Most new businesses are driven by desire: for Allison Nelson and Jon Phillips, both M.B.A. ’95, it was a shared obsession with books. Some start-ups are rooted in frustration: Wellie Chao ’98 couldn’t find decent office space in Manhattan; Thong Le ’98 was sick of eating fattening fast food on the run. And others stem from some offhand observation that flowers into a full-blown business plan: for Henry Rich ’02, it was the phrase "oral fixation."
Although their sources of inspiration, and their resulting ventures, couldn’t be more diverse, these young entrepreneurs and others like them share plenty of similarities (see "The Self-Made Mindset").
All allowed themselves some "what if" daydreaming. All benefited from chance and timing as much as from innovative thinking and skill. All made mistakes along the way. And, as they readily acknowledge, not one went to Harvard planning to do what they do today.
Reading between the Lines
In the mid 1990s, Allison Nelson decided to pursue an M.B.A. and to leave behind an investment-banking job, that, while lucrative, wasn’t how she wanted to spend her working life. "One of the reasons I attended Harvard Business School was to think about things I might like doing," says Nelson, a Wellesley College graduate.
One thing she’d always liked: working with words. "I was always reading, always part of book clubs," she recalls; at HBS, she served as editor in chief of Harbus, the school’s student newspaper. Still, "I was never thinking along the lines of making it a career," she says. "I always considered it a hobby."
At HBS, she and classmate Jon Phillips ’90 started a small Internet business as a field project, and a professional partnership was born. "Jon and I work very well together," Nelson explains. "We found we have complementary backgrounds and skills."
After graduation, Phillips married HBS classmate Wendy Mogan and took a marketing job with an Internet startup in Boston. Nelson and her spouse, K. Thomas Bailey Jr. ’90, M.B.A. ’95, moved to San Francisco, where she worked first as a management consultant and later as a technology company executive. Eventually, each couple had two children.
By 2001, Nelson still wasn’t satisfied with her career. "I wanted more life balance, more control," she says. "I wanted work that was combined with an interest."
As it turned out, her old friend, who had by then moved to the Bay Area, was thinking along the same lines. "We wanted to do something that we were passionate about, something where our children can feel proud of us," Nelson says. So she and Phillips, the son of a librarian and himself an avid reader, began brainstorming about launching a literary venture. From informal research, "we quickly realized that there was a need in the marketplace for something to help people decide what to read next," Nelson says. "There seems to be a real community out there, reading." From a business perspective, that community’s demographics are "fabulous," she continues. "When you talk about someone who is a reader, it’s almost everybody. It’s your parents, your sister, your children, your friends."
Those conversations led them in 2002 to start publishing Bookmarks, a bimonthly magazine for people who love to read. Issues typically include a comprehensive, ranked, list of recently published books, an overview of the best books in a particular genre, and a focused review of one well-known author’s works.
Constant readers responded. Paid circulation, which hit 30,000 in its first 18 months, continues to climb; the magazine also generates revenues from advertising, back-issue orders, and sales of spin-offs such as book-related greeting cards.
The magazine has no physical headquarters. To be near their young children, the founders work from home offices stuffed with books, communicating primarily by instant messaging. Nelson serves as publisher, handling the business side; Phillips is the editor, overseeing content. Neither takes a salary, but Bookmarks generates enough revenue to pay a managing editor and regular freelancers. Ultimately, the two hope the magazine will be just the first of their publishing ventures.
Right now, though, the biggest payoff is the sense of having found an avocation with some surprising benefits. After a recent issue profiled Kurt Vonnegut, the author contacted Phillips to praise the piece. "Jon was almost speechless," Nelson recalls, the awe evident in her voice as well. "What a special thing that was."
Carving Out Space
Wellie Chao was a tech guy all the wayso much so that he applied to technology schools as well as to Ivy League universities. At Harvard, he concentrated in economics with a strong emphasis on computer science. In his junior year, he even started a successful software business, Crimson Solutions. How, then, did this Tampa native wind up as a successful commercial landlord in New York City?
For the same reason he started his college company: frustration. In the case of Crimson Solutions, the source of his aggravation was Harvard’s Office of Career Services, which, Chao says, provided "inefficient access to information" by allowing students to peruse job postings only during regular business hours. "Students are up 24 hours a day," he says. "They’re hungering for information about jobs at 3 a.m., and they can’t get it."
Chao developed recruiting software that let Harvard post listings on-line, available around the clock. Then he made a sales call at Boston College, which became Crimson Solutions’ second customer. After that, "it really caught fire," says Chao, who began pitching the program to colleges all over New England. A year after he graduated, his company merged with a competitor, which still uses Chao’s software at about 500 schools nationwide.
After the merger, Chao moved to New York City to start another software company with friends. He began looking for suitable office space: small, pleasant, inexpensive, and fully equipped.
He found nothing, but spotted opportunity. Figuring that other entrepreneurs faced the same problem, Chao launched Micro Office Solutions, specializing in affordable workspaces for very small businesses. With help from several investors, he leased 5,000 square feet in a Manhattan office building, which he subdivided into miniature officesthe smallest the size of standard corporate cubiclesand offered to businesses with one to four employees. Rental agreements cover everything from utilities to cleaning services to high-speed Internet connections.
With about 35 tenants, ranging from self-employed writers to small consulting companies, the building is at capacity and, Chao says, "very profitable." Now he’s developing Phase II, subdividing 20,000 square feet in a second building, where he hopes eventually to house 200 more tenants. Early in 2006, he hopes to acquire and rent out another 30,000 square feet.
It’s been an educational experience. "I’ve learned so much about how different businesses operate, which business models work and which don’t," he says. "I’ve also learned so much about construction": for instance, that at $5 per square foot, the gorgeous wood flooring he wanted for his second location would eat up more than $100,000an expense he opted to forgo.
None of which means he’s abandoned his original calling. "At some point, I would like to get back into technology," he admits. "It’s always been a love of mine."
Eating on the Run
Thong Le had a little too much to do during his senior year at Harvardso much that he was skipping most scheduled meal service on campus.
"I was carrying a full load of courses, I had a job, and I had other stuff going on," recalls Le, a government concentrator who was working for a local management-consulting firm. He filled up on fast food at Harvard Square takeout joints, with predictable results: "I was gaining weight and feeling sluggish."
His solution: replace those high-calorie choices with food that was nutritious yet convenient, "something easy to use, something that was palatable yet portable." When he couldn’t find a product that fit the bill, he decided to invent one.
Working in the Adams House kitchen, Le blended fruit pastes he could spread on bread for take-along snacks. The first few batches burned or were otherwise inedible. "Then I started approaching it like a scientist," running computer spreadsheets to track the results as he tinkered with the formula. After several months of trial and error, he had perfected a "platform," a basic recipe he could modify with different flavors. "It tasted pretty good," he says.
Meanwhile, colleagues at his consulting job were curious about the fragrant green concoction he slathered on his sandwiches at lunchtime. After trying it, a couple offered to help him sell his invention to a larger audience. In short order, the partners established MiniMeals, developed a pie-like product filled with Le’s fruit paste, and started marketing it as "appealing, convenient nutrition" for people who need to eat on the go.
As demand picked upcoups included a deal with the Harvard CoopLe and the team tried to automate production. That caused one headache after another. The worst: a packaging machine that randomly smashed a couple dozen pies at a time. Until they worked out the glitches, Le had to assemble the product’s outer carton with a paintbrush and glue. "Every entrepreneur has to cross a Valley of Death," he says. "We had several Valleys of Death."
The biggest valley came when a distributor offered to buy their company. "Things got really ugly," Le says. He had almost no ownership rights in MiniMealshe attributes that to naiveté and lack of legal guidanceso he received next to nothing from the sale. He quit the company, which later shut down.
Today, he is again a consultant, working for a venture-capital company where he provides guidance and funding to start-up businesses. He’s philosophical about the demise of his own effort. "I got great satisfaction from being an entrepreneur," he says. "If I had the gumption and ability to do it once, I have it in me to do it again."
Making a MintLiterally
Henry Rich doesn’t smoke, but he knows plenty of people who do. When a summer-job coworker named Jeremy Kahn remarked casually, "I’m trying to quit smoking, but I have this oral fixation that won’t let me," something clicked. "It occurred to me that was the fifteenth or twentieth time I had heard someone say that exact phrase," Rich recalls. The two started brainstorming about what they might sell to satisfy smokers’ cravings and use that dandy slogan. They settled on gourmet mints, quit their jobs, and launched Oral Fixations LLC.
The move might seem a strange one for Rich, a philosophy concentrator and lifelong musician who planned to work in the recording industry. But Oral Fixations, he says, reflects what he learned from studying aesthetics at Harvard: "The general idea is that we can make things that are of very high quality and that look beautifuland we can do it very cheaply."
To achieve beauty, the founders partnered with a designer who created simple yet striking graphics for the company website, the mints, and their imported tins, which customers are encouraged to reuse as business- or credit-card cases. To keep quality up and cost down, they make the candiesall six flavorsby hand at Rich’s home in a renovated chocolate factory in Hopewell, New Jersey.
Like other startups, they’ve hit a few roadblocks, notably an unexpected response to their "Sugar Free Tibet" brand, which bore a picture of the Dalai Lama on tissue paper inside each tin. "We got a note from his lawyer," Rich recalls. "We weren’t using him to sell the product, but they were still upset." The image is gone.
Overall, business is good. Oral Fixations, which now targets anyone who likes mints, isn’t yet a threat to Wrigley’s or Altoids, but its products sell briskly on line and in 250 stores, including those at New York’s Metropolitan Opera and Whitney Museum. Rich says the customer base will soon include hotel chains overseas.
Rich and Kahn take small salaries while plowing their remaining profits back into the business. Things are tight"Frankly, we’re destitute," Rich says, only half-kiddingbut the founders expect their sacrifices to pay off down the road. Besides, Rich says, "Compared to Harvard, business is pretty easy."
Anne Stuart is assistant editor of this magazine.