This Centennial Year, we honor our past, present, and future. This article was originally published in CommerceU.Va. magazine in spring 2007. Andy Schoonover (McIntire ’01) is currently Managing Partner of Lion Venture Partners; Rebecca Weeks Watson (McIntire ’01) is Founder and Producer of The Reveal Co. and an Adjunct Professor at Davidson College; Alexis Ohanian (McIntire ’05) is Co-Founder of Reddit and Founder of Seven Seven Six.
Three young entrepreneurs and McIntire alums—Andy Schoonover (McIntire ’01), Managing Partner of Blue Canyon Capital; Rebecca Weeks (McIntire ’01), who leads Business Development and Partnerships at Real Girls Media; and Alexis Ohanian (McIntire ’05), Project Manager at reddit.com (recently acquired by Wired Digital, whose parent company is CondéNast)—discuss the rewards and challenges of starting a new business.
Please talk a little about your startup.
Schoonover: My business partner, Chris Hendriksen, and I recently created Blue Canyon Capital, a “search fund” to find, acquire, and subsequently operate a small business. Our initial round of financing was $500,000, which will enable us to pay the fees associated with finding a company to purchase. Once we find a company, we will go back to our investors and lenders for an additional $10 million to $20 million to finance the deal. Although this structure has not gotten a lot of publicity, about 100 of these funds have been set up over the last 20 years, with average annual returns of 35% or more.
I chose to create a search fund because it fit three criteria I was looking for in a job. First, I wanted to do something entrepreneurial but not particularly high-tech. Second, I wanted to be in an operating role that would enable me to take on significant responsibilities. Dozens of large companies would offer me an opportunity to start at the bottom and work my way up, but being my own boss sounded much more interesting. Lastly, I enjoy investing and researching different industries. In the initial “search” phase, we are looking at companies using methods and strategies I first learned through the McIntire Investment Institute and Professor John Griffin’s class.
Weeks: Real Girls Media is a media network for women. Our first products are based online; these include three unique websites targeting different age groups. Unlike other online publishers, they combine editorial content, user-submitted stories and articles, and community. Our first site, DivineCaroline.com, went live in February 2006 after only five months in development. I lead Business Development and Partnerships, which challenges me to find, target, and then recruit quality content creators (such as authors, publishers, and bloggers).
I took a risk and joined this startup for three reasons. First, I was fired up by the ambitious goal of creating the #1 destination online for women. I loved the idea of starting out as the underdog competing with huge media companies. Second, I felt confident that we could achieve this goal because the co-founders had a track record for groundbreaking success. I’d known the CEO for two years in a previous job and had always respected her ability to run a company while also raising children and being involved in the community.
And last, but far from least, the job sounded like a blast. Yes, I still have a tireless work ethic, but I have fun and enjoy learning in the process. The other management team members and I laugh at ourselves when we goof up or blow small things out of proportion. And we balance each other well because we seem to have equal parts creativity, vision, strategy, and execution.
Ohanian: Fellow UVA alum Steve Huffman (Engineering ’05) and I moved to Boston in June 2005 to start reddit.com, a news website where the readers—not the editors—decide what goes on the front page. I realized law school wasn’t where I wanted to be after graduating, and I wasn’t ready for a job where my efforts were going to be rewarding someone else. I wanted to be fully responsible for all of my screw-ups.
Steve had been full of new ideas, but it was the conversations I had with Professor Mark White that provided the real impetus for us to start our business. Until then, I’d only mentioned the idea to my parents, who were quite supportive (but who are also quite biased). Professor White gave his frank opinion of the idea and suggested that we give it a shot. Then it was just a matter of convincing Steve to turn down a great job he had lined up and getting him to live with me for an indefinite period of time in a small apartment with no salary. And that’s how our startup got started.
What are the special challenges and rewards entrepreneurs face in today’s economy?
Weeks: The main challenge I notice is that you can never really shut off your brain. When you’re fully invested in a business, you’re constantly thinking of ways to earn more revenue or attract top talent. When other people mention their 9-to-5 jobs, sometimes I get jealous. But I remind myself that the short-term effort will be all the more rewarding financially, mentally, and emotionally in the long run. Of course, getting acquired or going public is a great tangible reward, but I’ve come to see the demanding experience and process as their own benefit. You come to respect and believe in yourself while you turn a seed into a colorful blossom.
Ohanian: I can’t speak for all entrepreneurs, but I do have some idea about online startups. Fortunately for us, the cost of starting and hosting a website has fallen drastically since the last boom, so one of the major hurdles has been significantly lowered.
Speaking generally, you become solely responsible for the success or failure of an idea. Your resolve is frequently tested because there are few opportunities to shirk work or responsibility.
However, I suspect that the rewards you gain when things go well are more fulfilling than they would be if you were someone else’s employee. But then again, I’m essentially just retelling old adages. The last job I had to compare this to was working the booth at the UVA parking garage.
Schoonover: The biggest challenge for an entrepreneur is the lack of stability. Most of the time, that comes in the form of financial stability. However, the upside is tremendous. Not only could the venture be financially rewarding, but we have an opportunity to grow a company, provide jobs and healthcare to employees, and provide a product or service that could have a significant impact on an industry and local community. That to me is invigorating.
Did the Comm School provide you with the tools you need?
Ohanian: The people I met at McIntire made a real difference. I particularly appreciate the relationship I had with Comm School professors. I’ve already championed Professor White, but a number of my professors—Tom Bateman, Lynn Hamilton, Ira Harris, and John Wheeler, to name a few—were quite supportive of my entrepreneurial ambitions.
Schoonover: Looking back, I realize that I learned so much in the classroom. I’d be lost without the building-block classes I took at McIntire. The lessons I learned in those classes were instrumental in allowing me to perform the analysis I do on a day-to-day basis. Beyond the basics, I found that the classes that enabled me to use all the tools I had learned were the most beneficial. Professor Larry Pettit’s case-based finance class was a great arena for teamwork, as well as for putting concepts into practice. John Griffin’s class forced me to use what I had learned to think outside the box and to use behavioral finance to become a more successful investor.
The intangible tools McIntire provides are numerous. There’s no doubt in my mind that I would not have been able to do what I’m doing today without the help and support McIntire’s faculty, staff, and alumni have given me over the years. They have helped in so many ways—from offering me my first job out of McIntire, to writing recommendations for business school, to even investing in my fund. The McIntire network is invaluable.
Weeks: The Commerce School’s rigorous curriculum, access to information, and small class size gave me the comprehensive set of business tools and skills that I use and value every day. Plus, the professors were phenomenal. The ones who influenced me the most were the ones I feared the most. They loved to challenge students to think beyond the predictable. To prep for their classes, I read every word of the reading assignments, reviewed my old notes, and researched topics on the internet. I think this is the ultimate sign of influential mentors—that I tried to give my best to impress them.
Even though I dreaded team case-study projects, those experiences groomed me to be a more patient and thoughtful businesswoman. I learned how to respect everyone’s opinion, leverage each person’s individual strengths, and turn chaos into organized results. In the real world of business, we come across all different types of egos, personalities, work styles, and ethnicities, so it’s important that we understand how to find trust, comfort, and inspiration in other people.
Do you have any advice for young people considering an entrepreneurial career?
Ohanian: Do it. Be prepared for something that is going to consume a very large portion of your life and require a great amount of dedication. It’s going to become very personal.
But now is the best time. Youth grants us both the energy and the innocence that are useful for beginning an entrepreneurial lifestyle. Coming right out of school gives you the advantage of having almost nothing to lose. You also—perhaps more importantly—won’t know what you’re missing, for example, salary, health insurance, and weekends off.
Schoonover: The best advice that entrepreneurs have given me is “carpe diem.” Entrepreneurs who wait often succumb to financial and family pressures and never return to that entrepreneurial venture they dreamed about starting. The opportunity cost while you’re young is low. The worst that can happen is that the entrepreneur loses a couple years of salary.
However, failed ventures are often looked upon favorably by firms looking to hire people. It signals that the entrepreneur has the spirit and passion to go for something that very few other people are willing to try. It’s also an amazing learning experience that is worth every penny of salary forgone from that “stable” job you might have taken.
Weeks: Don’t underestimate the importance of research before writing your business plan or joining a startup. I don’t just mean buying a dozen market reports. Instead, get your hands dirty in the field. Talk to people working at competitors, buy from a vendor, question a skeptic, bounce your idea off an “influencer,” and ask venture capitalists what they’re investing in. This will help you focus your business on serving the need in the marketplace.