Frederick W. Buckman, a lifelong teetotaler, collects wine. He tastes it and spits out every sip. That self-discipline will be useful as Buckman embarks on another contradictory venture: trying to mine entrepreneurial profits from the highly regulated, slow-growth business of electricity transmission. The 55-year-old nuclear engineering PhD is chairman, CEO, and co-founder of privately held Trans-Elect Inc., a two-year-old company that in 2001 led deals worth $850 million to buy transmission grids in Alberta and Michigan. Co-investors include the likes of General Electric Capital Corp. Buckman's goal: to become one of the biggest transmission owners in the U.S.
Regulators favor companies that carry power without generating it because there are fewer conflicts of interest. Buckman hopes they'll let him post a 14% return on equity--about three percentage points above what integrated utilities earn. Although Trans-Elect is in Washington, D.C., Buckman still lives in Portland, Ore., where he was CEO of Pacificorp until 1998. When he's not striking deals or swishing wine, he likes to golf. His handicap is 2.
From a nuclear engineer who's transmitting electricity across the U.S. to a shipping heir offering no-frills European flights...
Stelios Haji-Ioannou, 34, the chairman and founder of easyGroup, based in London, has a very specific goal: to open one new company a year under the Easy brand. So far, he's on schedule. In the past six years, Haji-Ioannou has launched six businesses, from online car-rental and financial-services sites to cyber cafes. The son of a Greek-Cypriot shipping magnate, Haji-Ioannou is building a discount empire.
His crown jewel is easyJet Airline Co., a European no-frills carrier. While national airlines are grounding planes, six-year-old easyJet recently purchased new Boeing 747-300 jets and is on track to make $54 million on sales of $519 million in 2001. In a November share placement, easyJet raised $137 million.
Haji-Ioannou's penchant for self-promotion has led to comparisons with Richard Branson, head of Virgin Group Ltd. He has even shown up on rival airlines dressed in easyJet's trademark orange flight suits. But Haji-Ioannou wants to spin off his ventures into publicly traded, independent companies. "My intention is to make money out of capital gains, not royalties," he says. And, unlike Branson, Haji-Ioannou comes from wealth: His personal fortune is close to $1.3 billion, and he also owns a shipping company.
When Haji-Ioannou isn't working, he's often sailing. "I have a couple of yachts," he says. "Every self-respecting Greek shipowner does." His business is serving budget-minded customers, but Haji-Ioannou travels in style.
Joseph J. Atick
On Sept. 10, Joseph J. Atick was just another scientist laboring in relative obscurity. A day later, he was the hottest thing in high-tech security. His seven-year-old company, Visionics Corp. (VSNX) of Jersey City, N.J., makes biometrics software that uses facial measurements matched against those in a database to identify anyone from terrorists to runaways captured on video. That has politicians, retailers, and immigration officials knocking down his door.
Atick, who invented the technology, suggests using the system only in high-risk areas and discarding images when no match is made to maintain privacy. "We need to identify those individuals who pose a threat to public safety, while maintaining the anonymity of you and me," says Atick, 37.
A former physicist, Atick is riding a wave that will only get bigger. The $200-million biometrics market is expected to hit $1 billion by 2004. And since Sept. 10, Visionics' stock price has nearly quadrupled, to about $15. Atick may be surprised by his sudden fame, but the nation's newest apostle of high-tech security knows his loss of anonymity is the price of admission.
Jeffrey Sprecher made his first fortune building alternative power plants in California in the late 1970s. First, he got investors to agree to financing if he could drum up business. With that commitment in hand, Sprecher persuaded utilities to buy his power and municipalities to give him raw materials to fuel his trash-to-energy plants. Sprecher's out-of-pocket costs? Nada. When he sold the small-scale plants in the mid-1990s, he made millions.
Sprecher, 46, has proved just as adept at creating a market for his one-year-old venture, IntercontinentalExchange Inc., an electronic trading exchange based in Atlanta. He gave energy and trading firms equity stakes if they pledged to trade commodities over his system. Sprecher now handles $2.5 billion in commodity trading daily, with revenues of about $120 million annually. Enron Corp.'s bankruptcy is helping. "This is one B-to-B exchange that's generating profits and cash--and using Internet technology correctly," he says. At least someone is.
Royce Holland was an oddity among the telecom entrepreneurs who founded companies in the late 1990s to compete with such giants as Verizon (VZ), SBC (SBC), and AT&T (T). While his rivals took on mountains of debt, the chief executive of Allegiance Telecom (ALGX) played it safe, borrowing little and expanding slowly. And he raised a huge amount of equity: $1.4 billion in three stock offerings. Then, last year, the shakeout began. The stock market dried up, followed by the debt market. Without access to more capital, upstarts with huge interest payments and unprofitable businesses were toast. "It's a lot like playing Survivor," says Holland, 53. "It seems like somebody is voted off the island every week."
Allegiance, however, is still in the game. On Dec. 3, the Dallas company completed construction of local networks in 36 markets. As a result, its capital spending could be just $225 million in 2002, down from $365 million in 2001. With revenues expected to rise 75%, to $975 million, Allegiance should generate net cash from operations, before interest payments and depreciation, in the second half. It looks like Holland could win this round of Survivor.
In 2000, the then-67-year-old music impresario Clive Davis could have retired when his bosses decided to replace him at the helm of Arista Records, the label he founded in 1974. Arista's parent, BMG Entertainment, wanted someone younger, so they brought in Antonio "L.A." Reid, 44, to take over from Davis. Undaunted, Davis launched J Records. "I got to start from scratch and prove it again," he says. Well, sort of. Davis persuaded BMG to kick in $150 million to become a 50-50 partner in J and let him have 85% of Arista's top management as well as 10 artists. And he's still got his reputation. As Doug Morris, CEO of Universal Music Group, says: "In this business, he's the guy."
In 18 months, Davis has filled J's roster with some of the most promising acts in the business, including Alicia Keys, whose debut album Songs in A Minor has sold 6 million copies and who is nominated for four American Music Awards, which will be presented in January. J should book $200 million in sales in 2001 and could turn a profit next year. But for Davis, who signed such talent as Janis Joplin, Bruce Springsteen, and Santana (twice), it's still all about the music. At a recent Manhattan performance by singer Angie Stone, Davis--in trademark tinted glasses--was among those swaying to the music. He still has his groove.
Japan and e-commerce? Forget it, said the critics. But Hiroshi Mikitani, a 36-year-old former banker with a Harvard MBA, has proved them wrong. In four years, he has built his Rakuten cybermall into the country's most popular shopping destination for Japanese Web users. The site, home to 8,000 retailers, averages 18 million daily visits and handles a monthly turnover of about $64 million. Rakuten's operating profit in 2001 is expected to more than double, to $16 million, on sales of some $53 million, which is also up more than twofold from the previous year.
Since taking Rakuten public last year, Mikitani has bought 10 companies, including Bizseek, a popular used-goods trading Web site, and the Japanese operations of U.S. portal Infoseek. His policy is to write off the goodwill on the acquisitions in the first year, which in 2001 will translate into an extraordinary net loss of $5.3 million. So far, he has managed to turn around the money-losing Infoseek Japan by cutting advertising and operational costs and introducing new services. He hopes to increase the total goods and services his cybermall handles tenfold, to nearly $8 billion annually by 2005. As Mikitani puts it: "Japanese have learned that the Internet is a more efficient way to find a good deal." Now, he has to hope they keep shopping.