High-Tech Woes?

Virtual Billables

Bureaucracy vs. Art

Artistry at Work

Trade: Telecom

Trade: To Hong Kong

Latin American Trade<%0>"><%-2>Latin American Trade<%0>

Corporate Angels

Russ Berrie’s Teddy Bear Philanthropy

Corrections or additions?

Survival Guide

These articles by Peter J. Mladineo and Barbara Fox were published

in U.S. 1 Newspaper on May 13, 1998. All rights reserved.

Top Of Page
High-Tech Woes?

Jersey Boy Bruce Springsteen sang "Born to

Run." Texan Lyle Lovett crooned, "That’s right, you’re

not from Texas/ But Texas wants you anyway." They might as well

have been singing about high-tech venture capital, says Edward

Rosen, a high-tech entrepreneur. Once an oil baron’s paradise,

Texas has since become attractive to high-tech entrepreneurs because

of its tech-savvy venture capitalists, Rosen reports.

New Jersey, meanwhile, is a model of high-tech underachievement, he

adds. Once a hotbed for inventors, it now resembles a wasteland of

missed high-tech opportunities. Most of the "new" in New Jersey

has to do with new megastores, new highway construction, new sports

stadiums maybe — not new high-tech successes. Indeed, New Jersey-bred

entrepreneurs are born to run — to tech-friendly states like California,

Massachusetts, or Texas.

The problem, Rosen reasons, is that New Jersey venture capitalists

are more interested in maximizing returns than in helping New Jersey

become a more fertile ground for seed-stage entrepreneurs. "As

I look around the state I see a scattered number of venture capitalists

and they are not really interested in entrepreneurs with early-stage

technology," he says. "They are really looking for mature

companies that are still private that they can get an equity position

in just before they go public."

The root of the problem, Rosen says, is in the attitudes of the venture

capitalists. "The venture capitalists on the west coast are high-tech

people," he says. "The people here are not high-tech. They’re

good marketing people, they’re good financial people — but people

out west have had a great deal of experience commercializing technology.

The New Jersey venture capitalists are defensive and want to play

it safe."

While plenty of Princeton area venture capitalists would argue they

are the exception to that generalization (and point to a 1997 survey

that showed New Jersey ranking fifth in venture capital deals, up

from 10th in the prior year), Rosen charges on with his belief that

investors in the Garden State are more likely to invest in more mature

companies. "We have to cover the vacuum left by people who call

themselves venture capitalists who are really only interested in investing

in mezzanine companies," he says.

Rosen speaks at the Venture Association of New Jersey, on Tuesday,

May 19, at 11:30 a.m. at Governor Morris Hotel in Morristown. Call

973-267-4200.

His speech, "Can New Jersey Become the New Silicon Valley?"

is more of a challenge than a question. "I’m angry because I think

New Jersey can do much, much better," says Rosen. "More research

is done by more corporations in New Jersey than other states, yet

most of the entrepreneurs take their business to other states where

they have an easier time finding capital. New Jersey doesn’t have

a good reputation for high-tech and we’re not getting any better at

it."

Last year Stuart Leslie, a Johns Hopkins University history of science

professor, gave a similar talk to Princeton University’s POEM Center,

"Why Silicon Valley is Not in New Jersey" (U.S. 1, March 12,

1997). Spinoffs from major New Jersey corporations, he said, often

leave the state because it is difficult to grow under the shadow of

their respective parents. "I think that they found a better climate

both literally and figuratively in California and Texas, where there

seemed to be room to grow and they were part of a network with companies

like themselves," said Leslie.

But this too might be changing — Sarnoff’s website, for instance,

has several links to Sarnoff spinoffs. And if it’s any indication,

Leslie noted a trend where some Japanese high-tech firms were opening

offices in Silicon Valley and New Jersey.

Rosen, 60, has built two successful technology firms in New Jersey.

Leaving a career at Xerox in 1972, he co-founded Vydec in Florham

Park. This firm made daisy-wheel-based word processors and was heavily

reliant on venture capital to grow. Unfortunately, Rosen had to look

outside of New Jersey to find that capital. "I would try to get

people from the state to come and visit us," he says. "No

one paid any attention." Rosen was able to raise capital from

several venture capital firms in places like California, but ran into

problems when Exxon took a majority interest in the company as part

of its short-lived foray into the office products market in the late

’70s. When Rosen left, Vydec had grown to be a $100 million firm with

1,200 employees.

In 1979 Rosen started a Denville-based firm, Ziyad, which made dual-tray

sheet feeders for stand-alone word processors. Rosen kept a controlling

interest and in 1983 it did a $20 million public offering, underwritten

by Hambrecht & Quist. The firm was eventually sold to a competitor.

Rosen reserves some of his criticism for New Jersey’s small business

incubators. While they usually have good intentions, they often lack

staff with experience building a company or commercializing a technology.

"By and large incubators have done a nice job but they’re really

the stepchild of the state," he explains. "They’re doing it

mostly because they’re supporting the universities — not because

they’re supporting the technologies."

But Rosen is perhaps most critical of New Jersey’s pension fund, which

eschews venture capital investments. "New Jersey is one of half

a dozen states that doesn’t invest in venture capital," he says.

"Everybody in the world knows you get a better return on venture

capital than you do on bonds."

There is some hope, though. Despite its past failures New Jersey still

has a sizable roster of large research bulwarks like Lucent Technologies,

AT&T, and Sarnoff Corporation. These large research companies have

traditionally been very protective of their research, Rosen reports.

"We’re not absent the R&D effort, but we’re absent the spinoff

aspect of that R&D," he says.

— Peter J. Mladineo

Top Of Page
Virtual Billables

As information technology makes businesses processes

more efficient, the concept of billable hours may be in for a significant

revamp as well. For consultants, the concept of physical work versus

virtual work is sure to fire up pricing debates everywhere, says Hubert

Kostal, a manager of data networking offers at Lucent Technologies

in Holmdel.

"A lot of the things you use as a consultant are no longer generated

from scratch for each and every customer," he says. "Therefore,

as you are working for a client, you have the opportunity to start

much farther along. The question is, how much should a new client

pay for all the old information in the database? It’s the difference

between actual physical hours spent with the customer versus virtual

hours."

The overarching question is, if technology streamlines processes and

thereby reduces the amount of billable hours, should less money be

charged for those tasks? "Because we have the capability to keep

things in electronic form we actually have to think about changing

the definition of billable hours," says Kostal. "I don’t think

the debate is decided.

He speaks at the Institute of Management Consultants on Monday, May

18, at 6 p.m. at the Forrestal. Call 732-972-0549. "I’m really

coming at the billable hour issue from two different directions,"

he says. "One is reducing the amount of time needed for non-billable

activities and the other is to look at how you can essentially use

technology to create and support this reservoir of results."

The amount of cost-cutting that small consulting firms can do using

new technologies is truly phenomenal, Kostal reports. "Right now

there are capabilities that you can put on a desktop or laptop PC

that give you the same sort of telecommunications support that in

the past would have required hundreds of thousands of dollars,"

says Kostal.

This discussion could redefine the value of experience and knowledge.

Kostal compares it to hiring a plumber: A $100-an-hour plumber is

called in to fix a leaky pipe, finishes the job in ten minutes and

charges for the full hour. The extra 50 minutes charged is justified

by the plumber’s knowledge.

But for a small consulting company, justifying the same fees for less

actual work could prove to be a more difficult task. One alternative

is to charge by-the-job rates: Kostal predicts that there may be an

erosion of contracts that call for hourly charges. "From one perspective

customers are wanting to pay for and consultants are wanting to bill

for specific results. You will pay me for that regardless of how many

hours I work — and I think there’s a desire to move towards that

for a lot of customers," he says.

But in some cases it may be hard to define the exact results for a

given project. In other cases the project may have only yielded partial

results. Thus, keeping billable hours may be a necessary back-up to

ensure payment, Kostal explains. For example, someone hires an attorney

to fight a speeding ticket and the attorney only manages to get the

fine reduced. The attorney might need a record of hours worked to

justify a bill. "A lot of people are still using billable hours

so you can write that down on a timesheet and Boom! `Here it is, I

spent this much time.’"

— Peter J. Mladineo

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Bureaucracy vs. Art

Toiling in a bureaucracy is the very opposite of being

an artist, says Rebecca Reynolds, who is both a poet and the

assistant director of the honors program at Rutgers Douglass College.

"Being an administrator means that you are doing several jobs

at once and pulled in a lot of different directions. All day long

I am constantly attuned to other people’s needs — the deans, the

students, the parents — and am trying to take care of other people,"

says Reynolds. In contrast, "when I make a poem, I need solitude,

to reclaim an inwardness, to focus on what I am thinking and feeling."

Reynolds will speak on Monday, May 18, at "Women and the Arts,"

a conference sponsored by the Rutgers Institute for Research on Women

at the Douglass College student center. The conference runs from 8:30

to 5 p.m. and will have panels ranging from gender and arts education,

career opportunities, and art world economics, to women and folk art,

and the arts as a medium of feminist social critique.

For instance, a panel on women and new media at 1:15 p.m. features

Tina LaPorta of Ars Electronics’s Future Lab, Kathy Brew,

producer, Thundergulch; Rachel Greene, editor, Rhizome Communications,

Robin Masi, founder of Feminist Art History Listserve, and Theresa

Senft, a performance artist.

Reynolds will be on a 2:45 p.m. panel entitled "Working Women

Artists within Institutions" along with her sister Leah (a sculptor

and mother), Tina Maschi (a musician and prison social worker) and

Gail Holy (a visual artist and returning student). For $30 registration

call 732-932-9072.

A native of Washington., D.C., Reynolds majored in English at Vassar,

Class of 1984, and has master’s degrees from Rutgers and the University

of Michigan. In addition to her administrative job at Douglass College

she also teaches courses in creative and expository writing and an

introductory course in Women, Culture, and Society.

Her administrative job involves recruitment and lots of paperwork,

but she has leavened her duties and turned her job into something

more sympathetic to her interests. "I chose to take on a lot of

advising and student interaction that sometimes is pretty exhausting,"

says Reynolds. "But those are the things that keep me intellectually

interested at work."

Top Of Page
Artistry at Work

<B>Steve Gross combines his work with his art by

promising to play his violin for guests at his firm’s party. DevCom,

his marketing communications firm that specializes in the healthcare

industry, is having an open house at 114 Main Street in Kingston on

Friday, May 15, at 6:15 p.m. In 1982 Gross started DevCom in Paoli,

Pennsylvania. He moved to the Carnegie Center in 1993, and then to

the two-building Kingston property that he has renovated (U.S. 1,

March 25).

For some conditions (edema and arthritis, for example) Gross has invented

a diagnostic gadget and sold the trademarked invention to a drug company

to be used as a marketing tool. For the makers of DHA (a little known

food additive for infants), he helped found an organization named

"Pregnant Physicians for DHA" that could speak out for adding

docosahexaenoic acid to the diets of infants and nursing mothers.

A serious violinist, Gross is vice president of the Princeton Music

Club and on Friday will perform 15 minutes of selections ranging from

Mozart to a jazz/classical version of "Cheek to Cheek." For

information on DevCom call 609-924-4666 or E-mail DevCom@adv.com.

On Route 1, an `Absolute Auction’

Big commercial real estate auctions are rare in Princeton.

Even more rare are those that have no minimum bid. More unusual still

are those that can come with a liquor license. Princeton’s next big

commercial real estate auction, on Wednesday, May 20, at 1:30 p.m.,

will sell 23 acres on Brunswick Pike at "absolute auction"

with no minimum bid and no reserve.

Go to this one, and you just may meet the developer of this area’s

next hotel or restaurant. Why? Because the auctioneers just announced

that an arrangement has been negotiated with Robert Zylstra, owner

of the Marroe Inn, which sits on one of the parcels. Zylstra will

put the inn’s liquor license up for reserve auction following the

real estate sale. Only the buyers of the real estate would be permitted

to bid on the liquor license, and the minimum bid will be $300,000.

A possible conclusion: That somebody hoping to build a restaurant

or a hotel on this land hopes to be among the bidders and is pressuring

the owners.

"If Zylstra is able to get his price, the license enhances the

potential value of the real estate," says Ron Hurford of Traiman

Real Estate Auctions, "for someone who wanted to build a hotel

or a restaurant serving alcoholic beverages. The owners were trying

to allay concerns of buyers that they would have to go into the market

for the liquor license." The license would also be transferable

to another location.

The property is the former site of Heineman Electric on Brunswick

Pike next to Greenfield Dodge. The owner is Lawrence Holdings Inc.,

formed to manage and eventually dispose of the holdings of Heinemann

Electric, a manufacturer of hydraulic magnetic circuit breakers, which

was bought by Eaton Corporation.

In 1990 Steven L. Burack, president of the family-owned firm, moved

manufacturing operations from 2630 Brunswick Pike to Maryland’s Eastern

Shore (U.S. 1, December 8, 1993). The family firm’s longtime secretary,

Louise Schloenbach, remained with Lawrence Holdings, the caretaker

company for the remaining assets, including the 40 acre property.

Heinemann was bought by Cleveland-based Eaton in 1992.

Eaton did not buy the real estate, so the land was subdivided

into three parcels. Parker Communications Group bought the Heineman

building with about 12 acres, leaving 23 acres. Buschman Jackson Cross

most recently marketed the property. The first parcel to be auctioned

has 1,000 feet of frontage on Route 1 and has no improvements. The

second parcel, adjoining Greenfield Dodge, has the Marroe Inn as a

tenant, subject to a month-to-month lease.

The buyer is assuming a risk as to the use of the property because

the sale is not contingent on approvals. However, the buyer assumes

no risk as to the environmental liability. A clause allows the buyer

to have the property tested, and the owner would be responsible for

any deficiencies.

"Our firm has been doing this since 1924 and there is no minimum

opening bid and no reserve so it is extremely difficult to predict.

There haven’t been any recent appraisals," says Hurford. A Princeton

native, he went to Wagner College, Class of 1968, and is senior vice

president of Traiman Real Estate. His wife, Lee, is a craftsperson

who owns a natural fiber yarn shop Glenmarle Woolworks, located at

Terhune Orchards.

Hurford suggests that the land could fetch about $10,000 per acre

or a total of from $1.5 to $2 million. Still, for retail use, the

location is not convenient to southbound travelers, who would have

to go down to Texas Avenue for a jughandle. But as Hurford says, "As

these parcels are sold, there is a finite number of them, and the

lack of a traffic light becomes less significant."

To bid you need a $50,000 cashier’s check but the auction is free,

promises to be a good show, and is expected to last just 30 minutes.

Doug Clemens will be the auctioneer. "The interest has been encouraging,

although everyone is playing their cards close to the vest," says

Hurford. "The buyer might be anyone from a next door neighbor

to someone out of the country." Call 215-545-4503 for information.

— Barbara Fox

Top Of Page
Trade: Telecom

What New Jersey industry would be ideal for an international

trade conference geared to attract all kinds of high powered executives?

If you guessed telecommunications, you agree with the professors at

Rutgers Center for Business Education and Research.

"Global Competition in the Telecommunications Industry" is

the topic for an international trade conference co-sponsored by Bell

Atlantic and Lucent Technologies. Set for Thursday, May 21, from 8

a.m. to 5 p.m. at the Newark Airport Sheraton, the conference costs

$250. Call 973-353-5533 for reservations or E-mail: hkijne@andromeda.rutgers.edu.

"The telecommunications industry has been selected for our conference

because of the dramatic change it is experiencing internally and its

critical impact on virtually all other global businesses," says

Hugo Kijne, associate director of the CIBER. "The New York/New

Jersey metropolitan area is the major source and destination of global

telecommunications traffic in the United States — on one end of

the most dense transatlantic telecommunications path, with London

on the other end — and is the operating home of some of the key

players in the global economy."

Marc A. Schweig, vice president of international strategy for

Lucent, will keynote.

"With the help of experts on the four main regions in the world,"

says Kijne, "we will try to analyze how laws and regulations define

opportunities, and how government objectives relate to the strategies

of firms." Jens Arnbak, chairman OPTA, Netherlands regulatory

organization will represent Europe; Scott Blake Harris of Harris

Wiltshire & Grannis, formerly chief of the FCC international bureau

will cover North America; John Ure, director of the telecommunications

research project of the University of Hong Kong, is the representative

from the Asia, and Calvin Monson, Strategic Policy Research,

will tell about South America.

"Secondly, we will hear the major players," says Kijne. "Much

has been written about the future shape of their alliances, however,

little is known about how and why particular strategic and organizational

decisions are made in the context of a changing competitive environment."

Richard Romano, former corporate vice president, government

relations, AT&T, will chair a panel of regional experts.

Also attending: Janna Allgood, international marketing director

of AT&T; Jim Melonas, vice president of international strategy

at Bell Atlantic; Bill Marmon, executive director of ventures

and alliances, MCI Communications; and Donald Hassenbein Sr.,

vice president, Deutsche Telekom North America.

Claire Calandra, senior counsel & executive vice president,

Tyco Submarine Systems, will chair a final panel. John Dunning,

director of Rutgers CIBER; and Richard Langhorne, director,

Rutgers Center for Global Change and Governance, will also participate.

Top Of Page
Trade: To Hong Kong

Hong Kong is often referred to as the easiest place

in Asia to do business," says the brochure for a second important

trade opportunity, the 31st Annual World Trade Conference on Wednesday,

May 20, at 8:15 a.m. at the Birchwood Manor in Whippany, sponsored

by the New Jersey World Trade Council. For $125 reservations call

Dorothy Bergen at 609-989-7888.

Kenneth T. W. Pang, Hong Kong’s commissioner in the United States,

will share the podium with Governor Christine Todd Whitman and

David L. Aaron, undersecretary for international trade for the

United States Department of Commerce.

With the theme "Hong Kong: America’s Business Partner in Asia,"

the speakers will include Harrison Hong-She, managing director

of the emerging market group of GE Capital Asia Pacific, York Liao,

executive director of Varitronix Ltd., and Edward K.Y. Chen,

president of Lingnan College in Hong Kong.

David Tsue, director of the Hong Kong Economic and Trade Office

in New York, Gil Medina, New Jersey’ commerce commissioner,

and Robert P. Evans, New Jersey WTC chairman and partner in

KMPG Peat Marwick will give opening remarks, and Robert D. Ferris,

executive vice president of Ruder Finn, will preside.

Jane Carol Berris, vice president of the National Committee

on U.S.-China Relations, will moderate a panel that includes Dennis

Whalen of KPMG Peat Marwick, Alice Young of Kaye Scholer

et al, David D. Cutting of Standard Charter Bank, and Sharyn

H. Hess of the Export-Import Bank of the U.S.

Located at 216 West State Street in Trenton, the New Jersey World

Trade Council consists of senior representatives of corporations in

the manufacturing, processing, and service industries, along with

professional firms and colleges involved in international commerce.

It says the benefits of doing business in Hong Kong include:

"*"an open economy

"*"a simple and low cost tax system

"*"no foreign exchange controls

"*"no restrictions on repatriation of profits.

This attractive location, the brochure insists, "has been

further enhanced by its return to Chinese sovereignty. Hong Kong is

a natural gateway for trade and investment into the booming China

market."

Top Of Page
Latin American Trade

Another international trade opportunity — after

all, President Clinton did proclaim this World Trade Week — will

be a live videoconference focusing on Latin America on Monday, May

18, from 9 a.m. to 2 p.m. at the Pemberton campus of Burlington County

College. It is aimed at export managers, corporate managers of Latin

American affairs, vice presidents of international marketing, and

trade organizations.

"Contacts to Contracts" is co-sponsored by the Trenton Export

Assistance Center of the federal commerce department on Princeton

Pike. Michael Manning of the TEAC and Bernard Dolomon

of the college will preside. For $25 registration, including lunch,

call 609-894-9311, extension 7373.

"Argentina: a SMART Market for U.S. companies" will highlight

the Strategic Marketing Assistance and Research Team from the Buenos

Aires embassy, as presented by Michael Lilkala and Alvaro

Mendes. Miguel Pardo de Zela and Teresa Wagner will

discuss trade assistance services for export to Brazil. Carlos

Poza and Carlos Capurro of the embassy in Santiago will cover

"Chile: Mountains of Opportunities," telling about the 15

years of uninterrupted growth that Chile has enjoyed.

Other presenters: Jesse L. White Jr., federal co-chairman of

the Appalachian Regional Commission, and Daniel McLaughlin deputy

assistant secretary of the office of domestic operations, U.S. Commercial

Service.

The videoconference is expected to attract executives from the tristate

area and therefore might be a useful and inexpensive networking opportunity

for jobseekers fluent in Spanish or Portuguese.

Top Of Page
Corporate Angels

On May 12 Bristol-Myers Squibb renamed its softball

fields in honor of Frank A. Fortune, a B-MS information assistant

who died at age 37 from cancer. Fortune was commissioner of the company’s

softball league.

Top Of Page
Russ Berrie’s Teddy Bear Philanthropy

To Russell Berrie, Alicia Esther Larde Nash, has made

a difference. The former wife of the Nobel Prize-winning John Forbes

Nash Jr., Alicia Nash is one of the finalists for the Russell Berrie

Foundation’s "Making a Difference" award, a prize worth $50,000.

The foundation will announce the winners at a ceremony at Ramapo College

on Wednesday, May 13. Berrie will also be the keynote speaker at the

New Jersey Chamber’s Conference for Small Business on Tuesday, May

19, at the Brunswick Hilton. For $60 conference reservations call

609-989-7888.

Alicia Nash is one of 22 finalists for one of the foundation’s three

$50,000 awards. Her story is told in a biography of her husband, "A

Beautiful Mind," written by Sylvie Nasser, excerpted in the current

issue of Vanity Fair, and scheduled to be released in June by Simon

& Schuster. Nasser, a New York Times reporter, submitted Alicia’s

name to the contest.

John Nash went to Carnegie Institute (now Carnegie Mellon) and earned

his PhD at Princeton, where he had the boldness to schedule a consulting

session with Albert Einstein. At Princeton he came up with his elegantly

simple game theory that eventually formed the basis for modern economics

teachings. Nevertheless, he was not offered a teaching job here, so

he took a position at Massachusetts Institute of Technology.

Alicia Nash met him at MIT, where she was a physics major, Class of

1955. Born in El Salvador, she came to the United States when she

was 11 years old, went to Marymount High School in New York City.

She fell in love with her professor and they were married, had a son

in 1959, and in 1960 came to Princeton. Then it developed that John

Nash suffered from schizophrenia. Though he and Alicia divorced, Alicia

is credited with helping to save his life, and to help him and their

son (also diagnosed with schizophrenia) to make a better life. Princeton

University provided a job and an office, and after the passage of

three decades, John Nash did get the recognition he deserved, the

Nobel Prize.

"I stood by, of course," she says. "Sometimes illness

is part of things. I was able to help him in supportive ways. You

take it day by day. You really can’t let up, because if you do you

are just gone."

"I am proud and honored to name her as one of this year’s finalists,"

says Berrie. "Her efforts are truly making a difference."

Berrie’s firm, the Oakland-based Russ Berrie & Company, designs, develops,

and distributes more than 7,000 seasonal and everyday gift products

— everything from teddy bears to figurines — to independent

retailers nationwide.

Teddy bears have been so profitable that their maker has become a

philanthropist. In February Fortune Magazine listed Berrie as Number

34 on its list of the Forty Most Generous Americans. After the Fortune

List came out, he says he received "an awful lot of letters from

people asking me to be generous." He insists that the lovableness

of teddy bears did not inspire the philanthropy. "I don’t think

there is anything about my particular business other than that our

products bring a smile to people’s faces," says Berrie. "We

don’t make nuts and bolts. The products we make are warm and cuddly.

But the benefits that I’ve derived from the business allowed me to

do this."

The foundation (and Berrie emphasizes that he had nothing to do with

the actual choices of finalists or winners) tried to find people who

have given something back to society, either by dedicating their lives

or through a sudden act of heroism. So that the sum of $50,000 will

be meaningful to them, wealthy people are disqualified. This the second

year for this contest, and Berrie says its purpose is "to say

that we can all make a difference, that we don’t have to have millions

of dollars."

Berrie grew up in the Bronx, the son of a salesman who started a small

jewelry findings business. "My parents worked hard all their lives,

and they gave the little that they could give. My mother was involved

in charity work. My dad went on one trip to Israel, and gave an orphanage

a small kiddie pool. It wasn’t much, but he was so proud of that.

They were, and still are, an inspiration to me."

"I hope that I am having an impact on other businesses to start

thinking positive, that they can make a difference," he says.

"The real people who should be honored are those who work day

in out, thousands of people out there volunteering to spend their

time. Many people can write a check, but no one has been able to make

a 48-hour day."

— Barbara Fox

Corrections or additions?


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