July 15, 2024

Case Study: When Your First Company Is Working, but Another Is Beckoning

THE CHALLENGE Founded by Aseem Badshah, Uptown Treehouse creates campaigns employing elements for Facebook, Twitter, LinkedIn, StumbleUpon and Outbrain. It helps companies introduce new products and initiatives and has worked, for example, with both Guess Jeans and the television show “Breaking Bad.”

While building the company, Mr. Badshah and a programmer, Kevin Yu, created software that searches social media and other Web sources to generate sales leads, and that software has taken on a life of its own.

In fact, the lead-generation software was so effective that Mr. Badshah and Mr. Yu created a separate start-up, Socedo, to develop and sell the software. Thus far, however, they remain uncertain as to how to finance the start-up and how to divide their time between the two companies, which are in different cities. They believe Socedo, based in Seattle, could earn much larger profits, but with much greater risk.

THE BACKGROUND Mr. Badshah, 24, graduated from the University of Washington in 2010 with a business degree. He moved to Los Angeles with the idea of starting the marketing agency that became Uptown Treehouse.

As part of the promotional campaign for the agency, Mr. Badshah started looking for ways to find sales leads that might turn into clients. His team created software that scanned social media for words that would identify potential customers. Then they used those words to start a conversation with the target customers through social media channels.

When the Microsoft development team was looking for people to create Windows 8 or Windows phone apps, for example, Mr. Badshah’s software scanned social Web sites and public forums for people who were commenting on mobile application development and let the development team contact them, offering links to Microsoft resources and connecting them to others who could help them develop new applications. Mr. Badshah found this new referral system more effective than cold-calling for customers.

Inspired, he teamed up with Mr. Yu, a former Microsoft engineer he had met during a University of Washington entrepreneurship event, to start Socedo, choosing the name because it was a combination of social and succeed, and because they considered it short and “brandable.”

Over the last year, the programming team has continued to develop the lead-generating software, which is now being tested by some 200 companies — mostly small outfits but also a couple of big names in Mr. Badshah’s Seattle hometown, Zillow and Microsoft.

Thus far, Mr. Badshah said, the testing has indicated that some 20 percent of the sales leads Socedo generates for its clients are of high enough quality for those clients to include them in their sales pipelines. With about 10 percent of the companies indicating they are ready to pay for Socedo on a monthly basis, he now hopes to introduce the software for sale in the next few weeks.

THE OPTIONS Torn between the two ventures, Mr. Badshah has come to a decision point. He could continue building the Uptown Treehouse business and invest all of his time in that. There would be less financial risk because it is up and running and requires less investment in technology, but the company offers a linear growth curve based on the number of customers served and the number of employees that will have to be hired.

Option two is to sell or close Uptown Treehouse and use 100 percent of his time to raise capital to build Socedo. This option would be the riskiest because it is an early technology start-up, but it also offers greater potential rewards because he would be selling a software product, not a customized service.

The third option is to delegate the running of Uptown Treehouse to a general manager and use its profits to finance Socedo. Mr. Badshah would try not to spend much time on Uptown Treehouse but concedes he could be distracted by it.

There would be a risk in tying together the two companies financially because the loss of a client at Uptown Treehouse could affect cash flow at Socedo. Also, there are other software companies with similar ideas, and they may be able to grow faster than the Uptown Treehouse profits would permit Socedo to grow. If those competitors grow faster, they might capture the market first.

Article source: http://www.nytimes.com/2013/05/30/business/smallbusiness/when-your-first-company-is-working-but-you-may-have-a-better-idea.html?partner=rss&emc=rss

The Boss: Translating Your Skills

My parents expected my seven siblings and me to be independent, to learn to take care of ourselves. In third or fourth grade in Germany, I went to an indoor public swimming pool with friends and got lost returning home. The trip required taking two buses. I got on the wrong one for the second leg of the trip and ended up in a bar on the Rhine River. Even though I didn’t speak fluent German, I was able to tell the bartender my name and phone number. Someone called my parents and gave me an ice cream cone while I waited for them to pick me up. Times were different then; it was safer.

When we returned to the United States, we lived in Pennsylvania for a short time, and when I was 14 we moved to North Carolina. In high school, I worked at a local hospital, writing procedure manuals for nurses. I read about everything that went on in a hospital. I knew then that I wanted to go into the business end of health care.

In 1980, after graduating with a business degree from the University of North Carolina, Charlotte, I got a job as a management consultant at what became Cap Gemini Ernst Young. When I was leading a health care business unit there, I was given the chance to move to a middle-market division that had some Internet companies as clients.

Shortly after I accepted the assignment, the dot-com bubble burst. Even so, I set a goal of being the No. 1 division in the company a year later. We got to No. 3. Then I led a high-tech group, followed by an entertainment division. After that, I returned to health care.

I was with the company for more than 20 years and rose to senior health care practice leader. I was nervous about taking some of the positions I did, but I learned that I could handle them. I never wanted to regret that I hadn’t taken risks. The key is to jump in and ask questions. You learn things that you can apply to other jobs.

I joined Premier in 2003 as the president of Premier Purchasing Partners, our supply chain division, and became chief operating officer of our health alliance three years later. In 2009, I was promoted to C.E.O. Premier has an uncommon business model. We’re owned by nonprofit hospitals and health care systems, serving as a group buying organization for them. We receive fees from manufacturers when hospitals buy their medical supplies using our standardized contracts. We also collaborate with our members to improve health care quality and safety, and to lower costs. I like to think we’re a profit-making business with a social mission.

A few years ago, I completed the International Masters for Health Leadership program at McGill University in Montreal. The program required several weekends and full weeks on campus. I was the only American in my class.

During the program, executives and public servants from around the world discussed their individual situations. No matter how different the problems seemed initially, it became obvious that health care systems all over the world are facing similar challenges. No nation has managed to develop a perfect health care model that delivers the best quality at the best price, and every model has trade-offs. Hybrid systems, based on public and private partnerships, are emerging around the globe. 

As told to Patricia R. Olsen.

Article source: http://feeds.nytimes.com/click.phdo?i=2dfb7fa6bf229bb30a0423412436c933