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Business News - Tuesday, May 1, 2001 Failures teach valuable lessons By Michael Yeomans TRIBUNE-REVIEW This is not a story for the weak-stomached, those with heart trouble or expectant mothers. Nancy Deckant, George McKee III and Sanjay Chopra have waged gut-wrenching crusades to build companies from scratch with a volatile mixture of concentrated entrepreneurialism and manic determination to see their visions become reality as the primary ingredients. After logging countless hours and sleepless nights to live their dreams, Deckant and Chopra were fired from their own companies; McKee, meanwhile, watched his medical device company nearly wither to dust after it could find nobody to manufacture its debut product. Like roller coaster enthusiasts whose adventures may give them something akin to air sickness, they have all climbed back on the start-up train. This time, they're counting on their experience to help anticipate the loops and turns of their new ventures and allow them to re-enter the station without the world spinning around their heads. All three say they have emerged stronger and wiser from their initial forays into business building. Among the lessons learned is that chemistry and a defined division of labor among partners is critical to survival; that giving away as little of the company as possible to outside investors is highly desirable; and when it's clear that things are not going to work out, it's best to just let go. And one more thing; There's no going back to the 9-to-5 world. "Once an entrepreneur, always an entrepreneur," Chopra said.
A DOOR CLOSES, ANOTHER OPENS Deckant found herself out of options three years after helping create Onguard Systems. Deckant was an executive at Pittsburgh-based Medrad and a graduate business student in entrepreneurship at Carnegie Mellon University when she examined an orphaned technology within the company. She and two others accepted the challenge of building a company around the technology. But when one of the partners turned into the lead investor, a power struggle ensued that left her feeling isolated.		Nancy Deckant, Vice President of Marketing & Strategy at Soleil Technologies along Penn Avenue. (Heidi Murrin/Tribune-Review)
"Being part of a start-up should mean everyone's talents have a chance to grow. When goals and aspirations among founders begin to overlap, nobody's needs are being met," she said. In 1999, she was fired from the company she felt she had helped bring into the world. Deckant says that although her life was turned upside down, she has no regrets about the experience. She says she hopes her former company succeeds, particularly because she still has an equity stake in it. "I lived out my dream, and all I know is that I can't go back to corporate America," she said. "That's the steel-making process of an entrepreneur. You become stronger after going through the fire." Deckant was pointed to a new start-up opportunity by an investor in her original company. And she believes she has found better chemistry with the founders of Soleil Technologies, a technology consulting firm in the health care, utilities and financial service industries. As vice president of marketing and strategy, Deckant says she has the room to set her talents free. Even now she is hatching ideas for new ventures. "I expect to start a couple more companies before I'm done," she said. PARTING IS SWEET SORROW Chopra, a humble, soft-spoken native of India, was riding high last year. The company he launched in the summer of 1999, OnlineChoice.com, had garnered significant local venture capital and intensive media attention. Its concept was to use the Internet to build buying pools - groups of consumers - which would take delivery of essential services like telephone, electricity and natural gas. His company was one of the thousands of electronic commerce companies that sought to change the world. The company landed plush office space in the North Shore headquarters building of Duquesne Enterprises, the venture arm of Pittsburgh-based DQE Inc., and one of OnlineChoice's investors. As chairman and chief executive, Chopra successfully raised additional rounds of capital and hired more than 70 employees and continued to eye new service offerings. Chopra became a local Internet hero and was named the western Pennsylvania Entrepreneur of the Year. Just as his dream looked like it was reaching full-speed, the wheels started falling off. The capital markets dried up. OnlineChoice partners went out of business or retrenched. One was Utility.com, the California-based supplier of its electricity service to Pennsylvania customers, which pulled the plug on the state when wholesale electricity prices jolted upwards. Amid the ruin Chopra was forced to make successive rounds of layoffs, eventually going so far as firing his two co-founders. Days later the ax fell on him. He was devastated. Lathe Hayes, a clinical psychologist who consults with entrepreneurs who have left their companies, said that when a board of directors fires a chief executive, he often doesn't see it coming. "Initially, they are in total shock," he said. Still in the depths of his despair, Chopra received a call from Kannan Srinivasan, one of his professors from the Carnegie Mellon Graduate School of Industrial Administration. Srinivasan and another former mentor at CMU were building a company of their own called Intellions but needed a leader to help take their software concept from an idea to a commercial entity. "Kannan called me when he heard about the shakeup (at OnlineChoice). As soon as he knew the situation he asked if I would help launch Intellions," Chopra said. Hayes said another trait of the entrepreneur is the ability to rebound quickly and realize that leaving a bad situation can unlock even better new opportunities. Chopra said he plans on being the "dumbest person" at Intellions, surrounding himself with the most talented programmers and support personnel he can find. If he harbors resentment against his former employer, he doesn't show it. "OnlineChoice has been wonderful in a lot of ways, especially from a teaching perspective," he said. He said in his new job, he will avoid expensive mass marketing and will seek slow, sustainable growth, adding employees only when absolutely necessary. Chopra said the company has developed a demonstration software application to show venture capitalists and potential customers how to use the Web to gain time-sensitive information on the effectiveness of a company's pricing, promotions, discount schemes and financing plans. This information will enable them to make swift changes that will enhance demand for their products and services. "We want to get some financing by a June time-frame. We want to have our first product ready by the end of the year," he said. TAKING STOCK OF YOUR OPTIONS McKee left a sales job for a major medical device manufacturer in 1996 after watching the industry consolidate from 13 companies to three. He convinced a handful of the engineers in his company to break off with him to form a start-up. "I said, `Why don't we create a third player to inject some competition back into the market,'" he said. He said the plan all along was to develop and commercialize a technology and wait to be bought out by one of the larger industry players with wider distribution channels. But $1 million in venture capital and a year and a half later, the company, called Medtrex, discovered that it couldn't find a manufacturer to assemble its product correctly. And even if it were capable of being manufactured, the gross margins of between 5 percent and 6 percent Medtrex expected to receive hardly justified the effort for the founders or their investors. Running out of money, the group holed up in a basement for 11 months and cranked out a more sophisticated product more in tune with their expertise. Though it had yet to crack the $1 million sales plateau, Medtrex caught the attention of Johnson & Johnson Co., which bought the company for $7.5 million last summer. "When we sold, we had to sell. We were out of cash and out of options. We were fortunate to find a buyer," he said. After assisting in the integration of Medtrex into Johnson & Johnson, McKee said he was pleased with achieving his goal of building and selling a company. But he recognized he made many mistakes along the way, like starting a company without a well-defined product, building a distribution network from scratch and borrowing heavily to get the venture off the ground. McKee quickly found a new opportunity to put his lessons to work when one of the investors in Medtrex guided him to another young company in his portfolio that was developing inexpensive software to link small businesses to their large customers' data systems. McKee said he was impressed with the focus and rapidly growing customer base of the company, TrueCommerce, and signed on as chief executive. "My role is to scale the company up," he said. "We plan to grow the company methodically and become profitable this year. Once that happens, we can take the company in many different directions. We'll have options." Frank Demmler, chief executive of the local venture capital company the Future Fund, had Deckant, Chopra and McKee as students in the entrepreneurship class he teaches at Carnegie Mellon University. He said while he hopes his instruction has guided their successes, in the end, entrepreneurship must be learned on the job. "In the end, being an entrepreneur is not an intellectual exercise," he said.

Nancy Deckant, Soleil Technologies' Vice President of Marketing and Strategies, was among a distinguished list of panelists who spoke Thursday, May 10, 2001 at the MIT Enterprise Forum.

For information about the panel discussion, please email us.