Age Is Never a Barrier to Entrepreneurial Innovation

Published in UT San Diego, April 28, 2014

The average age for a CEO of a venture-backed company in Silicon Valley is 31, according to data from LinkedIn, Crunch Base and The Wall Street Journal. Well, we are here to tell you that revenge of the boomers is lurking. Or said another way, the youngsters can drink all the Kool-Aid they want, but us “old” folks are going to be sipping 18-year-old Scotch.

According to a study conducted by the Ewing Marion Kauffman Foundation, the highest percentage of new entrepreneurs (26.3 percent) in 2012 was in the 45- to 54-year-old age group. The report concludes that a growing number of older people are becoming entrepreneurs because of the “decline of lifetime employment, the experience and knowledge of the age group, longer life span and the effect of the current recession.”

Meet 56-year-old Randy Ozden, who was 45 when he started Vivantech in 2003 with the original goal of managing custom software development and systems integration for small to mid-sized businesses by working with lower-cost software developers in India.

An immigrant from Turkey, Ozden originally came to San Diego to study computer science at San Diego State University. After a career working for large companies overseeing systems integration contracts, he decided to start a business because “I had met some people who had started their own companies and I felt that I had all their qualifications. In addition, I was technical, I had done some programming, and I was a good storyteller who could speak about creating effective solutions at the executive level.”

Ozden and two other individuals provided initial funding of under $100,000. The company was fortunate to get customers quickly and no other outside capital has been needed. Today, the initial investors and the employees own Vivantech.

“The first four years were tough. There were times we didn’t know if we would make it,” Ozden said.

(Neil’s note: So what else is new? Young or old, the near-death experiences of a startup are not age-related.)

The company’s situation was complicated by the lack of industry focus and having to compete against bigger players in the outsourced software arena.

Then came the classic pivot.

(Neil’s note: Even the old guys can turn and make a move to the basket.)

“One of our clients was in higher education, and they asked us to look at Kuali to replace their ERP (enterprise, resource, planning) system starting with their payroll. I thought they were saying they wanted us to build the software and didn’t realize that they were talking about an open-source product that already existed and had been developed for higher education,” Ozden said. “We analyzed Kuali, and we liked it so we decided to focus on developing custom solutions for universities who wanted to use Kuali.” Customers now include Stanford University, the University of Southern California and the University of Hawaii.

We often write about knowing what you don’t know and the importance of seeking outside advice. From the early days of Vivantech, Ozden was mentored by Richard Leslie, an adviser with Score, a nonprofit association of more than 11,000 volunteers that works with the Small Business Administration to provide education and mentoring to small-business owners at low or no cost. “Such a dramatic shift in strategy was a very gutsy move. It has been extremely successful because of Randy’s very successful planning, thorough approach to due diligence, positive attitude and commitment to a new direction,” Leslie said.

Recognizing the shift to the cloud, Vivantech has used the Kuali platform to develop E-Kualiti, a proprietary SaaS product (software as a service) that can be sold to universities on a monthly subscription basis, and “they don’t have to worry about servers and configuring the software,” Ozden said. Market size — 6,000 higher-education institutions in the U.S. of which about 4,000 could use Kuali. Target for E-Kualiti are institutions with 2,000 to 10,000 students.

For its 2013 fiscal year, Vivantech reported $13 million in revenue and it has more than 100 employees in the U.S. Most of the software development is done in India. The next set of challenges involves whether to raise outside capital, either debt or equity, to expand the sales and marketing efforts of E-Kualiti.

(Neil’s note: Is it time for Ozden to dance with venture capitalists or maybe seek strategic partners? That depends on whether he has steel-toed dancing shoes.)

Rule No. 351

George Bernard Shaw said it best, “Youth is wasted on the young.” The revenge of the gray hairs is coming. Be afraid, be very afraid.

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