Soul Searcher of the Year
In February, a melancholy memo from Starbucks (NASDAQ:SBUX) CEO Howard Schultz to top management lamented the "dilution" of the experience at the company's stores and the "commoditization" of the Starbucks brand. "I take full responsibility myself, but we desperately need to look into the mirror and realize it's time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience," wrote Schultz, in a rare fit of fast-growth remorse.
The memo's leakage was met with the kind of emotion and analysis generally reserved for State of the Union addresses. First out of the gate were the skeptics ("gotta be phony"), followed by critics ("it's the people/business model/frontline operations, stupid"), concerned investors ("no, no, not the brakes!"), and admiring marketers ("a fiendishly clever PR ploy"). Meanwhile, loyal customers and frustrated baristas shed grateful tears.
Whether Schultz was being shrewd, sincere, or both remains debatable, as does the value proposition of nostalgia to an $8 billion company with 13,000 stores worldwide. What is remarkable about the memo is its reexamination of the company's direction in relation to its founding values. Schultz's memo nudged leaders everywhere not to argue with success (get real) but to engage it in a friendly discussion about what it really means. Has your definition of success changed with its achievement? Are you OK with that?
Blogger of the Year
It seems a sure bet that history will not remember Marc Andreessen for his writing. That's a shame. The engineer-savant who co-founded Netscape and who sold his second company, Opsware, earlier this year for $1.6 billion is the curator of the best entrepreneur's blog we've seen. Part personal service, part financial advice, and part entrepreneurial philosophy, Blog.Pmarca.com is a refreshing break from a universe of online journals written by self-satisfied venture capitalists, self-promoting marketers, and blowhards of all stripes. Pmarca is all the more interesting because Andreessen writes from deep in the weeds of his latest effort--a social networking start-up called Ning, which raised $44 million from venture capitalists several months ago. For entrepreneurs who haven't been as lucky with investors, Andreessen's advice is characteristically encouraging, insightful, and funny. "One 'no' doesn't mean anything--the VC could just be having a bad day," he writes. "Or she had a bad experience with another company in your category, or she had a bad experience with another company with a similar name, or she had a bad experience with another founder who kind of looks like you, or her Mercedes SLR McLaren's engine could have blown up on the freeway that morning--it could be anything. Go meet with more VCs."
Exit Strategist of the Year
Mary and Gary West are probably the richest American couple you've never heard of--and they did it the new-fashioned way. They took their company public, got rich, then took it private again and got richer still. The couple's business, West Corporation, provides large corporations with a variety of services--call centers, teleconferencing, even bill collection--and also runs the technology backbone for the national 911 system. In 2006, the company's top line exceeded $1.8 billion, up from $317 million in 1996, the year of its initial public offering. Timing the private equity bubble adeptly, the Wests closed a deal at the end of 2006 whereby two large funds bought up 66 percent of West Corporation, taking it private. For the founders, it was quite a payday: $1.45 billion plus 23 percent of the company. So how are the Wests spending their newly liquid fortune? First, they plan on funding start-ups in their hometown of Omaha, starting with a payment-processing company called Planet Group, in which the couple recently invested an undisclosed sum. Meanwhile, the Wests continue to indulge their passion for horseracing. Though their Kentucky Derby mounts have run poorly to date, they own several fine horses, including High Limit, Dollar Bill, and a 1999 stakes winner named, yes, Entrepreneur.
Upstart of the Year
When Whirlpool (NYSE:WHR) announced in May 2006 that it would shut down its Maytag division in Newton, Iowa, it offered transfers to a select group of employees. Twenty-year veteran Jordan Bruntz, the manager of the 90-person division, turned down the offer. He wanted to stay in Newton.
An idea sprouted. Bruntz started attending classes on entrepreneurship, and last December he gathered his seven top managers and asked them to be co-owners in a company he was starting. It would be based in Newton, would be called Springboard Engineering, and would do just what their division had done before-- industrial design and engineering. The managers agreed, and the notion gained quick support from the other Maytag employees.
Bruntz is starting a company that can thrive in Newton: Corporations are outsourcing extra design and engineering work instead of adding to their head count, and an American company full of trained engineers should be attractive. Bruntz talked the town into offering him tax rebates, then got the state of Iowa to give him both grants and zero-interest loans. (He also financed Springboard with bank loans and cash from each new owner.) He bought a large amount of used equipment from his bosses at Whirlpool and spent $600,000 on a former Kmart for his new headquarters. Fifty onetime Maytag employees will have jobs at Springboard. The new company opens its doors January 7, two weeks after Maytag's Newton office closes for good, and Bruntz has already talked both John Deere and Whirlpool itself into becoming clients.
Do-Good Capitalist of the Year
WaterHealth International sells water filtration centers to rural villages in India. A village's water supply is piped into a center (about the size of a typical suburban garage), filtered, then subjected to a UV device that knocks out the DNA of the pathogens that cause waterborne disease. Villagers can tap a clean-water tank for about a penny per six liters. The entire process is 6,000 times more energy efficient than boiling water.
The brilliance of this technology, however (it was invented by Ashok Gadgil, an Indian-born physicist who is now WaterHealth's head of scientific affairs), is not why investors have backed WaterHealth to the tune of $22 million. The key to that was a revamped business model courtesy of CEO Tralance Addy.
WaterHealth's early attempts faltered because it tried to sell a device rather than a service, says Addy, who joined the Irvine, California, company in 2004 after his venture firm invested $2 million in it. But Addy, a native of Ghana who had grown up standing in line at the water pump in Accra, knew there was a market for clean water.
Under the new approach, Addy partnered with NGOs to educate villagers about the importance of clean water. He built a network of local professionals to service and maintain the equipment. Then he set up a financing structure so that communities that were able to cobble together a 30 percent to 40 percent down payment for a $65,000 unit could pay off the rest in a loan arranged by WaterHealth. By making clean water affordable to families that earn just $2 a day, the company will soon become profitable.
In late September, the company scored $30 million in loan guarantees from Dow Chemical (also one of its investors); the money will make possible 2,000 more centers over the next couple of years.
Perspective Provider of the Year
The word tough is thrown around in business all the time: a tough negotiator, a tough adversary. The word gets overused, so when someone like Dawn Halfaker comes on the scene, you want to stop and say: No, she really is tough.
By now, Halfaker has told the story of June 19, 2004, hundreds of times. She was three years out of West Point, working as a military police officer in Baquba, Iraq, and was on a nighttime patrol. "I was in the first vehicle of the patrol and came around the corner," she says, "and started taking fire and took an RPG, a rocket-propelled grenade, through the front of our vehicle. It tore down the side, and tore off one of my squad leaders' arms, and also tore off most of my arm, my shoulder, and did a lot of other damage as well." Halfaker spent 12 arduous months at Walter Reed hospital. She was released in July 2005. She'd assumed her future would be in the military. Now it couldn't be; she couldn't be a soldier without an arm. So: tough. She'd have to find something else to do.
Halfaker began consulting on security projects, and in 2006 incorporated Halfaker & Associates. The pressure of hiring employees, assembling bids for government contracts, and doing most of the actual consulting work was tremendous, but Halfaker was determined not to let the stress show. The employees "just knew they would show up and get paid, and that's all they should be worried about, I think," she says. "It's a very similar model to being in the military. I wasn't always on every mission; I wasn't always with my soldiers; but if I made sure they were fed, happy, well trained, and had the resources to be able to survive combat, then I was doing my job and providing leadership."
Halfaker has 50 employees and expects 2007 revenue to reach $1.4 million; she wants to double the head count and reach $4 million in sales in 2008. Starting next month, she'll expand into the civilian world, selling industrial and physical- security services. You want to tell her that sounds like a tough transition. Then you remember whom you're talking to.
Crusader of the Year
At 43, Dom Meffe Jr. has lived the life of several entrepreneurs--he owned (with his father) 13 Chuck E. Cheese's before turning 30, then ran the Weight-Rite golf-shoe company, then started a pharmacy-claims-processing company, then started a specialty pharmaceutical company. He sold that last company, CuraScripts, for $333 million in 2004, then ran it as a division of its parent company until revenue approached $4 billion.
So what next? Meffe's personal life had been rattled by cancer. His sister had died from a brain tumor, his wife had had a tumor removed, and he had been treated for testicular cancer. When some private equity people he'd worked with approached him about running a company that would work on cancer-diagnosis tools, Meffe jumped. He joined Triad Isotopes as CEO in late 2006.
The company makes nuclear pharmaceuticals, radioactive materials that help with diagnoses and treatments. One highly simplified example: If a doctor can't determine where a patient's infection is coming from, he can send the patient's blood to one of Triad's pharmacies, where pharmacists will tag the white blood cells with a gamma-emitting isotope. The doctor reinjects the treated blood into the body and later takes a photograph with a gamma camera. Because white blood cells attack infections, the gamma camera will pick up where those treated white blood cells have headed: to the kidneys, the liver, wherever, and the source of the infection is revealed. Meffe estimates Triad products will treat 900,000 patients this year.
Meffe's strategy with Triad has been to acquire existing companies, which has led his little Orlando start-up to $120 million in revenue in its first full year. You might think all his experience would make this a breeze, but no. "I'm a lot more experienced now," he says. "Some of the other companies I ran, I wasn't aware of the things we were doing right or aware of the things we needed to do. Now I know, and if I don't get it done, it's frustrating. There's so much to do. So much more to do."
Wunderkind of the Year (Again)
When it comes to Facebook's relationship status, things have been complicated. After rebuffing a billion-dollar buyout offer from Yahoo in 2006, the company's founder, Mark Zuckerberg, was derided as arrogant and greedy. In 2007, though, he opened the doors of the social network to outside software developers, unleashing a tsunami of new applications and media chatter, and this time it was love.
Love or hate him, Zuckerberg has done a remarkable job of turning a dorm room hacker's project into a business juggernaut and himself into the Web 2.0 poster boy. But Zuckerberg understands the "social graph"--his term for the personal connections Facebook seeks to make use of--because he thrives there in real life. He makes and keeps friends. He seeks and takes good advice. He listens to his staff. The whiteboard geek, who talks a bit like a robot, has earned the affection and respect of a stunning array of VIPs, only some of whom stand to profit from his success. As for the big wave-off, it now looks prescient: When Microsoft (NASDAQ:MSFT) bought a small piece of Facebook in October, the company's value was established at $15 billion.