Northern California (1069)

Wednesday, 25 June 2008 20:00

Judging entrepreneurial excellence

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The 2008 Ernst & Young Entrepreneur Of The Year judging panel

Juli Betwee
Pivot.Point Partners

Jon Fisher
Teahupoo LLC

Brian Hinman
Oak Investment Partners

David Jochim
Union Bank of California

Patrick Lo
NETGEAR Inc.

Hira Thapliyal
VytronUS Inc.

Issac Vaughn
SC Investments Consulting LLC

Tom Vertin
Silicon Valley Bank

Wednesday, 25 June 2008 20:00

Refusing to quit

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Rodrigo R. Sales is driven by a passion to succeed. As an MBA student at Stanford University, he co-founded AuctionWatch as a comparison shopping site that pulled information from eBay, Amazon, Yahoo and hundreds of other auction sites. While still a student, he was able to secure two rounds of venture capital.

The company prospered, but it later faced problems when eBay tried to block providers like AuctionWatch from displaying its items in their searches. Enraged, Sales took out a full-page ad in the Wall Street Journal chastising eBay for its anti-consumer tactics. This propelled the company into the spotlight and gained it a reputation as being a David fighting the industry’s Goliath and raising the bar for competition.

As the market changed in 2001, and eBay emerged as the dominant online auction site, Sales knew his site wasn’t as valuable as it once was. Instead of accepting defeat, he decided to cater to these online merchants, so AuctionWatch evolved into Vendio Services Inc., which provides sales management solutions for online merchants.

Today, this chairman and CEO’s business provides a suite of products and services designed to help online merchants establish, manage and scale their businesses. By seeing the changing market, Sales was able to capitalize on a new opportunity instead of fold, and now, Vendio has seen profitable growth for the past five years. On top of that, Sales was able to purchase one of Vendio’s largest competitors in 2006, and he has high hopes for continued growth in the future.

HOW TO REACH: Vendio Services Inc., (650) 293-3510, (877) 258-8488 or www.vendio.com

Wednesday, 25 June 2008 20:00

Seeing the future

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Jerry M. Kennelly had a vision to make data move at the speed of light, so he and Steve McCanne left prominent positions at Inktomi Corp. and founded Riverbed Technology Inc.

Kennelly recognized that the challenges the chief information officers would face in the future centered around having a distributed work force and the work becoming more digital. They realized everything was expected to be virtual, instant and global, so they set off to solve the instant and global pieces.

Most companies said that to meet these future demands, more expensive networking equipment was required, but Kennelly and his partner worked to enable what the technology companies already had. They first introduced their wide-area data services products in 2004, and word of what they were doing spread quickly. Other companies saw the opportunity and tried to get on board through acquisitions and market-stalling tactics. By the end of 2005, Cisco, Juniper and Citrix all had competing offerings in the market. Riverbed continued growing and eventually went public in 2006.

Throughout all of this, Kennelly stood firm in his belief for the company, its products and its ability to be a strong, independent company, and his instincts were right on target. Today, this chairman and CEO’s company is the market leader and had more than 40 percent of the market share as well as more than 3,500 customers.

HOW TO REACH: Riverbed Technology Inc., (415) 247-8800 or www.riverbed.com

Wednesday, 25 June 2008 20:00

No fear

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Jagdeep Singh co-founded Infinera Corp. in 2001 with Drew Perkins and David Welch, and the optical networking company wasn’t without its problems during this difficult time. While many companies were closing up shop, Singh held true to his vision so that his business would stay open.

He envisioned changing the networking world by creating a photonic integrated circuit (PIC) and developed complete systems based on it, but this would require him raising private capital during a time when the industry was struggling.

Despite the challenging market, he moved forward on his vision by hiring top talent for Infinera. He brought aboard a chief operating officer and a vice president of global sales who both had fantastic track records at successful networking companies.

Infinera still had many people criticizing it, and this continued until its initial public offering, when Wall Street investors clearly embraced the company by bidding its stock up to more than double the offering price. Critics finally admitted that the company’s numbers, customers and technology were profitable, real and unique.

Success has only continued as PIC is now the world’s fastest optical chip, and revenue grew 1,100 percent from 2005 to 2007. As he looks toward the future, this president and CEO will continue to invest in innovation and developing differentiated products to help his customers build more profitable businesses.

HOW TO REACH: Infinera Corp., (408) 572-5200 or www.infinera.com

Wednesday, 25 June 2008 20:00

Healing and caring

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In the mid-1990s, Gary Lauer and Vipool Patel met while working at Silicon Graphics. The two realized that with the boom of the Internet, the health insurance industry could really use the benefits of Internet technology because of the amounts of information involved, the old distribution system in place and the need for product for consumers.

On that premise, eHealth Inc. was founded in 1997, and Lauer joined it in 1999 as president and CEO. His first challenge was to market a new distribution channel in a conservative industry that was resistant to change. Lauer and his team had to win over not just consumers but also insurance carriers, and they were successful in doing this. The company quickly built a strong reputation and became a catalyst for change in the health insurance industry. Today, eHealth has more than 500,000 revenue-generating members and has partnered with more than 175 insurance providers.

Lauer was also named chairman in 2002 in addition to his president and CEO responsibilities. As a leader, he has worked to not only grow eHealth but to also encourage and develop his employees. The company offers 90 percent premium coverage for health insurance and also offers employees free access to on-site and local gyms. He also encourages employees to come forward with organizations they care about, and the company has supported causes such as The Giving Tree, Toys for Tots and Walk for the Cure.

HOW TO REACH: eHealth Inc., (800) 977-8860 or www.ehealth.com

Wednesday, 25 June 2008 20:00

Entrepreneur Of The Year

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The Ernst & Young Entrepreneur Of The Year program is a celebration of the entrepreneurial mind and spirit — a commemoration of what leaders can do when they firmly put their minds toward achievement and perseverance in the face of possible and sometimes almost certain defeat. It is here that we have the opportunity to recognize the most courageous business leaders in our communities, those who have made every sacrifice necessary in pursuit of their dreams.

These individuals put their necks on the line everyday in pursuit of a passion — a unique vision of what the future can be. These are the entrepreneurs who are in constant pursuit of excellence and whose hard work is best recognized through the success of their companies, employees and communities.

In an age where faster, better, cheaper has become a mantra, entrepreneurs continually find better ways to develop, grow and prosper. They take words like can’t and no and turn them into motivational tools. Telling an entrepreneur that something can’t be done is a surefire way to create a future market leader. Entrepreneurs are leaders, and we are inspired by their achievements. Thanks to the entrepreneurs that have participated in this, the 22nd year of the Entrepreneur Of The Year program, and more importantly, for continuing the entrepreneurial spirit in Northern California. Also, a thank you to the program’s sponsors, judges and other supporters that have made this year’s program a success.

Northern California award recipients and those from other regional programs in the United States are eligible to participate in the national Entrepreneur Of The Year awards, which is the culminating event of the Ernst & Young Strategic Growth Forum. The forum is the country’s most prestigious annual gathering of dynamic, high-growth and market-leading companies. This year’s forum will be held Nov. 12-16 at the Desert Springs JW Marriott Resort & Spa in Palm Springs, Calif.

Ernst & Young is proud to honor this year’s Entrepreneur Of The Year finalists and award recipients.

RICK FEZELL is Entrepreneur Of The Year program director. Reach him at (408) 947-6568.

Monday, 26 May 2008 20:00

The cure is accessible

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Employees miss three to four hours of work every time they visit the doctor, which impacts productivity. But forgoing a doctor’s visit to avoid missing work is not the best choice dedicated employees can make for themselves or their employers. One solution that’s gaining traction with employers is the on-site health center, which increases the prevalence of ongoing preventive care and reduces time away from work.

“Employers are finding that the on-site center is a used and highly valued employee benefit,” says Teresa Wolownik, consulting actuary for the Group & Health Care Practice at Watson Wyatt Worldwide. “Which is great news because employers are seeing a reduction in nonproductive time by almost three hours per visit and employees are receiving high-quality health care.”

Smart Business spoke with Wolownik about the benefits of on-site health centers and how employers can explore the feasibility of and ROI from implementing one.

Why should employers implement an on-site health center?

The 2007 annual survey conducted among 453 employers by Watson Wyatt Worldwide and the National Business Group on Health revealed that 21 percent of the surveyed companies presently have an on-site clinic and 28 percent expect to open one in 2008. I think the reason behind the trend is that the clinics provide numerous solutions. First, because the on-site services can be delivered more cost effectively than those delivered by outside physicians, the practitioners are able to spend time focusing more on preventive and lifestyle-related risk factors, not just treatment. Second, only one in four employees currently seeks preventative care, which is contributing to the rise in chronic illnesses, such as diabetes. With services available at the work site, more employees engage in preventive care services, receive ongoing management for current conditions and participate in smoking cessation or weight-loss programs. Third, employers and employees benefit from visiting a health care provider who is fully integrated with a company’s program and is familiar with its benefit plans. Last, employees view the on-site health center as a perk, which improves morale and retention.

Which companies are potential candidates for an on-site health center?

We usually say that employers with a critical mass of 1,000 or more employees at a single location are candidates. However, there are vendors that cater to smaller employers, so it’s possible to adopt a scaled model that focuses on health coaching with or without disease management and still receive many of the benefits. Most on-site centers are outsourced to third-party vendors, so employers needn’t worry about additional liability, employee privacy issues or in-house expertise.

A design and feasibility study will help to validate ROI. The analysis process includes:

  • Engaging key stakeholders, such as representatives from legal, finance, benefits, occupational health and real estate, in a meeting to educate and define the objectives for the center. Include consulting experts to advise on the range of health center models and third-party vendors and discuss considerations of eligibility, cost-sharing, integration with other programs and data/measurement.

  • Shaping the center’s parameters, such as whether it will be led by an M.D. or a nurse practitioner. Knowledge of your employees and their preferences is vital.

  • Conducting a claims history review to help determine the types of services needed and the estimated patient volume for the center. Extract key data concerning current cost and frequency of visits, condition prevalence and proximity to local physicians to estimate adoption rates.

  • Leveraging the expertise of a clinician with experience operating an on-site health center. The needs and considerations of an employer-based center are unique to those in the outside community. The physician expert helps you to define your desired ‘patient experience’ and then reviews the data to determine the necessary health center resources and the estimated cost of providing them.

How is the ROI determined?

Once the volume of services is estimated along with the cost, it’s compared against the actual costs of purchasing those same services in the community, which can be validated by the claims review data. Next, we look at other savings opportunities, including productivity gains from employees missing less work time to overall employee health improvements. We typically see a 2-1 ROI rate, meaning that if an employer spends $500,000 for an on-site health center, it is seeing direct and indirect savings of $1 million.

What is the role of employers during the feasibility study and center implementation?

It’s important to have executive sponsorship from the beginning and an ongoing communications campaign. Second, it’s important to select an analysis partner that uses a cross-functional team approach, which includes an experienced physician, an actuary to evaluating community versus on-site services and an attorney to advise on compliance issues. Select a partner who is also familiar with integrating the on-site center with other employer-based programs, such as EAP and disease management, and who understands the options around integrating data with your insurance carrier and/or data warehouse. Data capture is vital for accurate ROI validation once the center is operational.

TERESA WOLOWNIK is a consulting actuary for the Group & Health Care Practice at Watson Wyatt Worldwide. Reach her at (858) 523-5586 or Teresa.Wolownik@WatsonWyatt.com.

Monday, 26 May 2008 20:00

Role-player

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Roland Strick Jr. wants to make every moment count. The second-generation owner of Service by Medallion is growing his company at a steady pace, from $18.5 million in 2006 to $20 million in 2007, and he projects his building maintenance company will hit $25 million in revenue by 2009.

However, the company’s consistent growth, environmental initiatives and constantly changing industry are too much for one guy to keep up with on his own.

“You sit for four hours in a conference, and so many things can transpire in those four hours,” he says.

To keep it all straight, Strick relies on his management team to stay up to date on issues concerning his 600-plus employees.

Smart Business spoke with Strick about how to build a capable management team and how to find the right role for an employee.

Q. How do you build a strong management team?

Whether you’re a pro football team or a company, you’re always trying to produce the best team. The way that I do that is (by staying) in tune. Our industry is very unique; people that come from the outside don’t usually succeed or last, so I really try to stay in tune with industry people.

I court people. I build relationships. I feel out people and try to figure out who would be the right fit. Depending on what we’re trying to accomplish is where I go.

I look at running a company like being the quarterback of a football team. You’re leading, but everyone has their roles. You have to have everyone on the same page and feeling accountable for their roles.

I surround myself with people who are going to be better than me at that role. If I’m the quarterback, it doesn’t make sense for me to go play line-man. I try to find people for the right roles.

Q. How do you decide who will be the best fit for a role?

You move people. ‘Hey, you’re not really a running back, you’re a receiver, let’s get you out to receiver.’ It’s just trying to find the right fit.

The way I go about that is just intuition. It’s just picking people’s brains, talking to people in the industry or vendors.

Most of our company is organic in the sense that we have built these people. In the early stages, we didn’t have the budget to bring on the people we have today.

Now, with the growth, we’ve been having and at the level we’re working at, I’ve been able to hire some higher-level people and bring them in from the outside. But, for the most part, it’s teaching (employees) the business from scratch.

Q. How do you earn your employees’ trust?

By starting from the bottom up. I grew up in the business. My parents are from Chile, and they started off as janitors. They really did the hard work of setting up the foundation.

My first six months out of college, I was cleaning buildings from 6 to 2:30 in the morning.

It’s different being the owner’s son; you have to really go above and beyond to gain respect because there’s a stigma that something is just being handed to you.

From the beginning, I’ve been taught to respect everybody. That’s what’s helped me be successful in life and in business. Treat everyone with respect, work hard and deliver results.

(When you do that,) people feel that sort of comfort that this guy’s got my back, and I’m going to let him lead the way.

Q. How do you develop a vision for the organization?

The vision is constantly changing. You have to anticipate the changes, develop your mission, and discuss challenges and issues.

Trying to fine-tune it really is communicating with the outside, but then I bring in my key players and discuss what I’m seeing out there, what I’m hearing and what I believe would work. I bounce it off people, and then we make our move.

Q. How do you balance input from outside sources with what you hear from your management team?

I’m very involved with everyone, constantly keeping in the loop with everything. I’ll get vibes from people, and I’ll go to a director and say, ‘Hey, I think this person is unhappy with the situation, can you get involved there?’

You might find that they don’t believe in what they’re doing, so it’s readjusting. Most of our development of our mission or goals happens within.

I reach out to the outside world, colleagues and friends that run businesses in different industries. I pick a lot of people’s brains. I try to come up with some common denominator. Then I say, ‘That would work in our business. That makes a lot of sense.’ I try to incorporate that in my business, but you can’t do that without getting buy-in with everyone. So I’ll brainstorm with them, and we’ll elevate the original idea to something that’s better.

HOW TO REACH: Service by Medallion, (650) 625-1010 or www.servicebymedallion.com

Friday, 25 April 2008 20:00

The U.S. dollar

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The U.S. dollar, still the benchmark for world currency, has been sagging the past several years. A detriment to U.S. consumers and U.S. companies that import products, the weakening dollar benefits some players in the global marketplace.

“Exporters will generally see their sales increase as the price of their product becomes cheaper in foreign currency terms,” says Gary Loe, vice president, foreign exchange at Comerica Bank.

Smart Business spoke with Loe about the weakening dollar, who benefits from it and why he expects the dollar’s value to increase as the year progresses.

What are some of the factors behind the weakening of the dollar?

Current economic factors that may be signaling recessionary conditions in the U.S. economy and could undermine confidence of U.S. dollar-based assets include the downturn in housing, turbulence in the equity markets and job woes. Additional interest rate cuts by the U.S. Federal Reserve could further erode the return of investors as lower interest rates may produce additional inflationary pressures, lowering the dollar’s value. Also, continued budget and trade deficits tend to weaken the U.S. dollar.

We are in an election year and increased political uncertainty could warrant a more cautious approach to holding assets based on the U.S. dollar. Lower oil prices could reduce demand for U.S. dollars, as oil is priced in U.S. dollars globally. More and more countries are diversifying away from the U.S. dollar as their principal reserve currency and are substituting the euro, pound, yen and others.

Who benefits from the weakening dollar?

Exporters will benefit from the weakening dollar. Mutual funds with overseas investments rise along with the currency they are denominated in as long as the funds don’t hedge against currency movement. People holding foreign currency accounts or notes will benefit as well as people holding gold; gold is priced in dollars across the globe and generally rises when the dollar loses value as buyers using other currencies drive up the price as it becomes cheaper. Also, our trade deficit should decrease as U.S. entity sales outside the country increase, and U.S. companies will buy less from foreign trading partners. The weak dollar is encouraging foreign manufacturers to set up factories in the U.S., bringing jobs and other economic benefits.

How does the dollar’s lower value help exporters?

The weak dollar makes American goods and services less expensive in the global marketplace. Therefore, exporters should increase their sales. The entities buying the exporters’ goods will be able to purchase them with fewer units of their own currency. Also, sales could increase as buyers shift purchases they currently transact with entities in other countries.

Do you expect this trend to continue?

In the long run, we should see the trend continue. The two major factors driving this are, one, the current account deficit — a broad measure of U.S. global trade and investment — and, two, the federal budget deficit. Experts don’t expect either to narrow significantly anytime soon, so in the long term, the dollar could very well keep falling.

What is your forecast for the dollar in the remainder of 2008?

There are many reasons why we could end 2008 with the dollar at a higher value than today. The U.S. Federal Reserve has made it clear that it wants to be ‘ahead of the curve,’ meaning it would rather risk a little inflation than bear the consequences of a recession. Unlike in the recent past, when interest rate cuts weighed on the dollar, new cuts may be viewed by the market as a monetary stimulus and spur investment, help correct housing imbalances and aid in minimizing the effects of a recession.

The dollar trend of the past few years, coupled with a stabilizing to improving equity market, will tend to encourage U.S. dollar demand (investment) as U.S. investments are bargains compared to anytime during the past few years. Higher oil prices (higher inflationary pressures) will tend to increase demand for U.S. currency. The upcoming elections could help the U.S. dollar as policies are re-enacted, amended or abolished. At the end of the day, foreign central banks will not want super-strong currencies, as it tends to diminish demand from the world’s largest consumer market — the United States — for foreign goods, which is needed to boost the rest of the world’s economies. I believe dollar positives will outweigh dollar negatives, and we will end the year with a slightly higher dollar.

How do fluctuations in the dollar’s value affect today’s global economy?

The U.S. has the biggest impact on the global economy and its monetary unit value, and fluctuation has the greatest effect relative to other currencies. The value affects company profits, budgeting and manufacturing costs. It has ramifications on capital investment, plant openings and closings. For example, some companies that have outsourced customer service and call centers to India have returned these centers to the U.S., since the weak dollar has eroded the cost benefits of operating overseas. It all underscores the importance of hedging currency risk to help mitigate variances from companies’ forecasts and plans.

GARY LOE is vice president, foreign exchange at Comerica Bank. Reach him at (800) 318-9062 or gloe@comerica.com.

Friday, 25 April 2008 20:00

In employees we trust

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As president and CEO of FirstRain Inc., Penny Herscher has access to plenty of information. But she can’t use that information as well as her 140 employees on the front lines do, providing research applications for FirstRain’s clients — investment professionals and corporate executives.

“The further you get up the management ladder, the less real information you have,” she says. “You’re dealing with meta-data, not real data. So I’m a big believer in getting information into the employees’ hands and then trusting them to make good decisions.”

Smart Business spoke with Herscher about how to build trust with your employees so that you’re comfortable allowing them to make decisions.

Q. How involved should a CEO be in the company’s day-to-day operations?

It depends on the type of leader that you are. Some leaders are very operational. They recruit strategists to work for them. Then there are other leaders who are strategists who recruit operational people. I’m definitely in the latter category.

I work on four things: strategy, culture, customers and our investors. I’m not very involved in the day-to-day schedule planning or resource planning of the company. I’ll review it with the senior members of my staff, but I don’t roll up my sleeves and develop product plans.

Q. How do you set those priorities?

I’ve been a CEO for 11 years now. Early on, it was a struggle to figure out what my job was because, as CEO, you can work on anything at any point in time.

During the first four to five years of being a CEO, I thought about where I was effective, where I was helpful. It developed over time as I looked at what I naturally gravitate to, what I was good at and what my team wanted me to work on.

I’m not necessarily as good at some of the operational things. So I’ve learned to hire people who are complementary to me.

Q. How do you build a complementary management team?

It’s important to value diversity right upfront when you’re building a team. The easy part is doing the breakdown of what skills you need to hire — the technical skills, finance skills or sales skills.

Then there’s a challenge for any leader to consciously look for diversity in the team. By diversity, I mean not just the traditional — gender and race — but also thinking styles and decision-making styles.

Q. What is the benefit of a diverse team?

If you get a very diverse group of people in the room with open communication and trust, you can make complex decisions very quickly because many different viewpoints get brought in to the decision-making process. You’re able to look all around a problem or all around a decision.

Then if you have a high degree of trust, everybody puts their opinions on the table. You can consider all the opinions and make a decision.

I like to build a team that is very diverse, where the personalities are different, and sometimes, it’s a little challenging to get the team to gel if they’re all very different. But if you put the effort into building the culture so the team trusts each other and not tolerating politics in any way, then you get the benefits of the diversity.

Q. What are the keys to leading a diverse team and organization?

One is building an open culture with open communication. Another is hiring great people. I have a lot of focus on the quality of management — the quality of my team and the quality of the people who work for my team.

As a result, I build a culture that has open communication and a very high level of trust, two-way trust. I need to trust my employees, and my employees need to trust me.

Q. How do you develop an open culture and two-way trust?

Tell employees the truth, and tell them what they need to know. Trust them to use that information responsibly.

I tell employees, ‘I’m going to tell you the truth, but you need to demonstrate to me that you will use that information responsibly. And if I ever learn that you don’t use the information responsibly, I’ll stop talking.’

It creates a two-way bond of trust. I also believe that reasonable individuals given the same information will make the same decision. It’s very important to give the employees as much information as possible that is pertinent to their jobs.

Q. How do you attract quality employees?

Quality employees attract other quality employees. It starts as you develop the vision for the company and start putting the strategy in place.

It starts with being vigilant about the quality of the first 10 people you hire. Then, as you hire great people, remember A players hire A players, and B players hire B and C players.

HOW TO REACH: FirstRain Inc., (650) 356-9040 or www.firstrain.com