Triangle entrepreneurs’ club offers CEOs safe place to talk shop

dranii@newsobserver.comApril 20, 2013 

  • About the club

    The Entrepreneurs’ Organization is an exclusive club where members must be a founder, co-founder, owner or controlling shareholder of a company that generates more than $1 million in annual revenue. The revenue requirement is waived for entrepreneurs of companies backed by venture capital funding if they’ve raised at least $2 million and have 10 full-time employees. The Triangle chapter, founded in 1998, has 46 members that generate nearly half a billion dollars in sales. EO’s worldwide membership includes more than 8,700 entrepreneurs in 35 countries.

    Website: www.eonetwork.org/

It can be lonely at the top of the organization chart.

That’s why Jud Bowman, the CEO of Appia, a rapidly expanding Durham company that builds and operates app stores, recently signed up to be a member of the Raleigh-Durham chapter of the Entrepreneurs’ Organization.

The organization’s focal point is a monthly forum where small groups of entrepreneurs discuss problems they’re facing and the opportunities they’re striving to seize.

“There are really big issues that we struggle with as CEOs that you can’t talk about with everybody,” Bowman said. “There are some issues that you just can’t talk to your executive team (about), for whatever reason, that you can’t talk to your board of directors” about.

EO’s members, while they come from a variety of different industries, have likely wrestled with similar issues at some point in their careers. And because EO is an exclusive club that puts a premium on confidentiality, its members freely share their experiences and insights.

Members must be a founder, co-founder, owner or controlling shareholder of a company that generates more than $1 million in annual revenue. The revenue requirement is waived for entrepreneurs of companies backed by venture capital funding if they’ve raised at least $2 million and have 10 full-time employees.

The companies that most members run, however, well exceed the minimum requirements. The local chapter, founded in 1998, has 46 members that generate nearly half a billion dollars in sales – $478.8 million, to be precise. That puts the average sales at $10.4 million; median revenue is $5.1 million. Overall, EO’s worldwide membership includes more than 8,700 entrepreneurs in 35 countries.

The membership of the local chapter has nearly doubled since July of 2011.

Among the members are well-known entrepreneurs such as Ryan Allis and Aaron Houghton, founders of email marketing company iContact, which last year was sold for $169 million; Chaz Felix, co-founder and chief operating officer of 162-employee email marketing company Bronto Software; and Jesse Lipson, the founder and former CEO of ShareFile, which was sold to Citrix Systems for $54 million. Lipson is now vice president and general manager of Citrix’s data sharing division.

Other members may not be as well-known but are on the fast track in a variety of industries, including biotechnology, furniture and manufacturing. Its membership even boasts a husband and wife who have carved out their own respective careers: Lipson and Brooks Bell, founder and CEO of an Internet marketing analytics company that bears her name.

“We’re the second-fastest-growing chapter in the world,” said Bell, the membership chair of EO’s local chapter. “The caliber of the members is so high already that it’s very easy to generate interest in joining the group.”

Indeed, a prime magnet for Bowman was that a number of his friends were members.

“They’ve told me they have gotten so much out of it,” he said.

Shared experiences

Typically, the monthly forums include a member making a 20-minute presentation of an issue they’re facing, followed by a discussion.

“The more vulnerability that you share, the better experience you’ll have,” Bell said. “If you only want to look good to everybody all the time, and not share anything that you’re really struggling with, then you probably won’t get the same amazing experience.”

Contrary to what you might expect, one of EO’s mantras is that the participants don’t give advice. Instead, they share their experience when they were confronted with a similar issue.

“It’s a much less judgmental approach,” said Bell.

“Everybody has an opinion and ... that is their opinion, right or wrong,” agreed Jude Tallman, the owner of SPEC On the Job, a Durham company that recruits construction and warehouse workers and commercial drivers for employers nationwide.

But, Tallman added, “when someone tells you what happened in actual circumstances, that is just fact ... you can save yourself a lot of time, money and hand-wringing learning from what they have already done.”

Another mantra is confidentiality. What is discussed during a forum stays in the forum.

That’s doubly important because in addition to discussing sensitive business matters, personal issues are addressed.

“That’s what I really like about the group – that we’re not all these hard-charging CEOs, win at all costs,” said Giles Shih, co-founder and CEO of BioResource International, a Morrisville provider of nutritious food additives for the poultry and swine industry. “I think there’s a lot of sensitivity and caring about families.”

Through EO, Shih added, “I have learned a lot about finding time and finding ways to carve out time for family.”

The usual confidentiality was waived for a recent forum session attended by a reporter.

At that session, held at a conference room at the Sheraton Imperial Hotel in Durham, the seven attendees addressed a real estate dilemma Tallman is facing.

Tallman’s expanding 30-employee company includes eight employees at its headquarters in Durham, where it is about to max out on its space. But Tallman projects that he could add as few as 15 employees or as many as 30 before the end of the year, depending on how fast the business grows, so he’s uncertain about how to move forward.

Should he rent the maximum amount of space he might need, which would mean “wasting money on unused space” if he doesn’t expand as much as he hopes? Or should he go for the minimum, knowing that he may end up deciding in six months that he needs to go and rent still more space?

Practical solutions

Adding to his consternation is that he discussed the issue with a real estate broker who told him that space in downtown Durham – his preferred location – could cost $27 a square foot.

“All of a sudden that starts to get expensive fast,” Tallman told his peers.

After Tallman said he wasn’t locked into Durham, Mort O’Sullivan, CEO of ARCA, a supplier of cash automation equipment, noted: “I’m in Mebane, which is in a different universe in terms of pricing. Class B space is around $3.50 a square foot. ... I’m in semi-Class-A space and I’m paying $7.19 a square foot.”

Tallman asked if recruiting employees would be a problem in Mebane.

“We haven’t had trouble getting people out there,” O’Sullivan said. “We’re pulling from the Burlington/Mebane/Hillsborough demographic, for sure, but we’re also getting people from Raleigh, from Cary, from Apex. So it’s doable.”

O’Sullivan also spoke of how he handled leasing enough space to accommodate his company’s future expansion.

“We took a building that was 45,000 square feet, but we didn’t need 45,000 square feet at the time,” he said. “So I negotiated with the landlord: ‘I’ll take all 45,000, but I only want to pay for 27,000 square feet the first year, 32,000 square feet the second year, 40,000 square feet the third year, and the next year I’ll be paying for all of it.’”

“We did kind of a similar thing,” said Matt Kane, CEO of Precision Biosciences, a Durham biotechnology company. “We locked in the minimum space we needed, and we also got first rights on any of the other space they had in the building.”

Looking to the future

So what would happen if Tallman ended up needing to sublease what turned out to be excess space?

“Let me give you a cautionary tale,” said Matt Zemon, CEO of American Support, a Chapel Hill company that operates call centers for corporate clients.

He said Tallman would need to be prepared for eating rent for six to nine months before finding someone willing to sublease, and that tenant might only agree to pay 70 percent or 75 percent of what Tallman was paying.

“It’s a big pain,” Zemon said.

There was also a discussion about subleasing space for a relatively short amount of time until the dust settles.

“I had a sublet,” Zemon said. “It’s a good deal.”

Afterward, Paige Zinn, a principal at Chapel Hill advertising agency Jennings, commiserated with Tallman.

“I feel for you trying to predict what’s going to happen,” she said. “It’s hard.”

Ranii: 919-829-4877

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