Risky Business

Some businesses are born on Wall Street and some students go to college for a degree. And then there are businesses such as Fast Breaks, which was dreamed up two years ago as an entrepreneur-club idea by 17 Indiana University students. Their concept was simple but brilliant: Fast Breaks would charge a premium to deliver hamburgers, fried chicken, tacos and pizza from a fast-food strip on the outskirts of Bloomington to the thousands of students marooned without cars in IU's dormitories.

But by the time Fast Breaks actually got going last fall, all but one of the students--senior Rick Gilbertson--had lost interest. Gilbertson needed to keep Fast Breaks alive as his senior project in order to graduate, but the business was consuming 70 to 100 hours a week. On the other hand, Fast Breaks was producing full-time profits.

"So I said the hell with it," Gilbertson recalls. With school, that is.

Gilbertson dropped out of IU in his senior year and never got a degree. But he does have a company that now employs 18 drivers and an accountant and is about to expand its operations into other college towns across the country.

Yes, times are changing once again on America's college campuses. A few years ago, kids went to school to get a degree so they could land a good job and make a lot of money. These days, increasingly, students are launching lucrative businesses in school, and often the degree is beside the point. Student-owned businesses have spread so quickly that they now have their own trade group, based at Wichita State University--the two-year-old Association of Collegiate Entrepreneurs, whose annual convention in Dallas this year attracted 611 participants from 202 schools in 41 states and eight countries.

Some of those undergrads, profiled here, started businesses for the experience. Others are already operating major enterprises that only a college student might be gutsy enough to start.

"If you wait until you're out of school and working for somebody else," says 24-year-old Jimmy Enriquez of Houston, who founded two thriving businesses as a University of Texas undergrad, "you're going to get used to that big salary and that fancy car. Once that happens, it's very difficult to gamble on a new idea. It's better to start a company when you're a student, while you're still used to driving a junker and living like a dog."

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Robert Kotick and Howard Marks

School: University of Michigan, Ann Arbor

Company: Arktronics Corporation

Business: Computer-software

The nation's largest student-run business was born one day in December 1982 when Michigan roommates Bobby Kotick and Howard Marks were horsing around in their dorm. Marks, then 20, was an engineering student from Paris with an American father and a French mother--an electronics genius who had built his own TV set when he was 13. Kotick, then 19, was a history-of-art major from New York and a confessed computer illiterate. "I bet Howard that he couldn't create a computer-software program I could use," Kotick remembers. "He won the bet. But, of course, we both won."

The program Marks designed--called Jane--was a forerunner of Apple's Macintosh concept: It employed friendly graphics and symbols instead of complicated jargon commands and was ideal for beginners to use in their homes. Through family connections, Kotick showed the program to Golden Nugget chairman Stephen A. Wynn. With his help, Kotick and Marks formed Arktronics, raised $250,000 and, in 1983, put Jane--the first inexpensive sophisticated software aimed at computer novices--on the market.

After shipping $500,000 worth of Jane programs in their first seven months, the two students realized that they had more than a good product on their hands: They had an unbeatable one-two punch in Marks's technical genius and Kotick's marketing skill.

Instead of coasting on Jane's success, last year, with the help of Arthur Salomon of Salomon Brothers, they built Arktronics into a 20-person organization that began churning out a stream of new software products, selling licensing rights to major computer manufacturers in exchange for royalties. Today, Jane is produced in six languages, Arktronics is expected to gross more than $2,000,000 this year and Marks and Kotick are so busy that they recently hired a full-time chief operating officer so they can finish their undergraduate-degree requirements.

"We're sort of half-time students now," Kotick admits, though both expect to graduate this year.

"Our parents and friends were afraid we'd drop out," says Marks, who's now 23. "But our business has benefited from our contacts with professors. And they gave me some credits for the programs I was designing. I even got an A in one course."

Besides, adds Kotick, running a company such as Arktronics saves time in other ways: "You don't have to go for job interviews."

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Mark Krasnow

School: Washington University, St. Louis

Company: Kras Shorts

Business: Sportswear manufacturer

Going into the clothing business was the last thing on Mark Krasnow's mind when he ran into high school chum Gary Goble in the summer of 1984. They had gone home to Oklahoma City after finishing their freshman year--Krasnow at Washington University, Goble at Oklahoma--and they decided to celebrate by treating themselves to new, flashy tropical shorts. But when Goble saw the $28 price tag on the shorts in a local store, he got another idea: "Let's figure out how to make them ourselves."

A week later, Goble went to Krasnow's house wearing a pair he had stitched together. (Goble had cut a pattern by taking another pair of shorts and ripping it apart.) The two students bought some cotton-and-polyester fabric from a local retailer and sewed themselves a few more pairs of Hawaiian shorts, complete with multicolored birds and flowers.

"We had no intention of going into business," Krasnow insists. But when they started wearing the shorts around town, envious friends demanded copies of their own, which Krasnow and Goble obligingly supplied. Soon they had so many orders that they hired a girlfriend to do their sewing in her home. When they sold 50 pairs (at $11 each) to a souvenir shop at an amusement park, "We knew we were on to something," Krasnow says. Later, they sold 350 pairs to an Oklahoma City chain store; by summers end, the two reluctant entrepreneurs had four friends sewing for them--not to mention a Vietnamese tailor with a professional's sewing machine.

Goble subsequently lost interest. But when Krasnow, a premed student who switched to economics, returned to school in St. Louis last fall, he wangled an appointment with the head sportswear buyer at Famous-Barr, a big local department store. She readily acknowledged that his Kras shorts were as good as anything on the market and much less expensive and talked with him about ordering 2000 pairs.

"I was flabbergasted," Krasnow says. "Our people were turning out maybe 100 pairs a week. I couldn't fill that order unless I quit school and hired a whole new work force." Because he figured that Hawaiian shorts were a passing fad that would soon fizzle, Krasnow declined to follow up on the order, opting instead to stay in school and keep his business small. Today, he sells the shorts from his fraternity house, relying on word of mouth to draw customers--which isn't difficult, considering the $14.50 price. "Last time I looked, Famous-Barr was charging $30," Krasnow says, grinning.

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Samuel Kates

School: Babson College, Wellesley, Massachusetts

Company: SSK Enterprises Inc.

Business: Candy, résumés, real estate

Although he's only 21, fast-talking Skip Kates is founder, president and sole stockholder of SSK Enterprises Inc., a diversified corporation that produces résumés, sells real estate and manufactures chocolate novelties through a subsidiary called Kandy Man. Of course, SSK sounds more impressive than it is: The corporate structure was set up "just for the experience," Kates says; its sole full-time employee (aside from himself) is his mother; and the corporate headquarters is Kates's dorm room on the Babson campus.

"When potential suppliers call and say they want to meet me in my office," he says, smiling, "I say, 'No, let me buy you a cup of coffee someplace.' I don't hide the fact that I'm a student, but I don't go out of my way to publicize it, either."

Kates launched Kandy Man three years ago as a high school senior in nearby Framingham. After watching friends make chocolate novelties for a party, he took $100 in savings and began producing chocolate greeting cards, holiday baskets, dipped fruit and other chocolate novelties. As a Babson freshman, leaning heavily on his father's financial advice, he rented an unused kitchen on campus, bought chocolate in 50-pound cases, hired his mother and a few friends part time to do the cooking and marketed his products to students, companies and Boston retail stores. His sales hit $1000 the first year, and since then, all earnings have gone to capitalize further business expansion. This year, he expects earnings to pay his tuition and living expenses.

But Kates, an entrepreneurship-and-finance major, insists that the money isn't an end in itself--which is why, this year, he picked up a real-estate broker's license and added a résumé-consulting service to his business repertoire.

"My goal is not to make a dollar but to learn something," he says. "I'm getting experience running a business that most other students don't get. I'm dealing with suppliers, customers and employees. I'm not just a student--I'm a businessman. And the business has helped my schoolwork. Dealing with real-life situations helps me see the relevance of what's being taught in class. The professors love it."

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There are many more young success stories out there. Here are some other faces in the college entrepreneurial crowd:

Michael S. Miller, University of Pennsylvania, parlayed $14,000 in savings into a jewelry business called Bead It with colorful pushcarts brightening half a dozen shopping malls that gross as much as $2000 per cart on a good weekend.

Dan Bienenfeld, Chip Conk and Sam Angus, University of California at Santa Barbara, produced 1985 California Dreaming calendars; did $200,000 in sales in 1984; will do $3,000,000 this year.

Tom Brim and James Taggart, Northwestern University. They run the University Book Exchange, which sells new and used textbooks at about 15 percent less than competing stores, including the university's own bookstore.

Charles Clemmons, University of Alabama. His Thomasville Recycling, Inc., a brokerage sales concern, is said to do $250,000 in sales annually.

Paul and Charles Dines, San Francisco State University, brothers who run Bristol Fashion Yacht Care, took in about $20,000 for yacht care last year.

David Glickman, University of California at Santa Barbara. His import-export clothing business, called Oliver D. World Imports (read "All over the world"), is said to gross $200,000 in annual sales.

Charles Henderson and Eric Elie, University of Pennsylvania, are partners who started the New York Job Exchange, a résumé-consulting service, last fall.

Mark Idzik and Howard Isaacson, Georgetown University, gross about $250,000 annually from Strictly Software Plus, a retailer of computer products.

Mark Komonoski, University of Calgary in Alberta. His landscaping-and-painting concern, K.O.'s Professional Services, has three employees and grossed $30,000 last year.

Katherine Krupp, Smith College, known as The Underwoman, sells lingerie to students, attends trade shows in summer, sets up displays in Smith dorms during the school year.

Julie Levine, Northwestern University, designs, makes and sells sweat shirts and T-shirts with a Northwestern U. Country Club logo; she also sells costume jewelry to students and retail stores in Evanston.

Adam Ruderman, Williams College. His College Pro Painters franchise, with 15 employees, grossed $100,000 in 1984 painting houses.

Hugh Taylor, Harvard University. His Benjamin Graphics, a design-and-printing firm, grossed about $200,000 in 1984, when he was at New York University. After transferring to Harvard last year, he sold the business to concentrate on his studies.