Flying the Coop: TeleSign¢â‚¬â„¢s Incubator Exit T Flying the...

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Transcript of Flying the Coop: TeleSign¢â‚¬â„¢s Incubator Exit T Flying the...

  • SCG-5XX M o nt h D a y , 2 0 X X

    T H O M A S K N A P P

    J A C Q U E L I N E O R R

    Flying the Coop: TeleSign’s Incubator Exit wenty-somethings Ryan Disraeli, Darren Berkovitz, and Stacy Stubblefield hurried around in a cramped office kitchen, taking out their frustrations by sniping at one another. They had just returned from a meeting at Starbucks with a potential client, which they had taken offsite

    under the guise that their conference room was booked with other critical meetings. In reality, they did not have a conference room. They knew that their humble, tiny office would be an obvious giveaway of the company’s limited means and small size. Just as they returned from their meetings, they learned that their office building’s management company would be shutting off the power that evening to perform routine maintenance. As a small technology company housed at an incubator, they used the office kitchen as their server room. If they lost power, their customers would undoubtedly face an outage.

    The three entrepreneurs met at the incubator in 2006, four years prior, when they were all in their early twenties. During their years together, they hustled to eventually begin a company managing online account security. Theirs was a story of product iteration and customer feedback, originating in

    an online backgammon company’s need for order verification for gamblers.

    Equal parts brainstorming session and group meltdown, their bickering in the kitchen paid off. Berkovitz agreed to run to the store before it closed to purchase an uninterruptible power source. When he returned, the three of them installed it on the spot to protect their servers—and therefore their customers.

    The experience left the entrepreneurs exhausted. It was yet another example of why they needed to exit the incubator. However, the

    task seemed overwhelming: they had little money, limited professional experience, and they continually struggled to get potential clients to commit. However, they also knew that staying in the incubator would stifle the company’s potential, which they envisioned as a global, multi-million-dollar enterprise.

    Curious Minds Ryan Disraeli grew up in San Diego, California and never imagined that he would spend his

    undergraduate years at the University of Southern California (USC). “The previous three generations of men in my family went to USC, and they were all dentists. But I didn’t want to be a dentist. I wanted to carve my own path. I have always been passionate about technology and doing something new,” Disraeli shared. Disraeli surprised even himself when he enrolled at USC in 2005, attracted by a combination of scholarships and his desire to stay in California. His first student internship was with

    T

  • SCG-5XX Flying the Coop: TeleSign’s Incubator Exit

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    a large medical insurance company. “I was bored and unimpressed. It became clear to me that I wanted to work in a more entrepreneurial environment. None of my family members really had a history working in large corporations either, so it didn’t seem like a far stretch,” Disraeli recalled. After this experience, Disraeli came across a job posting for a business incubator in Los Angeles called Curious Minds. Disraeli landed an interview with the founder, Sam Gonen. An Israeli-American businessman and entrepreneur, Gonen had founded the incubator with the idea of hiring young people to work on his myriad ideas and turn them into businesses. Disraeli was offered an internship at Curious Minds in early 2006, while he was a sophomore at USC.

    When Disraeli arrived at the incubator, he met the small team of employees, which included some of Gonen’s younger relatives. He quickly started to work with Darren Berkovitz and Stacy Stubblefield, who had both been at Curious Minds for approximately a year, having started their positions on the same day. Gonen originally intended to only hire for one position but could not decide whether to hire Berkovitz or Stubblefield, so he asked them both to join the incubator at its inception. “We showed up to desks in a box that we had to build ourselves. The whole incubator was basically this concept of throwing spaghetti against the wall to see what would stick. We were always working on multiple ideas,” Stubblefield recalled.

    Stubblefield grew up outside of Houston, Texas as an only child. As a young girl, she liked to read Entrepreneur magazine. At the age of 10, she embarked on her first entrepreneurial venture. “It was puppy arbitrage,” Stacy joked. She found puppies that were for sale deep into the suburbs, purchased them, cared for them, and then sold them for a higher price to customers closer to the city. She continued this operation for a year, until she saved enough money for her class field trip to Washington, D.C. In the early 1990s, her father, an entrepreneur himself, bought Stubblefield her first computer. She quickly became fascinated by the internet and taught herself HTML. When she was 12 years old, Stubblefield began to create webpages for businesses. Completely self-taught, she later wrote an unpublished book to teach others how to code. “The neighbor kids would always ask why I didn’t come out to play. But I just wanted to be inside doing stuff on the computer.”

    Stubblefield, attracted by USC’s entrepreneurship program, committed to studying there sight unseen, and quickly declared a business major with an entrepreneurship emphasis. She spent her summers working various jobs, which ranged from waiting tables to assisting a private investigator and working at a law firm.

    Stubblefield recalled, “I hated my job as a waitress. It was then that I knew I wouldn’t be a good employee for someone else. I needed to work for myself. The legal job was uninteresting to me because you were never allowed to question the process, even for minor things like filing protocol. Working for the PI was interesting because I learned a lot about fraud and started to think in a different way.”

    Soon after her graduation, she found an online job posting for Curious Minds. “It sounded like a telemarketing scam, but I went to the interview anyway. At the interview, everything seemed legitimate. It had a low salary, but I could work on starting up companies, so I was excited,” Stubblefield said.

    Professor Thomas Knapp, Associate Professor of Clinical Entrepreneurship and Director of the Master in Entrepreneurship and Innovation Program at USC Marshall, and Case Fellow Jacqueline Orr prepared this case . This case was developed from field research and published sources. Cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data or illustrations of effective or ineffective management. Copyright © 2018 Lloyd Greif Center for Entrepreneurial Studies, Marshall School of Business, University of Southern California. For information about Greif Center cases, please contact us at greifcases@marshall.usc.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted or transmitted without the permission of The Lloyd Greif Center for Entrepreneurial Studies.

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    Berkovitz had a similar path to Curious Minds. Like Disraeli and Stubblefield, he had been drawn to entrepreneurship from an early age. “Even as a kid, I wanted to start my own business. It’s like it was in my DNA. When I was in high school I took an AP Computer Science course and realized it didn’t come naturally to me, but I loved tech. So, I decided that I’d get in on the business side of tech,” he explained. After high school, he wanted to start a business, and attempted to persuade his parents to provide seed funding. His parents were unconvinced, so Berkovitz enrolled at USC, although he, Disraeli, and Stubblefield never crossed paths there. In 2005, he found the same online job posting that caught Stubblefield’s attention. “It was the perfect balance because I wasn’t risking my own money. The salary was low, so I was living at home when I started working there. I had to make sacrifices to make it work, but I learned a ton in the process,” Berkovitz said.

    Berkovitz and Stubblefield had been bouncing between multiple projects when Disraeli arrived as an intern. “The incubator was very focused on doing things rather than pontificating about them. There was a ton of ambiguity, not a lot of structure, and a lot of problems. It was chaotic but exciting,” Berkovitz related. The trio immediately hit it off. “All of us wanted to work together. We had different skill sets but we all got along. The group dynamic was great. If you would take one person out of our group, it wouldn’t work as well. Left alone, Stacy and I would get too negative, like the sky is falling. If it was just me and Darren, we would get too ‘big picture.’ When it was just the two of them, they would start fighting. We’re really lucky that the three of us met when we did,” Disraeli shared.

    Disraeli and Berkovitz agreed that Stubblefield had a pragmatic approach and the strongest technical skills in the group. “She’s probably the smartest person I’ve ever worked with,” Disraeli confided. Disraeli characterized Berkovitz as optimistic, extroverted, and a holistic thinker; he was the most oriented to sales and marketing of the three. Disraeli described himself as product-oriented, always watching where the market was going for various projects. The trio agreed that Disraeli exhibited the most centrist perso