After graduating from Georgetown University with an honors degree in accounting and finance in 2006, Neil Agarwal spent several years working in various analytical and strategic roles at Citibank and Live Nation before being admitted to UCLA Anderson’s class of 2012. Coming from one of the nation’s top business schools, Neil’s prospects for a promising corporate career were bright. But he wanted something that Corporate America could not offer. He wanted to go into business for himself.
Neil is one half of a two-person team that recently acquired exclusive North American rights to Logical Skincare’s Recipe for Men line of products. Launched in June of 2012, Neil’s company–Logical Skincare LLC–has been featured in several national periodicals including Men’s Health, Style Magazine, and Esquire Magazine among others.
Even before I began business school at Anderson, my brother-in-law and I had discussed the idea of starting a company together. We were both men’s skincare junkies who knew that would be our niche of choice. Originally, we thought we would develop our own line; however, our research on the industry revealed some things that influenced us to pursue a slightly different path.
First, neither of us had any knowledge of chemical formulations, which is a critical skill set to have on your team if you want to build a cosmetics company from the ground up. We also realized that executing our original plan would require a great deal of time and capital and expose us to a fair amount of risk that we wished to avoid.
Not only would we have the product’s formulation to worry about, but we’d need to file legal paperwork to secure its exclusivity. We would also need to develop packaging and perform extensive clinical testing to ensure the product’s quality and safety. After that, we would still need to invest in marketing and distribution, essentially “eating” those costs until sales gained enough momentum to turn a consistent profit.
My brother-in-law, who is based in New York, works a full-time corporate job while working in the business part time. I work the business full time from my home in California. He initially discovered Formula for Men while travelling across Europe for his full time job. He immediately fell in love with the product, finding that its quality and results surpassed that of the tons of similar products he had tried and used in the past.
After trying the product for myself, I found that I agreed with his sentiments about it. We contacted the owners and eventually secured exclusive North American rights to distribute it in December of 2011. Our negotiation period lasted for eight months; during which time, we conducted our own focus group testing to eliminate our dependency on anyone else’s data or claims.
Funding is a huge concern for anyone looking to start a company. You really have to know what to expect based on your business model. Oftentimes when people think of launching a company out of business school, they have venture capital funding in mind. For many, however, that is a romanticized expectation that might lead to disappointment.
One common characteristic of a traditional business model like cosmetics is that it is much more capital intensive than say, a tech startup that builds smart phone apps. The owners of such a business are more likely to need to seek out traditional funding options (i.e. banks or SBA loans) to get off the ground—or get into a positive cash flow before looking for outside capital. We are currently self funding and plan to seek outside investors in about a year from now.
Another possible impediment to starting a venture after business school is debt. In fact, the loan burden carried by the average MBA graduate is the primary reason why many who desire to pursue this path right of out of school do not. Many more of us would start businesses if the debt were not so overly burdensome.
I am fortunate in that I don’t really have big loans to pay back for my MBA. It also helps that I have a wife who works full time. But there are sacrifices that come along even with that. Anyone who is looking to live “high on the hog” and/or start a family and begin buying big homes and cars right out of b-school might want to go ahead and take that job at McKinsey.
One of the obstacles of this path is overcoming your conditioning. For starters, moving from a structured environment like business school to the self-directed work environment of an entrepreneur can be a challenging transition. There is no structure but that which you create; and nothing is done for you, which can be quite a departure from the white glove service that top business school grads become accustomed to while enrolled in elite MBA programs.
MBAs in general are highly theoretical beings by the time we get out of school. There have been numerous accounts of business school graduates who have had a difficult time grappling with practical pursuits after two years of immersion in a high-level, ultra-strategic ecosystem like business school. And starting and running a company is an exercise in practicality—in more ways than one. This doesn’t have to be a weak point, however; one just needs to be aware of it and adjust accordingly.
I spoke earlier about curbing any expectations of living a lavish lifestyle as a new entrepreneur. Beyond your day-to-day decisions, you’ll also need to be practical with your finances. You must be comfortable taking a big chunk of what you earn, reinvesting that into your business and not necessarily pulling out a big salary—especially for the first several years. You have to be comfortable with that.
We ask several questions of each entrepreneur. ‘Did you come to business school planning to start your own company?’ ‘How did your business school experience equip you to become successful?’ ‘What is the biggest lesson you’ve learned during your journey?’ And ‘What is one piece of advice that you would give to current MBA and pre-MBA students who wish to take a similar path?’
I came to Anderson knowing that I wanted to be an entrepreneur. My dad has owned and run businesses my entire life; and I always knew that this would be my path. From day one at Anderson, I knew that I wanted to start a business either during school or right after I earned my MBA.
Anderson’s program is geared toward general management. Since I knew what I wanted to do afterward, I focused on classes that would develop skills that I knew I would need but did not already have. I already possessed a strong financial and accounting foundation from my undergraduate study and pre-MBA career, so I dialed in on entrepreneurship and marketing classes while in school.
Additionally, UCLA’s Price Center for Entrepreneurial Studies is an awesome resource. And two people in particular who have been invaluable to me are Angela Klein and Elaine Hagan; any time that I’ve spoken with either of them I’ve come away with great advice, a contact or both. Elaine has a nearly photographic memory of Anderson grads. I’ve leveraged her knowledge and relationships to tap the UCLA/Anderson network on numerous occasions.
I also had the opportunity to study under a phenomenal entrepreneurship faculty while at Anderson. The professors there are very accessible and always willing to mentor and give advice to their students. From a curriculum perspective, I found the sales and marketing classes to be the most helpful. UCLA also has a very active entrepreneurship club that hosts over 150 events each year. There is a ton of valuable knowledge and networking to be gained from those events, and I took advantage of as much as I could during and after my matriculation at Anderson.
The biggest lesson that I’ve learned is that you can’t be afraid of failure. In fact, I’d say that if you aren’t failing at something then you aren’t playing the game full out.
As a business owner, you’ll be dealing with all aspects of your business. You won’t have the luxury to just make strategic decisions from on high. You’ll be doing things you’ve never done before, and your success will greatly depend on your willingness to be bold and take risks. In the beginning of our business, we had to cold-call stores to get them engaged in our product. During that time, I quickly got over any fear of rejection that I might have had.
You also cannot be afraid to ask questions. You can’t be scared to “look stupid”. The trick is to learn to listen to others and consider the possible validity of their point(s) while remaining confident and clear about what you DO know. Also, realize that you cannot be good at everything. At Anderson, I took a leadership class that made me keenly aware of my weakness. I’ve learned that in business the best path to improvement is not necessarily trying to become more masterful in a weak area, but finding an alternative solution such as partnering with or hiring someone who is strong in an area in which you are not.
I would advise anyone considering this path to strive to remain balanced. Learn to separate your home life from your business life. Make time to nurture your close interpersonal relationships and pursue non work-related passions. You’ll not only be happier, but you’ll avoid burnout, giving you a much stronger chance at lasting success.