By John Surdyk
MBA 2003
Director, INSITE, UW-Madison
jsurdyk@bus.wisc.edu
608.262.9041
As a management consultant and advisor to technology firms at Stanford Research Institute many years ago, I quickly learned about the important role organizational consultants might play in technology-driven entrepreneurial ventures.
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By Neil Peters-Michaud
BS ’93, MBA ’99
CEO & Founder, Cascade Asset Management
Neil@cascade-assets.com
“It just seems so obvious. Why didn’t I think of it?” Eight years after launching a business, I’ve become very familiar with this reaction. If only it were so easy . . .
Back in 1999, I took the leap into entrepreneurship soon after earning my MBA at the University of Wisconsin-Madison. It wasn’t a leap of faith. Rather, a substantial amount of planning, experience, and education made this a calculated risk my wife and I reasoned was worth quitting all other jobs and leveraging our meager assets nearly to the brink.
What was born was a service that companies are increasingly becoming aware that they need. Cascade Asset Management educates businesses on government requirements for disposing of retired technology equipment such as computers, x-ray machines, monitors, etc, and helps them to dispose of this equipment so that it can either be refurbished or recycled.
Experiencing a Business Need
In my undergraduate days, also at the UW, I found an avocation in environmental work while pursuing a degree in Philosophy and Environmental Studies. After graduation, I took a position at what is now the UW SWAP Shop, a glorified garage sale where old furniture, lab equipment, computers, and even some old animals (with limps) from the Veterinary School are sold off to other agencies and the general public.
As time went on at SWAP, we introduced many changes and eventually turned it into a growing enterprise that returned substantial value back to the University. Although the business was successful, we were finding it more and more difficult to sell certain technology equipment at the weekly public sales, and this waste stream was beginning to grow. I remember watching the weekly dumping of dozens of old monitors and terminals into the back of a packer truck destined for the dump thinking, “this can’t be right. There must be a better use for these.” That was in 1997.
Applying Education
When deciding to return to school for an MBA, I discovered the Entrepreneurship program provided the best fit. In every class, I tried to apply lessons to my particular curiosity in the reuse and recycling of outdated technologies. I discussed the concept with professors and students to gather even more perspectives. My discussions with major technology companies and independent research pointed to several exciting conclusions:
When presented with this information, my wife and I decided by January 1, 1999 to move ahead full force with the business. We just needed a plan, money, and customers.
The Plan
Having a well thought out business plan was essential to the success of our company, both in terms of structure and leverage for financing. The primary elements of our plan were the market opportunities available, our customer base, operating requirements and a financing strategy.
It just so happened that once we decided to move forward with the business, an instructor in the Weinert Center for Entrepreneurship suggested we submit a business plan for some of the competitions springing up across the country. There’s nothing like a deadline from an external source to spark some motivation. Our first plan, with a complete set of five years of Pro Formas, competitive analysis and a service description, was whipped together in a couple of weeks.
A team of students worked with me to improve the plan and to ultimately present it to competitions judged by executives from companies such as Intel, Qualcomm and NASDAQ. The experience helped me refine the plan and gain the confidence to eventually present it to investors at the time of launch. Over the course of four months, the business plan underwent an active evolution that allowed us to successfully raise the necessary funds to start-up Cascade Asset Management and guide us far into the future.
The Money
Having a business plan in place was the first step towards getting the finance we needed. For our business, we needed to secure a large amount of debt with as little equity investment as possible, so that we could keep control of the company. We sought an angel investor and found that in the Weinert Center for Entrepreneurship Ventures Fund, along with three other investors, both state and private. Not only were these investors crucial for financial purposes, but they also served as advisors to help us get on our feet.
When we were making the sell to our investors, it was important to get them all together—they wanted to know they weren’t in it alone and there were others that had confidence in us as well. Our investors wanted to be assured of three things:
Starting this business was definitely doable with little or no money of our own. It was stressful at times, wondering if we would break even. Some of the best advice we got from our investors was that we would need to double our expectations—they were right, our business cost twice as much and took twice as long as we originally expected to become profitable.
The Customers
According to Gartner, an IT consulting company that conducts a wide range of research, two-thirds of fortune 500 companies did not have an IT retirement plan in 2006. Most of them probably don’t know they need one, either. Basically, we had our work cut out for us—we had a large number of customers who needed our services, but didn’t know it yet.
Our customer base has been built upon three factors: connections, cultivation and testimonials.
We started out using the connections we had to get in front of decision makers at several companies. The key link was the contact—we found someone that said “tell them I recommended you talk to them,” and we were in. From that point on, customers took a lot of cultivation and the value of testimonials cannot be overstated. Having a good reputation backed up by positive referrals is the best way to attract new customers.
Although we are an established business now with many long-term customers, 40 percent of our customer base in 2006 was comprised of new customers. To continue to gain new customers, we must stay competitive. We often collaborate with many similar programs in other states, but we are still competitors, hoping to win the bid of those Fortune 100 companies. We try to avoid being seen as a commodity business by focusing on our services and building a relationship with our customers. The best way we are able to do that is by helping them to identify where they can find value in their retired equipment and demonstrating how we can meet those needs.
More than an Idea for Success
Eight years later, our company can be considered successful, and it is still very much growing. We serve over 900 institutional customers, employ 80 individuals, and have experienced an average annual growth rate of over 100% for the past four years. At the same time, we’ve made plenty of mistakes.
Fortunately, we had several things going for us when we started the business. We brought experience in a similar industry to help us address unforeseen issues, we came in at the right time when the market was prime (what I call luck), we had a well defined plan to secure investments and define our strategy, and we executed this strategy through plenty of hard work.
Just as a professional athlete can make their acrobatics seem effortless, entrepreneurs’ business success may appear as obvious solutions to every day problems. I think in both cases, there’s a bit more to it.
Neil Peters-Michaud and his wife Jessica own Cascade Asset Management, an IT Asset Retirement and Recycling Company headquartered in Madison. Neil earned an MBA in Entrepreneurship from UW-Madison in 1999; Jessica has a BS in Rehabilitation Psychology. Neil can be contacted at nmichaud@cascade-assets.com.
by Dean Michael Knetter
At the University of Wisconsin-Madison School of Business, we engage 1 percent of our 36,000 alumni—almost 360 business leaders—on more than two dozen working boards. This not only helps us keep alumni involved with the school, but also strengthens our connection to corporate leaders, both regionally and around the world.
The most traditional of these groups is our Dean’s Advisory Board, which comes to campus twice a year, provides invaluable input on our strategic plan, and helps keep our efforts relevant to the real world of business. While we believe this service is as rewarding for board members as it is valuable for us, we often find that they have an even more fulfilling experience when they join one of our other boards. What’s just as important, from our perspective, is that their involvement helps us keep our curriculum relevant, enhances employment opportunities for our students, and leads to funding of critical projects.
Special Interest Boards
We have created three distinct types of boards to aid our school. Advisory boards seek advice from members on broad issues. Program boards focus on the tangible ways alumni and friends can support particular degree programs. Project boards work on specific issues of importance not tied to a single degree program, such as diversity or leadership.
Some of our strongest program boards are those that work with the specialized tracks making up our MBA, including brand management, applied securities, corporate finance, supply chain management, and real estate. For example, the Executive Advisory Board for our Center for Brand and Product Management is made up of representatives of a wide range of national and international companies, including General Mills, Intuit, Kimberly-Clark, Kraft Foods, and Procter & Gamble, Abbott Vascular (Guidant), ConAgra, Grainger, Johnson & Johnson, and S.C. Johnson.
Board members commit to helping the Center’s students begin successful careers in brand management. They come to campus to share their experience with students through applied learning sessions. They open doors for students seeking summer internship and full-time positions in brand and product management. They arrange site visits to leading companies. They help recruit prospective students, mentor students while they are in the program, and enhance students’ educational experience by getting involved in on-campus activities.
One of the inaugural members of the center’s board was Jeffrey Rotsch, senior vice president of General Mills Inc. and president of its Consumer Foods Sales Division. According to Rotsch, “I agreed to serve on the Center’s advisory board, as did executives from other companies, because we think the Center will play a major role in training the next generation of product managers.”
A key result of this intense board involvement has been in the area of placement. Since the program in brand and product management began, its students have had a 100 percent placement in positions at leading firms. Sixty-eight percent of those graduates accepted full-time job offers from companies represented on the center’s board.
Program boards for the Center for Brand and Product Management and for other career specializations have been particularly valuable in allowing us to develop international study trips, an increasingly important part of our MBA curriculum. This year, for example, three of our MBA career specializations planned separate trips to explore business in China. On these trips, they met with executives of leading firms with China operations, including Procter & Gamble, Citigroup Real Estate, Morgan Stanley, Best Buy, Johnson & Johnson, and Grainger.
Investing Time—and Money
In addition to our formal program boards, we have more loosely connected alumni groups that work on critical topics as members of project boards for the school and the university. A great example of this is the Badger Alumni Capital Network—or BACN, which we inevitably pronounce as “bacon.” BACN was created to enable our alumni and other supporters, acting largely on their own, to help the university convert intellectual property into startup companies.
Historically, the university has produced a relatively low number of startups based on intellectual property, research activity, and patents generated by its faculty. We felt that, by assembling a talented group of alumni from around the world who had an interest in running young companies, we could promote the school, bolster the state economy, and create a new and deeper pool of angel capital.
Phil Mathews, a graduate of our MBA program and a retired partner of BlackRock Financial, has taken the lead on the BACN initiative. He has helped assemble a group of alumni and friends who will act as advisors, connectors, investors, and possibly even full-fledged partners in some exciting new ventures being launched by faculty inventors. BACN brings together people who have a natural affinity for the university and a long-term interest in success. That increases the level of trust between inventors and investors, which is critical to value creation.
In recent months, BACN has investigated ten areas of intellectual property, and it has aided two new companies in their patented work with computer network security and drug testing. According to Mathews, “BACN is an opportunity for alumni to work together and share their expertise for the benefit of the university and themselves.”
An Exchange of Ideas
Board members don’t just help us launch initiatives we think are important. Often, they bring outstanding ideas to us. An example of this is the Accenture Leadership Center.
Among our alumni, we have several retired Accenture partners who felt strongly that leadership should be a critical component of our undergraduate business program. They funded the creation of our Accenture Leadership Center, which provides opportunities for undergraduate students to develop leadership skills outside the classroom, but their support went far beyond financial involvement. For months, these alumni worked with our staff to develop hands-on learning activities for the students. They acted as mentors to students tackling semester-long leadership projects, and they provided a level of involvement to undergraduates that the school never would have been able to offer on its own.
Board members are even assisting with our executive education offerings. For example, each year, we offer a two-day corporate governance program for senior management. Known as the Directors’ Summit, the program attracts corporate board members and institutional investors from around the country. The board members with expertise in this area help us assemble a program featuring speakers with national credentials and high visibility.
In the future, we expect our board members to make significant contributions to another key area: creating a business school that reflects the diversity our graduates will experience in the workplace. Based on what has and hasn’t worked to promote diversity in their own companies, board members are helping us further diversify our students, faculty, and staff. A new recruitment plan focused on underrepresented minorities has been developed with the input and support of board members.
I’m an economist by training, so return on investment is ever top of my mind. For that reason, finding new ways to involve alumni in our programs and projects remains a top priority for me. Active, involved boards can provide an extraordinary return to a business school—a return that can be measured in terms of industry knowledge and networking opportunities. The time I spend managing board relations is significant, but the payoff to the business school is enormous.
This article was part of a larger piece on advisory boards that ran in the September/October issue of BizEd magazine.
