Wednesday, February 22, 2012
SDSU alums Tom Leahy and Kim Folsom find success in a tough economy.
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Building a start-up company is a lot like owning a sports car. It’s exciting at first, but the hefty maintenance costs—whether insurance and premium fuel or long hours and high risk—diminish the appeal for some owners.
Others, however, discover an inner entrepreneur who really, really loves sports cars. They relish the risks and rewards of a new venture.
Count Kim Folsom among the sports car aficionados; in fact, the analogy is hers.
Folsom, a 1990 College of Business graduate, has started four successful businesses during a 25-year career in San Diego. Currently, she is CEO of ShowUhow, a company that develops informational and instructional videos downloadable onto smart phones with the swipe of a Quick Response (QR) code or product bar code.
The ShowUhow solution is catching on fast since its 2009 launch. Folsom’s company currently contracts with 22 industry leaders, including Panasonic, Olympus and Seagate. They’ve produced more than 1,500 videos—viewed by more than three million consumers—for products ranging from baby cribs to home theatre equipment.
Hotbed for startups
While San Diego felt recession’s sting sharply in its real estate and labor markets, it has remained a hotbed for startups, third only to the Silicon Valley and Boston area.
Nikhil Varaiya, an SDSU professor of finance and director of graduate programs in the College of Business, said the San Diego region continues to support start-up activity, particularly in technology-related areas such as software, mobile phone technology, and biotechnology.
“This may be due to the presence of companies such as QUALCOMM; research institutes such as Scripps, Salk, and Burnham; and a pool of workers who have technology training from SDSU and UCSD,” he said.
Folsom’s startups are examples of this trend—a series of successful companies that utilize video technology to help businesses operate more efficiently. Previously, she held senior management positions for several banks, Advanta Mortgage Corporation, Alltel Communications and the law firm of Luce, Forward, Hamilton and Scripps.
Folsom also served on the board of directors for SDSU’s Entrepreneurial Management Center and is currently on the Dean’s Advisory Board for the College of Business.
Her current company links manufacturers and customers by creating a direct means of communication between them.
“If a picture is worth a thousand words, a video is worth a billion,” said Folsom at ShowUhow’s Kearny Mesa headquarters, where she leads a team of 50.
After downloading the free ShowUhow application, shoppers swipe the product QR code and watch a video that helps them decide if the item fits their needs. Another video demonstrates how to set up the product at home.
A broader audience
Smart phone technology, the Internet and social marketing have completely transformed the way companies do business today, said Ruprecht von Buttlar, director of business creation and development at CONNECT, a San Diego-based nonprofit that links investors and entrepreneurs specializing in technology and life sciences.
Not only have these advances created new products to sell, they has also revolutionized marketing by allowing people to target their ideal customers, he said. “You can reach a broader audience, and also narrow your focus. [The Internet] has shrunk the world community.”
What has also shrunk, however, is traditional venture capital for start-ups.
“In 2000, you could say you’ve got a dot-com and you need money, and have no business model, and still get funded,” said Bernhard Schroeder, director of programs at SDSU’s Entrepreneurial Management Center. “It was absolute insanity. Now you had better have a real business model, and it had better make sense.”
Folsom agrees that there are fewer venture capitalists in the San Diego region now than in 2000. And they are far more cautious. She is fortunate to have established strong relationships with investors from her days as CEO of SeminarSource.com and Momentum Solutions. Because she had a proven track record of success, finding investors was less challenging than it is for most startups today.
New kid on the block
On the downside, the tough economy has tightened funding sources, but on the upside, it might just be one of the fundamental factors sustaining entrepreneurship in San Diego.
“In 2008 we had this rapid economic decline, and a lot of people decided to realize their lifetime dreams of starting a business,” said von Buttlar. “Entrepreneurs are getting younger and smarter. If people don’t find employment, they put on their thinking caps and start their own companies.”
2002 alumnus Tom Leahy had a thriving career at Gallo Wines when he, Blake Petty, ’04, and other friends decided to start ONEHOPE Wine, a retail business that donates half of its profits to charitable causes.
The company, which launched in 2007, partnered with winemaker Robert Mondavi Jr. to create unique wines for its brand. ONEHOPE bottles the wines with spiffy labels that support the battles against breast cancer, autism and AIDS, among other causes.
Starting a business in the midst of a recession bucks conventional wisdom, but then again, so does everything about this socially entrepreneurial endeavor.
“We didn’t want to wait until we were established in business to become philanthropists,” Leahy said. “Our founders wanted to play a role in the community and make the world a better place now.”
They are doing just that. ONEHOPE sales have risen from 1,000 cases of wine in the company’s first year to 35,000 in 2011, and the brand has donated more than $700,000 to charity.
There’s no question that social entrepreneurship is trending, said Martina Musteen, associate professor of management at SDSU. First, large corporations began to embrace social responsibility; then media outlets picked up on the shift, she said.
“Nonprofits have been around for a long time,” Musteen noted. “What’s new is the growing number of for-profit companies using business methods to address social problems.”
Musteen, whose focus is on international entrepreneurship, has joined with four other College of Business faculty members to create the International Social Entrepreneurship Initiative at SDSU. They cooperate in research endeavors, look for ways to engage students and are moving forward to strengthen ties to the Entrepreneurial Management Center.
In her classes, Musteen encounters students with highly developed social consciences. Several of them moved abroad after graduation to work with nonprofits in Africa and South America.
“This generation seems acutely aware of suffering in the world,” Musteen said. “It may be challenging for them to find a balance between the social and economic missions of their companies.”
A more immediate challenge to young entrepreneurs is the battle to survive in dire economic times. But ONEHOPE Wine’s Leahy said volatile markets can produce tougher, more resilient startups.
“Normal funding like banks and venture capital didn’t exist for us, so we had to get creative and find private investors,” he said. “We don’t have outstanding loans, we’re not leveraged, and that’s all positive.”
Moreover, Leahy was able to negotiate better deals on everything from office space to supplies and hire from a larger talent pool. “If times were better, talented people would not have problems finding work,” he acknowledged.
Like Folsom’s ShowUhow, Leahy’s ONEHOPE leverages technology to build market support. The company employs staff to run its Facebook and Twitter accounts and to blog nearly 24/7. At last count, ONEHOPE Wine had 45,000 fans on Facebook.
“Wine itself is social,” Leahy observed. “Our fans on Facebook are passionate about wine and our causes, so social media is a perfect platform for us.” As a result, ONEHOPE Wine has doubled its Internet business in just the last year. Now 20 percent of sales are completed online.
The SDSU difference
Both Folsom and Leahy credit their time at SDSU—in and out of the classroom—with helping hone their entrepreneurial skills. “I’ve always had the passion to be an entrepreneur,” Folsom said. “I credit my professors for helping me develop problem-solving skills.”
Today, SDSU management majors can specialize in entrepreneurship, and any student can take advantage of the internships, guest lectures and business plan competitions offered by the Entrepreneurial Management Center. One young woman consulted the EMC for help in creating a startup even before graduation.
Jenny Amaraneni, inspired by one of Musteen’s classes, recently co-founded SOLO Eyewear with fellow Aztecs Craig Stern and Dana Holiday. For every pair of sunglasses sold, SOLO Eyewear donates a pair of prescription eyeglasses or funds eye surgeries for those in need.
It’s just a beginning, but Kim Folsom might recognize another sports car enthusiast in the making.
|Story Keywords: || 360, Business Administration, University Relations and Development, Alumni, College Area, Community, Faculty, Staff, Students, Entrepreneurship, Marketing, Technology, California, Management, Engaging the Region, Leadership Starts Here, People|blog comments powered by
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