Harvard Business School Working Knowledg e Archive

African American Student Union Conference 2000 - High Technology

2/29/2000
Lightning speed, rigorous innovation, and "ruthless commitment to the customer" were the watchwords for a group of African-American Internet entrepreneurs discussing "Catching and Riding the World Wide Web" at the AASU conference. The five panelists spoke candidly about their own experiences in the cyber age, from arriving at the right idea to attracting venture capital and maintaining some semblance of a personal life in the midst of enormous flux. Said one participant, "There is no difference in the Internet business model other than time." And there is almost none of that.

AASU Conference

Internet startups may be flush with money, but that elusive element called Time for calm consideration of a business plan, and even for attending to a personal life is forever in short supply, according to African-American participants at a jam-packed panel discussion on innovating in the Web.

In a frank discussion of experiences in the cyber age, including obstacles in dealing with venture capital investors as well as those confronting African Americans, moderator Jaja Jackson, MBA '99, was joined by five guests. All panelists had either just started a Web business or were poised to do so.

"Working in the Web requires even stronger business fundamentals," said Jackson, a co-founder of the student-life portal Mascot Networks, Inc. "With the current speed of decision making, it's very easy to make mistakes," he said. "And along with speed comes a magnified impact of bad decisions. There's no time to catch up."

When the panelists were asked to name two mistakes they had made in their startup phase, George Clayton Fatheree III, co-founder of govWorks, a site for linking governments and constituents, answered immediately, "Being afraid to take bigger risks.

"It's important to realize you're grabbing low-hanging fruit. Little wins build on little wins only if you have constant momentum."

John ClendeninAdded John Clendenin, an HBS senior lecturer currently on leave while starting a business-to-business portal, "Our first mistake was getting mesmerized by the model. Think out and use your MBA skills to figure out if there is really a market. It's better not to head quickly in the wrong direction."

One of his early mistakes, said Jason Thomas, an engineer who runs a business-to-business tool called Cyveillance, had been in listening to and following every word his VCs told him.

Personnel problems hiring and retaining the right people while coping with rapid growth -- were other factors to be reckoned with, all agreed. "Four and half months into development I had to change my management team at the moment when I needed everyone to come together," lamented Daryl Hubbard, leader of a business-to-business product called Internet Exchange. "In the excitement of having a great idea you want to quickly bring others on board."

"Next week they go to somebody else," Clendenin said. "You'll be going around in circles." By setting up far from Silicon Valley in the relatively untapped city of St. Louis, Mo., he said, he can establish his company while benefiting from a community-based way to grow.

Innovation is also essential for survival as well as for acquiring initial capital. "If you're trying to do the same thing that everyone else is doing, you're always going to be behind," noted Clendenin. "On the other hand, VCs will be impressed by the hype. We all know better. Don't jump on the bandwagon as ME TOO. If you read in the paper about the hot new stock, it's too late.

"And beware of technology," Thomas cautioned. "There are a lot of buzzwords out there, but the technology doesn't make the company: what works is the idea and what it does for people. These are [just] buzzwords to help you get money. Ideas succeed based on the people who are there at the companies.

Concurrent with innovation, the group addressed the spectrum of challenges they all faced in the short term.

The biggest challenge, said Clendenin, is ruthless commitment to the customer. Who are they, and what do they want? "If you understand your customer, make sure you're in bed with the right customer," he advised. "Many entrepreneurs think their customer is the VC."

As for obstacles in high tech for people of color, the panel offered a variety of opinions. Fatheree said he has met few if any obstacles. Thomas pointed out that he faces the same challenges he would face in a non-internet company. "The only challenge is that they also expect you to be technically competent," he said.

Panel moderator Jackson noted, "You may have a younger network than some of your peers. One issue that will confront you all is the ability to raise the early capital. If your friends and family don't have the capacity to fund you, then look left and right: There is a lot of capital two, three and four degrees away from you.

"Confront other networks and make yourself available to that capital."

Clendenin described his own experiences advising friends in setting up companies -- who were then not willing, he said, to return the favor. "You need an inner network of people who can support you," he told the group. "I know it's hard for us to collect the money, and it's hard for us to get the money. To pretend that isn't so is dishonest. I don't know what the answer is long-term, but until some of you start your own funds and get in the space, with our own people in VC and on boards, then it's not yet a good space."

Hubbard said his own tack has been to focus on the deal at hand. "When I do business I don't go around thinking 'What are they thinking?'" he said. "When I come to the table I'm going to come strong, knowing I have the best solution, knowing I play ball even better. Compete mainstream, not as an ethnic player."

Starting a business, panelists noted, has had a tremendous impact of their personal lives. They agreed that for the most part their startups are their personal lives. And there was no such thing as weekends. According to Fatheree, "If I didn't hire my friends I'd never see them."

Hubbard added, "The difference between an entrepreneur and a manager is guts. If you believe in something you've got to put it all on the line. I'm working 18-hour days. I sold my house, I sold my car, I'm going for broke."

Thomas, meanwhile, has moved back in with his parents in order to conserve money. "You're going to working all the time, and when you're not working you're doing to be admonishing yourself for not working," he said.

Clendenin, who said he hunkered down in a cottage in the Adirondack mountains for several months in order to prepare his start-up, asserted that any number of travails are nevertheless well worth the adventure of a startup.

"When Christopher Columbus was trying to get money from Isabella to go to the New World, it was an entrepreneur trying to raise VC."