Of Software and Apples
Sean McLaughlin '91 isn't your typical software CEO
Sure, he's got the traits. He's young (34), bright, ambitious, intense, brimming with ideas. He walks fast, talks faster, and rarely wears a necktie. He's also got the trappings: a hardworking young staff, an enviable client list, a headquarters in downtown Boston that, with its exposed brick walls and metal staircase, still looks like the leather factory it once was.
But the resemblance between Sean McLaughlin '91 and his peers ends there. For starters, his company, Eze Castle Software Incorporated, has thrived, growing steadily even during the recent recession, as others flamed out. The firm, whose products automate securities trading, has grown from a single employee McLaughlin in 1995 to more than 120 today. It ranked among America's 500 fastest-growing small businesses two years in a row (number 81 in 2002, number 142 in 2003, according to the annual list compiled by Inc. magazine).
Then there's that extended family. McLaughlin and his wife, Laura (Denessen), are the parents of six young children. As the eldest of 10 siblings himself, he helped hold his family together after his mother's early death; more recently, he has employed several of his five brothers and four sisters, their spouses, and, in one case, a spouse's siblings, in his software company.
Finally, there's his farm. You'd be hard pressed to find another high-tech CEO who not only owns, but actually runs, a 50-acre apple orchard. Not surprisingly, that venture is profitable, too.
McLaughlin's take on it all kids, company, extended family, farm is a masterpiece of understatement: "I like feeling busy."
Sean Padraic McLaughlin was born in Boston. His father, Dr. Stephen V. McLaughlin, is a dentist; his mother, Carol J. McLaughlin, who died in 1994, worked with special-needs children. He was restless and curious from the start. "He used to take apart our toys and then rebuild them," recalls his sister Cara McLaughlin Gavin, fourth oldest and six years his junior. "I seem to remember him trying to build a helicopter once." Some of McLaughlin's projects notably, the helicopter never got off the ground. But if failure intimidated him, he never let on, says Gavin, now a medical resident in Rhode Island: "Being the eldest of 10 instantly gives you a certain amount of confidence in life. You're the leader of the troops." Later, McLaughlin graduated to rebuilding cars, including a 1967 Volkswagen that his father still owns.
McLaughlin began building companies early on as well. He spotted his first opportunity after his parents moved their fast-growing family from Boston's densely populated West Roxbury section to Weston, a lush suburb west of the city. "There are a lot of lawns in Weston," he says simply. His father helped him buy a used golf-course grass-cutter and a small truck. Before long, McLaughlin had so many steady clients that he began hiring his brothers and buddies.
Early on, he also channeled his energy into school sports, which, oddly, led to his high-tech career. At 14, a soccer-game pileup left him with a double leg fracture, an injury requiring weeks of bed rest. Worried about his sidelined son, Stephen McLaughlin bought what was then a novelty a Texas Instruments personal computer to occupy the invalid while he recovered.
It did. From then on, McLaughlin and a neighborhood pal, John Cahaly, spent every spare minute tinkering with the computer, "trying all kinds of schemes to make it run faster," the elder McLaughlin recalls; they quickly outgrew it and bought a more powerful one. The experience was apparently life-changing for both boys: Cahaly is now CEO of Eze Castle Integration, a separate company providing technology services to financial institutions.
After graduating from high school, McLaughlin enlisted in the U.S. Air Force Reserve Officer Training Corps (ROTC) to help cover his college costs. Wait-listed at Harvard, he initially enrolled at Haverford College, a Quaker-affiliated school in Pennsylvania. Because Quakers oppose military service, McLaughlin's ROTC commitment became a roadblock. The school's board of trustees had to vote to accept his ROTC money; after they did, fellow students heckled him when he wore his uniform. After his freshman year, McLaughlin was able to transfer to Harvard, happy to be closer to his family. Surprisingly, he says, his military status attracted little attention in Cambridge.
Between his classes and his ROTC obligations, McLaughlin found time to run a computer-consulting business from his room at Eliot House. He also made plenty of friends, including Scot Landry '92, M.B.A. '99, who is now chief operating officer at Eze Castle Integration. "Two things about Sean that I like: he's a very hard-working guy and he's exceptionally smart about business," Landry says. "I remember Sean saying way back in college that he believed that work wasn't just something you did to make cash and put food on the table it was something to be passionate about, a way to spend time with people you like." McLaughlin has, in fact, surrounded himself with friends. In addition to Cahaly and Landry, he's hired several members of the Gavin family (they met through their sisters), including Tom Gavin '95, Eze Castle Software's chief operating officer, and his brother Tim, the company's senior vice president, who married Cara McLaughlin last year.
During his college years, McLaughlin didn't worry much about what he'd do after he graduated. "I knew I'd have four years to think about it," he says, referring to his military obligation. But fate intervened several times.
While he was still at Harvard, his mother was diagnosed with breast cancer. McLaughlin, then 23, couldn't imagine being stationed far from his siblings, some still in grade school, during the family crisis. Fortunately, because of a sudden surplus of ROTC graduates, the Air Force had begun offering amnesty to some who agreed to repay most of their college expenses in exchange for an immediate honorable discharge. McLaughlin took the deal and started looking for work in Boston.
Initially, he became a securities trader and analyst, first with Hellman Jordan Management Company where one of his former lawn-mowing clients worked and then with Tudor Investment Corporation. He did well, but knew he couldn't do the work indefinitely: "I just didn't have the love for it."
But he did have an idea. Why not combine his technology expertise with his new financial knowledge to automate and streamline the trading process, making it less labor- and paper-intensive? And why not then start his own company and sell the product to investment firms?
By this time, he had met and married Laura, a college friend of another of his sisters. With one baby at home and another on the way, the thought of giving up a stable, high-paying job prompted a rare moment of uncertainty. Ultimately, he jumped anyway. "I told myself, 'I'm never going to have an idea as good as this again," he recalls. "This is my ticket.'"
Once more, McLaughlin turned to his father, asking to live rent-free for six months in the apartment over the dental office in West Roxbury while he got his company off the ground. "I said, 'Go for it,'" the elder McLaughlin says. "You can always get another job."
Working on his own in the borrowed apartment, McLaughlin quickly designed his first program and began marketing it to investment firms. His former employers, Hellman Jordan and Tudor, were among the first to sign up. It was Laura McLaughlin who suggested the company's name: it refers to a landmark in the French village, Eze (pronounced something like "edge" without the "d"), where the McLaughlins spent their honeymoon.
The company grew quickly, fueled by competitive demand for faster and more accurate trading capability. Today, Eze Castle Software is among the leaders in its industry, with more than $21 million in annual revenues, 180 corporate clients, and offices in Stamford, Connecticut, New York City, San Francisco, and London. (McLaughlin now heads only the software business, but remains on the board at Eze Castle Integration.)
McLaughlin is keenly aware that success can turn to ashes overnight: Eze Castle Software is housed in space once occupied by an Internet company that flopped. So he hunts for bargains. He buys used chairs on eBay, and he bought a mammoth portrait of the fortieth president for his office ("I'm a huge Ronald Reagan fan," he says) when a big New York hotel changed hands and sold off all its decorations.
He also cuts costs where he can. One example: after two administrative assistants left the company, he divvied up their duties among everyone else by using a "chore wheel," like those in his children's grade-school classrooms. Now responsibility for plant-watering, supply-ordering, and dishwashing rotates among all employees, including McLaughlin and his executive team. The practice saves $100,000 annually in salaries, benefits, and the elimination of expenses such as a $100-per-month plant-watering service. Employees divide 20 percent of that savings; the rest pays for the company's social events and community-service work.
At first, employees grumbled about the chore wheel. Even colleagues at Eze Castle Integration smirked at the idea. "When Sean instituted it, we were making fun of it without considering the merits," Landry acknowledges. "But it's been successful. There's a certain sense of equality there that says, 'Regardless of your rank, you're an equal member of this group' just like in a family."
Meanwhile, the McLaughlins have been building their own family. Today, they are parents to Maria (9), Catherine (7), Jack (5), Bernadette (4), Charlie (2), and Lucia (1). They live in a Boston suburb during the school year, but spend weekends, holidays, and summers at their apple orchard in Harvard, Massachusetts, about 35 miles northwest of Boston.
This is no idle country retreat. It's a working farm with 1,000 apple trees, a pumpkin patch, a cornfield, and a collection of chickens and sheep. Although a part-time farm hand cares for the animals on weekdays, McLaughlin does most of the other work himself, from feeding livestock on cold winter mornings to tending the trees on summer afternoons. The physical labor provides him with his own peculiar work-life balance. "I'm basically happy only when I'm working," he says. "I don't like sitting still. I can't stand things that waste time, that have no value once you're done. So I've tried to create a work life outside of work that's beneficial for me and for my kids."
The children share in the chores, harvesting apples and pumpkins, making cider and baked goods, and retrieving eggs from beneath the hens in the 200-year-old barn. McLaughlin's tractor has a "buddy seat," so he can take one youngster along when he mows the fields. "If he goes to the dump, he takes along two or three children," Laura McLaughlin says. Most of the kids don't even realize that their father is a high-tech executive, McLaughlin says: "They'll tell you I'm a farmer."
On several weekends each autumn, the McLaughlins hold apple-picking festivals, selling produce, cider, and baked goods to 1,000 or more people in a single day. Those events raised more than $100,000 last fall, with all the profits currently donated to children's charities. McLaughlin expects that number to grow this year with the opening of a new post-and-beam function room that can handle events for up to 200 people.
But his real vision for the farm, as for his software company, is to have it provide for the next generation while teaching them about leadership, self-sufficiency, and resourcefulness. Pointing to the gaggle of youngsters spilling off the sofa one Saturday afternoon at the farm, McLaughlin says, "This is our biggest business."
They're apparently learning. At one festival last fall, unbeknownst to their parents, his oldest daughters quietly made some iced tea, then sold it at the farm's front gate for substantially less than McLaughlin was charging for juice drinks inside. "My own daughters were cutting in on my business," he recalls. Not to be outdone, son Jack began peddling loose apples for 25 cents apiece. An initially mortified McLaughlin turned proud when he realized that the youngsters had, entirely on their own initiative, earned $34 that day. "Now that," he says, "is what I call being an entrepreneur."