Classmates.com founder returns to OSU to give advice to budding entrepreneurs

By Wendy Geist
Gazette-Times reporter

One of America's highest-profile entrepreneurs paid a visit to Oregon State University this weekend, passing out advice to students hoping to someday experience the same kind of success.

Randy Conrads, an OSU alum who majored in industrial engineering in the early 1970s, is the founder of Classmates.com, a wildly successful Web-based business he started in his basement in 1995 after a 21-year career at Boeing. The online alumni directory, currently worth $70 million, has grown to serve more than 38 million members, enabling them to find and stay in touch with friends and acquaintances from school, work and the military.

In November 2002, Conrads launched another Internet company, this time for the online travel market. The Web site RedWeek.com connects people who use time shares. The site currently has 425,000 members, and Conrads is aiming for an even million.

Conrads was on campus to deliver the keynote address at Saturday's grand opening of Weatherford Hall, a restored dormitory that houses the university's new Austin Entrepreneurship Program. Conrads was a financial contributor to the program, and he traveled to Corvallis this week from his home in Seattle to share his entrepreneurial knowledge with students over dinner, fireside chats and breakfast.

Over coffee Friday morning, Conrads shared advice on acquiring the funds to start a company, managing a "virtual company" and Internet advertising with Weatherford students Tyler Walters, Jon Duell and Alex Polvi.

"Typical business startups don't pay," Conrads said. Getting the needed capital is hard if you have no track record. When he started Classmates.com, he had no money at all. It was easy to attract financing the second time around for RedWeek.com, though — investors whipped out their checkbooks. Unattached investors are the best way to go, explained Conrads.

"Venture capitalists don't care about dividends," he said.

On the topic of management, Conrads is really happy with the dynamics of a virtual company.

Leaders of a traditional company can end up spending more than 50 percent of their valuable time working on things like employee benefits and interoffice operations, he explained. Almost everyone involved with RedWeek.com is a contractor, not an employee, and because the venture is Internet-based, people can work from home or from anywhere else they want.

"If you can't see people, it doesn't mean they're not doing good work," Conrads said.

An entrepreneur wants to run things like a parent, he said, but "I want somebody to stand up and say, ‘This is wrong.'" Conrads had people come in and argue with him every week about why Classmates.com should be a free subscription service. Two years later they told him they were glad he didn't listen to them, but he told them that wasn't the case.

"I did," he said. "I listened every week."

Don't lean too heavily on consensus-building, he advised, because it takes forever to get everyone to agree. Leadership is still important.

Conrads has become a true believer in Internet advertising.

Through online advertising a company can determine what works and what doesn't within an hour, he explained. With magazine advertising you have to wait two months for the magazine to come out, and with TV ads you can't interact with customers directly. There are Web sites out there now that are mainly living on advertising, he said.

For Walters, an MBA student, and Jon Duell, a recent philosophy and computer science graduate, Conrads' advice on online advertising and general business structure was just what they wanted to hear. The pair, along with Dhari Aljutaili, are currently working on an online advertising company called Witmatix in Weatherford Hall's incubator program.

Conrads had a lot to say about the legalities of setting up a new company that really helped, Walters said.

"He is an advocate of the distributed workplace, which we are," said Walters.

He and his partners would like to work from home, which would give them low start-up costs. They also took some of the first entrepreneur courses offered at OSU and have become a test case for how rules are written for incubators at Weatherford Hall.

Conrads said the new program is a wonderful opportunity for budding ventures such as Witmatix. The students will learn from people who've already built successful companies, which is a "tremendous part of education," he said. "If they rotate enough people in, they will learn a lot fast."