Alumni Success StoriesJourdi De Werd, M.B.A. '84
Greif & Co.
What kind of business did the entrepreneur start?
Jourdi de Werd and his two partners Lloyd Greif and Steve Cesinger founded Greif & Co. investment bank. Greif & Co. offers financial advice to companies involved in mergers or acquisitions and, in addition to the three owners, employs 13 individuals. Essentially, client firms are in the process of being acquired, are looking to make an acquisition, or require assistance in raising capital for either of the aforementioned cases. Greif & Co. restricts its clients to medium-sized companies valued on the market between $20 million and $500 million, and located in the Western United States.
Put simply, Greif & Co. is a smaller version of major investment banks, such as Morgan Stanley or Merrill Lynch. The services rendered are much the same, with the primary difference being size, both in terms of the company itself and the clients it serves.
What is the background of the entrepreneur?
de Werd’s family shows a long history of entrepreneurial spirit. His father ran his own product distribution business after serving in the military. His grandfather owns a chain of restaurants. His great grandfather was a farmer that went into the elevator business. Thus, one can surmise that the environment Jourdi was raised in was infused with the spirit of entrepreneurial success.
His education continued to feed this entrepreneurial spirit. He earned his Bachelor’s degree in computer science from Cal Poly San Luis Obispo, after which he came to USC for his Master’s work. In 1984, Jourdi graduated from the USC Marshall School of Business Entrepreneur Program.
Working in addition to going to school enabled de Werd to gain experience in the startup of new companies as well as become interested in investment banking. While in school, Jourdi started no less than three businesses. The first two were publishing companies and the third was a computer software firm he co-founded in May of 1984 as a part of his Entrepreneur Program work. As a final project, his Program mentor asked him to write a business plan. Jourdi came up with the idea of selling greeting cards featuring a family member’s artwork. To push his student, the mentor said this was too simple, and in order to pass, de Werd would have to develop a plan for a software company that his mentor had already begun forming. With his mentor as an owner, de Werd successfully ran the company for three years, finally making the decision to sell in November of 1987. The startup experiences tweaked Jourdi’s interest in the process of raising capital for new companies, which in turn led him to the investment banking industry. After graduating from USC, Jourdi went to work for the large investment bank Sutro & Co., where he stayed until the founding of Greif & Co.
How did the entrepreneur get the idea for starting this business?
Greif & Co. first emerged as an idea in the heads of the three founders when John Hancock, a large mutual life insurance company, acquired their employer, Sutro Co, in 1986. The new management proposed changing the customer focus of Sutro Co. to eliminate smaller clients. de Werd and his partners felt that the organization they worked for had lost the vision of the target market, and so decided in November of 1991 to start a new company to regain that market.
At the time, financial services were in abundant supply for those clients with sizable, attractive transactions. Larger companies had numerous investment banks, such as Merrill Lynch and Morgan Stanley, that were more than willing to assist them in financing. The smaller companies did not have transactions complicated or large enough to require outside financial assistance. Thus, the medium-sized firms, between $20 million and $500 million, were in demand of these services, but were commonly ignored by most suppliers because their transactions were not large enough to be attractive. After examining this market situation, de Werd, Greif, and Cesinger realized they could use this opportunity to start their own business serving only these medium sized west coast firms. Thus, Greif & Co. became a reality in April of 1992, a mere five months after the news of the Sutro & Co. customer focus change had reached the partners.
What did the entrepreneur do to start this business, and when did the entrepreneur do these activities?
The three founders of Greif & Co. met while working at Sutro & Co. In 1986, John Hancock acquired Sutro & Co. and set about making substantial changes in the operations of the firm. In November of 1991 de Werd and his partners were informed that the new senior management no longer wanted to support the type of work with which they were directly involved. This work was primarily investment banking for medium-sized company mergers and acquisitions.
de Werd and his partners strongly disagreed with this new plan and, over the next four months, got together as a group and established a business plan to start up a new company. The plan focused on filling unsatisfied demands in the marketplace by clearly defining customers, the target market, business structure, and operations financing. They had to move quickly in order to keep their current clients’ support, and so, by March 1992, all three left Sutro & Co.
Through late March and early April, they performed the routine necessities of setting up a new business. They hired an attorney to regulate and license their new investment banking firm. As independent investment bankers, each of the three partners had to obtain licenses from both NASDAQ and the SEC to practice. Once the business permit and licenses came through, they set up their offices in a downtown Los Angeles office building and hired a secretary. They contributed only personal funds to Greif & Co.’s starting capital, although they did not expect to reach profitability for at least three years. Greif & Co. went to work in April of 1992.
de Werd described the change in actual work from Sutro & Co. to Greif & Co. as little to none. It was as if they had simply gone home one day and came back the next doing everything the same except with different business cards. All their clients made the move to Greif & Co. with them. But especially in the beginning, the three partners were determined to execute their business plan to the letter. They kept with their mission to deliver only the highest quality services, but also managed to keep their focus on the middle-sized companies they had originally left Sutro & Co. to serve. At times this meant turning down clients whose work looked attractive, but deviated from their plan. While keeping to the market segment they targeted, Greif & Co. slowly grew, all the while evolving to match market changes and specific customer needs.
What major problems did the entrepreneur encounter during the start up of this business?
de Werd takes pride in the fact that Greif & Co. really did not encounter many problems during its start up and he attributes this primarily to careful planning. While working at Sutro & Co., de Werd and his partners gained valuable experience which enabled them to avoid pitfalls with their own venture. Through their prior work, they were able to familiarize themselves with the industry and note the client needs that their large firm was not addressing. They made their business plan simple and long term, and set realistic expectations to avoid any disappointments.
Additionally, the fact that investment banking is largely a personal service industry made it easy to avoid problems in starting up a new business. Really, the three founders were doing the same thing they had done at Sutro & Co., but it was even better because it was in their new form with a focused customer list and complete control. Their already established reputation and affiliation with a well known firm such as John Hancock, ensured little to no risk of losing the funding they had invested or of running out of clients. It also helped from both a legal and tax standpoint.
They did all the work themselves, used their own cash for funding, and kept the firm small at first. This meant no errors would occur in their work, and they had no loans with interest to repay. Their small size, given the capital they put in, allowed them freedom from having to make compromising decisions in their early days. Perhaps the one thing de Werd says was a downside to starting up a new business is the increased share of time he had to spend on issues not related to investment banking, and that he had not needed to concern himself with at Sutro & Co. These are issues such as hiring employees, leasing office space, and other day-to-day administrative work. Together, however, the three founders made wise and careful decisions based on their collective years of education and experience. Greif & Co. continues to grow today.
Who did the entrepreneur use for help and guidance during the start up of this business?
de Werd says that he and his partners relied primarily on themselves for guidance.
Education and family background taught him how to properly structure a business, with a well-defined customer profile and business plan. His previous startups gave him a preliminary taste of what it was like to deal with the day to day affairs of running a business that may not be related to the product or service the business provides. Most importantly, his previous work of raising capital, handling mergers and acquisitions, and satisfying client firms at Sutro & Co. allowed him to perfect his skills as an investment banker while also safely monitoring the industry and developing a plan for how best to deliver his services to a client.
de Werd’s two partners had similar educational and experiential knowledge to draw upon, thus, together the three were a solid support base for one another. As a whole, they exuded great confidence in their abilities and intelligence, and worked as a team to not only explore all options before acting, but also to always think about how best to perform the preserving functions of the company. Add to that three helpings of the "instinct" of an entrepreneur for good business practices and the "entrepreneurial spirit" and Greif & Co. was off to a very good start.
What advice would the entrepreneur give to someone thinking about starting a business?
de Werd’s advice for becoming an entrepreneur is contained in a simple, three-step process. By achieving all three steps, a fruitful young business can emerge. First, he says, you must know the business’ mission. This means, among other things, knowing who your customers are and what type of service or product they need. Second, you have to know how to keep true to the mission and not lose focus. Here, you determine how best to deliver your services or products to your customers. This entails being sure your business is properly structured for success, and that you have a well thought out plan for providing the initial capital. The third step is to execute. Launch your business following the set mission and never faltering. de Werd gives three pieces or rules of thumb to remember along the way:
"Aim high." Do not be afraid of taking on projects that may appear too large to handle at first. Stay realistic, but do not underestimate yourself, especially in a personal service industry. Starting up in a larger market means less competition and more opportunities, so do not let anything pass you by;
"Always have the customers in mind." First and foremost know who your customers are. If you develop a wonderful new painting tool, you may think that your customers are painters, but that would be a mistake. Retailers must be convinced they should carry the product or painters will not even have a chance to like it. Never lose sight of who your customers are, and remember that regardless of how great a service or product you have, it must be delivered at their convenience and to their satisfaction;
"Do not be afraid of failure." Entrepreneurship by definition involves taking risks, and likewise risk-taking must result in the occasional failure. If you lack the confidence to try new things, opportunities will pass you by and the world will leave you behind. Every failure teaches a lesson, and always convince yourself that if you are willing to work harder, you will be successful.
Why was this entrepreneur successful at getting into business?
Greif & Co. was successful beyond even the founders’ expectations for many reasons. The three Sutro & Co. employees found the perfect idea for a business, generated an exemplary business plan, and executed it flawlessly. Their own personal traits as well as those of their environment added to what can only be described as a great success.
de Werd describes how Greif & Co. really got started as the "Lee Iacocca Syndrome." Had Iacocca not been turned away from Ford Motors, the great Chrysler Empire probably would not have come into being. The same "sheer chance" as David Perkins calls it in his article "Effable Invention" applies to Greif & Co. Had de Werd and his partners not been led to believe that the new management of Sutro & Co. was going to change the customer focus, all three might still be working there. Yet, as it was, the search for a new business idea was over almost before it began. From that moment it was all "safe bets" made on using the same techniques and even serving the same customers as they had before.
Once de Werd and his partners had found their new business market, they relied primarily on their wits to guide them. Perkins’ psychological factor played a huge role in the startup, and continues today. One of the things that struck me most about Jourdi when I met with him was the enormous amount of leadership both he and his co-workers had. "Entrepreneurs have a lot of confidence," he told me. This is clearly evident in his attitude toward work. He is also a man who has a developed ability to envision things. From the business plan to the customers, to the market, Jourdi knew what had to be done to ensure success right from the beginning. These abilities could stem from his family upbringing. His father knew military discipline and the value of hard work. Other entrepreneurial relatives taught him to grab every opportunity that presented itself. His leadership abilities are derived from his education in the entrepreneurial program at USC, and the confidence he possesses come from the skills he learned in graduate school and perfected in his years at Sutro & Co.
The trio of partners that founded Greif & Co. worked together to sort out each and every issue in the start up phase of the company. Though many of the basic assumptions about services and the market were taken from work at Sutro & Co., their interaction was especially necessary when it came to hiring new employees, negotiating lease contracts, etc. The three showed distinct interdisciplinary skills in successfully managing these various tasks, as well as being able to provide the highest quality financial advice to their clients. The outside market, particularly those firms that made the switch from Sutro & Co. to Greif & Co. as clients, also played a special role. As the three had foreseen, there was little in the way of investment banking available for the middle-sized merger and acquisition firms, thus, competition was not a major problem. The new company could not help but succeed and grow.
- Kurt Eberle