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The Quintessential Pacesetter Featured

9:47am EDT July 22, 2002

It’s just about midnight at the Roseman household, and all is quiet as Jack Roseman, 68, rests peacefully amidst the stillness in the dark.

Suddenly an alarm sounds, and Roseman awakens. Anyone else would curse the disturbance before fighting his way back to sleep. Not Roseman. He merely smiles.

It’s only the alarm on his wristwatch, which he sets to go off every night at midnight.

Says Roseman: “It means I’ve lived to see another day.”

So it goes for the man whom doctors said had only one day to live back in 1973. That’s when the pressures of the entrepreneurial workaholic life led to a massive heart attack which basically destroyed half his heart.

Prior to that, this Massachusetts native with an advanced mathematical mind had been working with partner John Godfrey to build Online Systems, a Pittsburgh-based mainframe computer time-sharing company, from a $1 million-revenue operation in 1970 to roughly $35 million in sales before selling out in 1980 to what today is known as Sprint.

But in 1973, after putting in 18 hours a day, seven days a week, overseeing three shifts of workers a day, his world came crashing down. Doctors told him death was imminent.

“In 1973, I said, ‘I have to find a life,” Roseman says, smiling. “When you see death coming, what really pushes you is, ‘What are you doing on earth? What is your mission? What is your purpose? Is it just to exist?’

“My life was to try and make the world this much better. At times it sounds a little arrogant, because who the hell am I to make life better? But to this day, that is my driving force. Now the doctors says that work is keeping me alive.”

With help from quadruple bypass surgery in 1982 — and the money he made over the years as a successful business owner — this high-tech entrepreneur has made educating and mentoring others his mission in life. As an adjunct professor at Carnegie Mellon University’s Graduate School of Industrial Administration, he teaches entrepreneurship in the school’s Donald Jones Center for Entrepreneurship to some of the region’s brightest up-and-coming entrepreneurs. He also is director of the center’s 12-week Entrepreneurial Management Program, a hands-on winter course for active growth-company presidents and CEOs.

He hasn’t given up entrepreneurship entirely. He does invest in, and help lead a number of high-tech ventures, including Actronics, a company near and dear to him as evidenced by the custom license plate — ACTRON — on his Lexus. Then there’s Omega Systems, Stuart Hospital Supply, Cerebellum Software and Mallett Technologies, to name a few.

He also offers management consulting to the select, since, as he puts it, “Unemployed executives don’t ever retire, they just become consultants.” Nonetheless, we’re talking about some serious consulting for those who really want him. At $5,000 a day, he says, companies are more apt to take his advice.

When he’s not teaching or consulting, you’ll more often than not find him sitting at Table 32 at his favorite lunch spot, Caf Sam on Baum Boulevard, in Shadyside. Across from him, you’re liable to find almost anyone sitting there, from a budding entrepreneur or student with lots of questions to a fellow investor contemplating the next Microsoft, or even the president of CMU, who wonders why he keeps hearing of Roseman everywhere he goes.

There, Roseman gives freely and with enthusiasm, perhaps giving the most meaning to his last 27 years.

SBN recently caught up with Roseman at that very table. He reminisced about his entrepreneurial glory days, how times have changed, what to expect as an entrepreneur today and, just as important, why more people should be giving back to the community that helped them succeed. Here’s what he had to say:

SBN: Describe entrepreneurship today.

Roseman: In the old days, I used to give my hand, and that was my bond. Well, the venture capitalists have become extremely greedy.

But don’t blame the VCs — the entrepreneurs are extremely greedy. And don’t blame the entrepreneurs. Now it’s the technical people. In the Silicon Valley, if the stock takes a dip, those guys are going to go across the street where the stock is going up.

It isn’t now a mission about what we’re doing, the love of what we’re doing, what is it that we’re doing. It’s, “How do I make a buck? And right now I’m only worth millions. How do I become a billionaire?”

Is that what’s wrong with entrepreneurship today?

I think it’s the one spot. You know, it’s hard not to be greedy if you’re involved in the Internet business. Look at today’s paper and FreeMarkets, for example. They’re going to have a valuation bigger than GM’s. And that hasn’t even opened. The stock isn’t even traded yet. So it could be worth twice that, who knows.

Look at Yahoo!; that’s worth more than GM today. It’s worth more than all of these major corporations now. And most of these Internet companies haven’t shown a darn profit.

So it’s a completely different way of evaluating value, and a lot of people — a lot of VCs and a lot of entrepreneurs — have made billions of dollars. I read a speech the other day by a guy who was talking to entrepreneurs in the Silicon Valley. He says that if you have a good idea, assume money is free. Why? They’ve made so many billions of dollars that it’s Monopoly money. What we’re playing now is with Monopoly money.

That’s a whole world unto itself, and I’m not sure that in terms of personal life, it can screw up people’s heads. A lot of these kids who are doing this are very young, in their 20s.

When you’re in your mid-20s, the chances of making a hundred million or a billion dollars — that can screw up your head. And when you make it, unless you’ve got two feet on the ground, your head’s screwed up. What does money mean to you? That is a concern.

Do you think this whole high-valuation atmosphere can continue in the long term?

I used to make the point that, if you’re looking for money, you have to show positive cash flow, preferably in two years but certainly no more than three years, or who would invest in you? There was one exception in the past, and that was biotech companies that needed billions of dollars. That was a farce. But now, you have another big exception, and that’s the Internet.

You don’t have to show profits anymore, not with the Internet companies. But one day, what you have to see is return on investment. That concept has never disappeared. What the hope is today — and I say instead of price to earnings, I say price to hope — is that, based on the number of clicks, on the number of people looking at your Web site, one day, investors and stockholders are going to say, “Wait a minute. I’ve given you enough time. Now make my tummy feel good that there is a return on investment.” And if there isn’t, you’re going to find a lot of these companies go by the wayside. There’s no question.

For technical people, this is a gold rush. And so what you have to come up with today is a hell of a good idea to put on the Internet, and you won’t have a problem getting money. None.

How do you feel about the prospects for Pittsburgh’s entrepreneurial community?

I really have never been more optimistic about Pittsburgh than I am at the moment, and I’ll tell you why. I get more calls to work with people on starting companies than I’ve ever gotten before. I always got a lot of calls, but now it’s more than I can handle. That’s one.

Two, there are more venture capital funds today in Pittsburgh — I would say double — than there were just a couple of years ago.

Three is government. I have high hopes for this guy Roddey. The reason I have high hopes is I’m taking his word that he’s not a politician, that he’s here to do something to get this thing moving. And I’m assuming he’s smart enough to know that it’s not just Allegheny County, but it’s Western Pennsylvania, and he has to work with the other counties also. And he’s bringing in the Democrats and minorities.

What does it take for entrepreneurs to get good people today?

It has always been my philosophy that money is just a trinket. If you’re an entrepreneur, if you really have your eye on the donut and not on the hole of the donut, if you’re really high on some of these things ... people don’t become extremely rich with salaries and bonuses. They become extremely rich because of stock.

So today, everybody’s taking Economics 101, and they’re talking about how many options they get if they’re going to join you. They take it for granted that you’re going to pay them a competitive salary. But what do they get? Look at FreeMarkets again. The families of the employees couldn’t get enough stock. That’s how much demand there was for the stock.

But I still believe that people don’t work for money. There’s something within the nature of man, the spirit of man, that says we need a vision. We need something more, something we’re willing to give our lives to, and it can’t be just money. Money can be a byproduct, a scorecard. But to say that we’re working just for money somehow doesn’t feed or nurture our souls.

We need something bigger and better. We need a dream. Those entrepreneurs who create that dream can afford to pay a hell of a lot less and can give less stock options. I’m not saying that’s what you should do.

The important thing is to understand that people work for dreams. People work for recognition. People work to get a pat on the back. We don’t give “atta-boys” to enough people. More people give criticisms. It’s just the opposite. If you do the opposite, you really get the best out of people.

All of this is entrepreneurship. It’s really the golden rule. Treat your workers, your associates, your partners as you would want to be treated. I believe that God has kept me alive to give this message.

Define your view of the consummate entrepreneur.

A definition that I saw and happen to buy is that an entrepreneur is not an entrepreneur unless he has started at least three companies. In other words, the entrepreneurs I know and read about tend not to be good managers. They want to go from $0 to $30, $40 or $50 million, and start another company. That’s the fun. Speaking for myself, that’s my fun. Then once it gets too big, it takes away the game I want to play.

Look at entrepreneurship, the beauty behind it. Here’s the part that fascinates me. One day you have

an idea — no money, no people, no resources, no manufacturing, no printing presses, nothing — just an idea. Then one day you have printing presses, manufacturing, sales people, sales, business coming in.

How did this miracle of an idea come into existence? Twenty years ago, Allen and Gates had idea. Now these guys are the richest guys on Earth. How did that happen? All from an idea.

It’s the power of an idea and the transformation to new companies and new jobs and new moneys, all started because of someone’s idea.

Why do you get so excited about that whole notion?

I think it’s almost a miracle, next to life. You have an idea, maybe we ought to have a child. Then you have the miracle of birth. I think there’s a close analogy between the miracle of birth and the miracle of new companies, new entities, new economic things that bring new jobs, wealth and a new life because of an idea.

What kind of person does it take to get it from an idea to a successful company?

Aha! I have a corny saying: “Entrepreneurs are dreamers who do.” The issue is that you can have all kinds of ideas. But if you don’t act on them, they’re worthless, because nothing happens with them. Ideas are only good to the degree that you act. That’s one.

Two, true story — years ago, I was in my recliner watching my granddaughter crawl. She crawled, then all of a sudden she stands up, takes a step and falls. And laughs. She takes another couple of crawls, stands up, tries to take a walk, falls down and laughs. And this goes on.

I’m thinking, boy, we could learn from kids. If she was afraid of failure, to fall on her ass, she to this day would not know how to walk. Not only that, she thought this whole thing of failure, this process, was fun. She laughed at her failure. She thought it was fun.

Most people are programmed by the time they’re adults that we don’t laugh at our failure. Sometimes we deny it. It’s OK to make mistakes. It’s alright. That’s what I try to teach my kids. It’s okay to make mistakes.

The Silicon Valley finds this out because if you have started a company and failed, it’s easier to get the second round of money than someone who’s never started a company. Now that’s a true story. So, two, it’s the acceptance of failure.

Also, what’s wrong with being second? Strive for first, but it’s a game.

Entrepreneurship, to me, in some sense is like making love — hear me out. I still remember, even with how old I am. When I was young, the biggest charge for some was getting the girl in bed. Somehow the anticlimax was the climax. I believe entrepreneurs love the game of getting. It’s the fight, the struggle. It’s the mental game.

Why is it so important for successful entrepreneurs to mentor to others?

Your computer between your ears is the same as mine, so what is it that I can give you? I can give you the benefit of experience. I can give you the benefit of what I’ve seen.

What is the core that I really believe in? That is, from whence you make your money, you owe it. It’s only fair to return some things. I made my money in entrepreneurship. I owe it to society to give back.

When we cut down big trees, we plant seedlings. And so mentoring for me is the planting of seedlings, and I owe it. It has treated me very well, and I owe it. We all should give back and not just think about ourselves.

Why do you spend your time today reaching out to so many business people when you could be out making your next fortune?

Because I love it. I cannot explain why I should have lived another 26 years. Why should I be alive? The only way I can explain it is, I’m on a mission. My mission is to bring out the best in people, so when I die, God will say, “Good job,” not how much money I’ve got, just “Good job.”

Daniel Bates (dbates@sbnnet.com) is editor of SBN.