Two weeks after Flycast's sale to CMGI, Thompson and Braitman flew to Austin for the meeting with Schinnar, which laid the foundation for E*Entity.
For Schinnar, the path to E*Entity lay through the halls of academe, punctuated by occasional forays into consulting. An architect by training -- Schinnar has an M.Arch degree from the State University of New York at Buffalo -- he completed his Ph.D. at Carnegie Mellon University in 1976. That same year he joined the University of Pennsylvania, moving to Wharton in 1983. Schinnar founded and directed the school's Policy Modeling Workshop from 1980 to 1993 -- a research services lab that developed decision support software and data management systems for corporations and government agencies. In 1997 he became the director of the Gruss Public Management Program, which seeks to inculcate sound business principles among public-sector officials.
Although as an academic Schinnar did research on issues such as corporate governance and performance management, he was no armchair theoretician. He participated in founding four international management and trading companies, in addition to consulting for such firms as Mellon Bank, CIGNA, and McKinsey. One assignment involved helping Rosenbluth International open offices in Moscow.
As part of his research on corporate governance, Schinnar earlier this year began studying companies that were in their early, embryonic stage. He visited Silicon Valley and was soon eager to become part of the Internet economy, not just as a researcher but also as a participant. Schinnar spent the summer meeting venture capitalists on celebrated Sand Hill Road in Menlo Park, Calif. On August 12, Robert Coneybeer, who works for New Enterprise Associates, a venture capital firm, told Schinnar about Thompson, who was Coneybeer's MBA classmate.
Schinnar met Thompson that week and spoke to him several times. Thompson introduced Schinnar to Braitman. Schinnar and Braitman met at Braitman's parents' home in Philadelphia during the Jewish holy day of Rosh Hashanah in early September. Soon, Schinnar had decided to take a leave of absence from the university to concentrate on the new venture. They decided to meet in Austin on October 14.
In Austin, it was apparent that as strong-willed people, one of the toughest challenges that Braitman, Schinnar, and Thompson would face would be to work through similarities and differences in their ideas. Schinnar, who had arrived in Texas with a prepared business plan, soon saw his ideas being vigorously debated.
"Academics are used to defining their intellectual turf and then defending it," he says. "When the stakes are minimal, it is easy to fight those battles. But in Austin I met with people who had worked successfully together and were pretty close. Initially, we had to make a strong attempt to synchronize different visions of the business and to fit our personalities to the implementation plan." This process is still going on.
One initial difference in perspectives: Schinnar felt that E*Entity should focus on early venture funding. "When I met with Rick and Larry, it became a much broader discussion of providing support to entrepreneurs in other ways," he says. "They were looking from within the Internet environment to opportunities outside, while I was looking at the situation from the vantage point of my experience in a university."
Another difference was that Schinnar used the term "nurturing" for the services that E*Entity would provide. Thompson and Braitman saw matters differently.
"From our point of view, struggle has some value," says Braitman. "If you coddle or nurture people too much, you may be putting off the inevitable that will sink the company later. It's almost like tough love versus the university perspective, which is to be much more protective. In a university, you don't want people to fail. Well, that's not the real world. People do fail -- and we are interested in early indications of success or failure. They keep score out there in a way they don't in a university."
After that discussion, Braitman, Schinnar, andThompson decided to describe E*Entity as an accelerator, not an incubator.
In these first weeks, Braitman, Schinnar, and Thompson are still debating such issues as they shape their newborn venture. The basic business model, for example, is still being discussed: Should E*Entity own its resources -- such as an advertising agency -- or should it draw on resources as it needs them, creating them just in time? The organizational structure, too, is being defined. "We are looking at an organization with a highly networked approach," says Schinnar. "We want to build a network-based value-amplifying process that is managed by a national alliance of strategic partners. Some activities may be sequential, but others will go on in parallel so that we can help entrepreneurs zip through the process of market entry. This is our concept, but we are struggling with how to implement it."
Another question is where E*Entity should be based. Thompson lives in California, Schinnar in Pennsylvania, and Braitman in New Jersey. Who should live where? Should the company exist virtually, as it were, or should someone move somewhere? "We will figure this out over time because it reflects our families' and personal desires," says Thompson. Yet another debate centers on the company's name. "E*Entity is our stealth name," says Braitman. "The URL was available, and we have registered it. But we are still seeking a good name."
Even as E*Entity seeks to define itself, Braitman, Schinnar, and Thompson are already pursuing deals -- and that may help define the company more specifically than general debates. Says Thompson: "We don't have the leisure to sit back. As we talk about our structure and so forth, we are also doing the things we are talking about. That has been a great strength, because we are structuring our organization while focusing on what our customers want."
Schinnar agrees. "We have opened our door while we try to figure out who and what we are," he says. "Whoever walks in first will have a substantial impact on what we become."
Schinnar emphasizes that a very important featureat the company's current stage is the partners' high tolerance for ambiguity. "Personally, I enjoy ambiguity," he says. "I find structure confining."
Braitman observes that people who find ambiguity appealing and who thrive on it are driving the Internet world. He likens the process of creating E*Entity to climbing a mountain.
"When you start out, you are at sea level, and when you look up the mountain, you don't see much else," he explains. "As you get higher up the mountain, you get a better sense of where you are. You can't necessarily know everything you need to know about the mountain from sea level. But you learn as you climb. You start up a path that may turn out to be wrong, so you turn back. If you wait at the bottom and try to project your way up the mountain, you'll be wrong. You need a general sense of where you want to be, but then keep changing your plan as you go. The best course of action is to first start up the mountain."
For E*Entity, the climb has just begun.
*Note to readers: The founders of E*Entity are eager to getfeedback from inc.com readers about the issues their company faces. Example: Should they call their companyE*Entity or something else? E-mail your suggestions.
See Start-up Saga, Part 2: Unveiling a Mission.
All materials copyright © 1999 of the Wharton School of the University of Pennsylvania.
