gets tough.“Don't take rejection to heart,” he says.“If you have a vision, move aggressively and make it happen.”