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The consultant Featured

8:34am EDT January 24, 2005
At an age when many consider retirement, Robert D. Blackwell is 12 years into his start-up enterprise and has his sights set on having his business mentioned in the same sentence as IBM.

Blackwell knows a little something about IBM; he worked for the company for more than 25 years before venturing out on his own.

"I'm out of college and someone offers me a job, I take the job," says Blackwell, chairman and CEO of Blackwell Consulting Services Inc. "IBM taught everybody they hired skills, which they don't do anymore. (Today), they go out and hire computer people. When I came along, nobody knew anything about computers."

During his first 18 months at IBM, Blackwell spent as much time in school as he did working for the company -- and he did it on IBM's dime.

"I thought I had died and gone to heaven when I was working for IBM," he says. "They were -- and still are -- a fabulous company to its employees. Over the years, I fell in love with the place and would probably have never left except for the fact that IBM got into a lot of trouble in the '80s."

By then, Blackwell had reached upper level management, "high enough up that you can see the company making decisions," he says. "It was clear that IBM was on the ropes. I thought the products were priced in a way that seemed silly. You can talk about price elasticity, but nobody can sustain 40 percent differences in product price."

Blackwell was in his early 50s then, and "in the worst possible place that anybody could be -- a well-paid middle manager in a company that's got real problems," he says. "The first guys they let go are middle managers."

Knowing it was only a matter of time before he saw a pink slip, Blackwell left IBM and started his own consulting firm.

"I felt like I'd better prepare myself to do something else," he says. "IBM was getting into the services business, and I said, 'There's the place to be.' It immediately became obvious that there were very low barriers to entry. In the hardware business, the barriers to entry were gigantic. (In) the service business, all you had to do was get one contract for a few million dollars, and you're on your way."

Today, the company has grown to approximately 300 professionals and has become one of the largest minority-owned IT and management consulting firms in the United States.

Smart Business spoke with Blackwell about where that first contract came from (the answer may surprise you), how he survived the dot-com bust and how he plans to take his company from $36 million today to $100 million by 2008.

How is working for yourself different from working at IBM?

There are some things that you worry about when you're in business for yourself that you don't worry about when you work for IBM. When you work at IBM, you wake up in the morning, you worry about your targets.

You don't worry about money, you don't worry about whether your employees are going to get paid next week or not, you don't really worry very much about the creation of your products and the development of your brands. All I had to worry about was selling the product that had been placed in my hand.

When you have a business of your own, you've got to create the products. You've got to worry about all parts of the business. The most difficult thing that I've encountered since I've been by myself is the creation of a brand.

In cases where we absolutely know we're better than an IBM, where we're clear about it in our own minds and we're objective, the fact is we will lose eight out of 10 of those deals because people buy brands.

The only way you make a living is that you've got to be better than IBM every time so that you win two out of 10.

If you are viewed as no better than IBM -- or if you are viewed as not as good as IBM -- then you lose 10 out of 10. That is the biggest lesson that I've learned since I've been in business for myself -- the devastating impact of brand on small firms.

How did you get your first customer?

I was leaving (IBM) and I had a customer that liked me a lot and liked IBM a lot. He said, 'We don't want you to go.' I said, 'Go talk to IBM. If they're interested in continuing on with me, I'd love to do it.'

My heart is beating 100 beats a second, hoping we can pull this off. We did. IBM did all right and I did all right. I walked out with a job, and that sustained me through the first year.

Then I worked like crazy to build the business up because I knew that IBM would probably leave me.

A friend of mine at IBM gave me some advice when I walked out the door. He said, 'Always remember that your friends would rather make a stranger rich.' That really stuck with me. He was warning me -- don't depend on IBM to sustain you. Get some other customers.

You've won a number of awards. Of which are you most proud?

That's easy -- Ernst & Young (2003). It's really a prestigious award; it talks about being an entrepreneur, and you're in fast company. I don't want to pooh-pooh any of the others; they all matter.

But the Ernst & Young Entrepreneur Of The Year, I am a huge fan of that award because I think that they are careful about it. They look over the companies very carefully. You have to submit your financials. And then, when you go to the nationals, the guys that win at the nationals, which we have not, the year that I won (locally, the national winners were) Jet Blue, the airline, and Whole Foods, the grocery chain.

You're just in really fast company. It was wonderful. It's great what they do; it's kind of like an entrepreneur's dream to get mentioned.

How did you survive the dot-com bust and the down economy?

I think that the problem was in the boom, there were some companies I saw that believed some things that just couldn't be true, that I never believed. They were treating venture capital money as though it were revenue. That was the big one that I observed.

The thing I kept wondering was, how many customers do you have? How much business do you have? What are your costs? They acted like cost didn't matter. It's nuts.

The second thing -- I went to a venture capital meeting; I was trying to understand venture capital. The guy said, 'What we want, basically, is a 40 percent return on our money, compounded every year, and at the end of the fifth year, we want our money back.'

I thought, 'I don't know that a service business like mine could generate that. That's a tremendous scaling exercise.' I questioned at the time whether a service business could scale that way. Somebody said, 'Venture capitalists are making a bet, and if one out of 10 or one out of 12 hits, those guys are in great shape. And I'm thinking, 'What happened to the other nine guys?'

I was very cautious and conservative about that because I couldn't see where my business could meet those requirements.

9/11 killed us, and the economy, it was just a very difficult thing. We were fortunate that we had a couple of really good customers. The downturn did not impact our business with these clients. We were able to survive. A big piece of our business was not impacted at all by any of these things.

Where will the company be three years from now?

I always say to people, 'I want Blackwell to be spoken in the same sentence with a lot of the companies that I really admire.' If, three to five years from now, you could imagine there was a CEO having a conversation with a CIO, and the CEO was saying, 'We've got this problem, and we need to find some company to help us with it; who would you recommend?' And the CIO says, 'I think we probably ought to talk to Andersen (Consulting), IBM and Blackwell.'

Then I will have thought that we've finally achieved something.

HOW TO REACH: Blackwell Consulting Services, (312) 553-0730 or www.bcsinc.com