After my previous posts on Tuck alums who are successful venture capitalists, this post takes a look at the other side of the table, and showcases a Tuck alum who took the leap of faith to become an entrepreneur and has been very successful in his endeavors. As part of this blog series, I plan to introduce Tuckies who have done myriad things in myriad ways, but it all had to begin somewhere. Hence, the focus, at the outset, has been on more familiar territory of venture capital, private equity, and entrepreneurship. Keep those comments and feedback coming.
Michael Stern T’79 – Founder, Premier Retail Networks
Michael is upfront about one thing: he is not your textbook Tuckie, in the sense he is one of the few who pursued marketing in an era when most Tuckies gravitated toward finance, making him an anomaly at the time. That said, he is very much a textbook Tuckie in terms of approachability. His affable smile is enough to reassure you that you’re going to have a pleasant chat with him. And his sense of humor further accentuates the relaxed conversation you’re having. That my discussions with him over the past few years have changed neither in nature nor in tenor is evidence enough.
Michael and I had first met over coffee back in 2009, while I was in Paris for my exchange program. His advice to me about how I should navigate my career came at the most opportune time, just as I kicked-off the second year at Tuck while at HEC Paris. That honest conversation, followed by a few more, reinforced my decision to do what I’m doing today, namely, private equity in the emerging markets. Needless to say, we’ve been in touch since then and I still look him up from time to time not only for advice, but also for much-needed morale boost!
Michael grew up in an entrepreneurial family. Dinner table conversations with his parents and siblings included stories of how his father overcame challenges in the course of managing his business. In that sense, the entrepreneurial spirit was always there. Still, he didn’t want to miss out on the “big company” experience. Thus, this English major who earned a Masters’ degree in City Planning at Boston University and an MBA from Tuck went to work for Clorox, the FMCG giant, in Silicon Valley. It was very clear to him that he didn’t really fit into the culture that pervaded the company; still, he spent a good two years at Clorox and then, in his own words, “ran away from there!”
After leaving Clorox, the entrepreneurial bug inevitably got the better of him. What better place to start a business than in the heart of Silicon Valley, in San Francisco? True to the ‘anomalous’ moniker he gave himself, Michael started a business in San Francisco that had nothing to do with technology. It was a restaurant called Sour Dough Puff Company which was modeled as a fast food chain. 8 years and 200 franchises later, Michael sold the entire company to a franchisee from the East Coast for a nice valuation. This success, which most others would tout loudly, he simply characterizes as a “great experience.”
If it wasn’t fully clear to him until then, it was crystal clear now: the last thing he wanted to do, was to work in big business. He was a builder, someone who brought people together, inspiring them to be a part of something greater than what they had been working on thus far. It’s this clarity that I’ll hark back to, as we go along Michael’s story.
MTV had just started, and people watched music videos at home. They would then head to retail stores to buy albums. Michael hit upon the concept that he would use free content, which people could access while they were in the stores, allowing them to make their decision to buy music videos on the fly, after watching/hearing a snippet. More generally stated, the idea was to give people information while they were in a store that made them want to buy things.
This germ of an idea started what is today, Premier Retail Networks (PRN). Have you been to a Target or Wal-Mart or Best Buy and noticed TVs (Wal-Mart TV for instance) giving all kinds of information about various products? That’s PRN for you – it pioneered the concept of having TVs within stores that display product details for customer benefit with all of the programming being customized based on store location and customer demographics. What began as a focus on music in retail stores turned into sharing product information with customers while they are shopping in the store. PRN started selling advertising on these in-store TVs to targeted customers while they are heading to the point-of-sale. PRN grew to reach 97% of the US market at retailers such as Sams Club, Wal-Mart, Best Buy, Costco, Sears, and at restaurants such as Chili’s and Applebees. PRN was ubiquitous and at the time was present in 8000 stores across the country and employed 300 people.
You’d be accurate to say Michael is a very self-aware leader. His philosophy is “you don’t need to be the boss as long as you reach the goal.” He was the founder of PRN, but didn’t let his position in the company color his vision of how the company should be run. As PRN continued to grow, he realized he needed to bring a CEO who can help scale up the operations and that’s exactly what he did. As an aside, that’s a very refreshing thought to me as an investor since I can point to so many companies that have not been able to realize their true potential (or worse, ended up as failures) since the founder thought she/he knew best.
In 2005, Thomson SA of France (you may recognize its current name, Technicolor SA) came knocking on the door saying it was interested in acquiring 100% of PRN. Michael weighed his options. He decided it was time to sell and make it a worthwhile endeavor to all the employees. Needless to say, 300 very happy people went home the day the deal closed. Michael could have retired instantly but was requested by Thomson to be a consultant for them and oversee PRN’s expansion in Europe. Michael and his family moved to Paris and he set about the task of replicating the business model in Europe, Mexico, and South America.
He says very matter-of-factly that the efforts in Europe didn’t meet the same success as what PRN was able to accomplish in the US. The speed with which things happened was also a disappointment. Overall, the European foray was not so successful. The fact that the $6B parent company was less willing to take risks didn’t help either. Four years ago, Michael severed ties with Thomson amicably but continued to be based in Paris. Since his three children are now in college in the US, Michael and his wife Denise moved back to Bay Area in October 2012 in order to be closer to their children (at least in terms of being in the same country).
Michael insists he is in no hurry to get back to doing something. He wants to savor life after having worked hard for all these years. He is passionate about the environment and sustainability; he is ever-willing to give his input to entrepreneurs to help their companies grow – he says humbly, “I’ve made so many mistakes in business, I can offer ready learning to people based on my experiences.” He adds, “I’m having a lot of fun and I intend to continue doing so.” True to his word, Denise and Michael are in the middle of their vacation in Australia as I type. Last month, the entire family got together to ski at Squaw Valley during Christmas vacation. Later this year, they’re planning to visit India as well. I, for one, can’t wait to see him right here in Mumbai!
Speaking of skiing, Michael and Denise go on ski trips regularly with his classmates at Tuck. He cherishes the relationships he has forged during his two years at Tuck and has continued to build on them over the years. Although he wasn’t a regular visitor to Tuck when he was busy with PRN, he now visits the school annually to speak to students taking the entrepreneurship course. He will be back at Tuck in a couple of months as a speaker at the Greener Ventures conference hosted by the school.
He has one piece of advice for prospective applicants to Tuck: “Study for the darn GMAT! It doesn’t matter how good the rest of the application is, if your GMAT score is not good, your application will have difficulty passing muster with the admissions committee.” He follows that up with this: “Once GMAT is no longer a concern, find a way to help the admissions committee cut through the clutter and home in on your application. Make the essays a worthwhile read for those poor people who have to read thousands of essays every season.”
When asked what advice he has for entrepreneurs, he simply says “follow the lighthouse principle.” When I probe further, he explains, “At PRN, we were obsessed with the lighthouse. We steered the company away from rocky shores, but were always fixated on the beacon that would get us home, in this case, the recognition of PRN as a media company – a TV network – leading to an eventual acquisition. Have unflinching focus on what you want to achieve. Have an unshakeable faith in business and combine it with cold analysis of business reality. Dream, but be practical. Expect failures over and over again until you succeed.”
One question still lingers in my mind. As someone who relishes building businesses from scratch, is it not difficult to walk away from the action, having worked so hard to bring them to where they are? He simply says, “You have to treat businesses like businesses and not be emotionally attached to them as you are to your family. They are designed to generate earnings that can be turned liquid at an opportune time.” I was alluding earlier to this clarity of thinking, which is a must-have trait in entrepreneurs. I, for one made my pitch, “Michael, when you start your next venture, please remember to make the first call to me.”
I asked him one final question: how does life in US compare with that in Europe? I was expecting a long answer, but he had this gem to share with me. “Life in the US is much easier to live and much less thrilling.” Given my own experiences of life in US, Europe, and now in South Asia, I couldn’t agree more!