Eric Reich and Michael Weisman just finished a week most entrepreneurs can only dream of.
The former University at Buffalo MBA students started a campus data analytics business from scratch 11 years ago and built Campus Labs into a company that had more than $10 million in sales and counted more than 650 colleges and universities among its clients.
The payoff came last week, when Campus Labs sold its business for more than $40 million to Higher One Holdings, a Connecticut-based company that helps colleges and universities process tuition payments and disburse financial aid.
Reich and Weisman talked about how it came to pass after the sale was announced.
>Q: You were guys who came up with an idea when you were in college. Now, here you are selling your company for more than $40 million. That's pretty good. How'd you do it?
A: (Eric Reich)You need to be ready to work very hard with a very thick skin and be able to accept the ups and downs that come with executing a new idea.
>Q: When did you come to the realization that you can take your idea and make the business successful.
A: (Reich)The very first day we took the Campus Labs concept into the field was a Monday in Colorado in September or October of 2002. It was the day after the Bills played at the Broncos, because hey, if you're flying to Denver, you might as well see the Bills.
I met, in succession, with the University of Northern Colorado, Colorado State and the University of Colorado at Boulder. All three of those campuses committed to buy on the spot. I called Michael in Buffalo and said, ‘Get ready, because I think we have something here.'
>Q: How did the Higher One deal come about?
A: (Reich) The areas which we've gotten very good at, which are analytics and outcomes — things that can enhance students success or streamline processes on campuses — is a real hot topic for colleges and universities. A lot of the bigger players in higher ed, including Higher One, are trying to figure out how they fit in that data puzzle.
We had a lot of conversations about partnerships. We had a lot of conversations about working together with some of these bigger entities. At the end of the day, being a self-funded, but very successful operation in Buffalo, you end up making a lot of choices because you only have so many resources to go around.
>Q: Was there anything in particular that made you decide to seek a partner?
A: (Reich) We have 650 different campuses. They all have different agendas and goals. We get a very diverse amount of information about ‘you should do this or you should do that.' We'd like to get to them all, but as a smaller operation, we were getting to some of them. We think working with a partner like Higher One, we'll be able to get to all of them.
>Q: What happens to Campus Labs operations?
A:(Reich) I don't think anything happens to them. We're excited about adding more people. We're excited about continuing to grow. There is so much opportunity. Now we'll have many more resources and opportunities to execute.
>Q: Often the people who come up with the idea for a business run into trouble because they may not have the skills to run the business. How did you get around that?
A: (Michael Weisman) Eric and I have been friends since we were 3. We had a bond that was brother-like or unbreakable. Starting a business is extremely challenging. It can be emotional. It can create arguments and it takes a special relationship to look past that and continue to strive for success.
Eric and I have very complementary skills. Eric has a great mind for business and I have a personality for building relationships. That was a sound recipe.
>Q: Did you get much help along the way?
A: (Weisman)The other thing we knew was that we didn't know a lot. What we did have was the chutzpah to ask other people how were they successful. We asked a lot of people "How do you do it?"
Buffalo was an amazing community. Nobody turned us down. Every door was open. Those doors continue to be open. We continue to see those people on a regular basis. Hopefully, now it's our turn to pay it forward.
(Reich) Only in Buffalo can you have the access because of the size of the community and the nature of business in the city. When we were asking for help and getting advice, we were literally getting advice from [venture capitalist] Jordan Levy and [Synacor founder] George Chamoun. I got to meet a bunch of times with Jeremy Jacobs Sr.
This is the most powerful venture capitalist in Buffalo and one of the most powerful business people in Buffalo. In any other city, we're two guys in our 20s among hundreds — thousands — of guys in their 20s trying to make something happen.
In Buffalo, there's only a handful of people doing that, so you can get access to all of these really interesting people who can be really helpful in assisting you. And there are a ton of them in Buffalo.
>Q: The perception is that Buffalo is really a hard place to start a business; that if you want to do it, you want to do it in New York City or California.
A: (Reich) I think it's the complete opposite. In Buffalo, the cost of living is lower. There's a lot of talent here. There's a lot of people stuck in conservative, less exciting jobs. So if you start something new and exciting, you'll get a lot of people who are interested and excited about it.
>Q: The other perception is that there's no funding here for young companies like yours; that you have to be in New York City or Los Angeles or somewhere else.
A: (Reich) That might have been true three years ago, but now with [technology incubator] Z80 Labs, which I'm a board member of, I think that's no longer the case.
I think we're both going to be mentors and assist in some of the things that are going on at Z80 in trying to get some interesting companies in there and help them.
The second thing is, when you've been supported by an entrepreneurial community and had some success, you almost have an implicit responsibility to do that for the next group.
It's about building an entrepreneurial ecosystem. In order to do that, you need to have a couple of success stories who are willing to provide time and assistance and some seed funding; the types of things that can build a start-up community so that Buffalo can have that type of activity in a way that most other major cities do.
>Q: Did you have trouble recruiting people from here, or getting people to come to Buffalo?
A: (Reich) We found almost all of our technology people in Buffalo. We have 20 to 25 people among our staff who have very specialized skills in higher education. People with Ph.Ds. People who came out of universities who have moved to Buffalo, bought homes and had children and are trying to reverse some of the people who are leaving.
(Weisman) We've never – ever – had an employee leave because of this city or the region. There's always the challenge of recruiting people because of the weather. People come from the South or West who have never heard anything but negative descriptions of Buffalo.
Once they get here, they're genuinely surprised at how wonderful the community is to put roots down and do your thing.?