Nicely tanned and fresh from his Caribbean vacation, Harold F. Mills, the 36-year-old CEO of ZeroChaos, exudes confidence and business savvy.
One could say it was a much-needed rest considering Mills has been driving hard for the past several years building ZeroChaos (No. 14 on the BE INDUSTRIAL/SERVICE 100 list with $366.8 million in sales), an information technology staffing and human resources outsourcing firm in Orlando, Florida. The firm, which provides high-tech consultants, software developers, and help-desk professionals to the top publicly traded companies, has been transformed into a formidable competitor against the likes of Manpower and Adecco.
It’s hard to imagine that this now thriving company almost didn’t make it off the ground. “Certainly there was a time when no one was buying our services and we got down to a thousand dollars in the bank account,” recalls Mills of the day he was considering throwing in the towel. It was 2001 when expenses were outpacing revenues as Mills struggled to engineer ZeroChaos, then owned by an Orlando holding company called CoAdvantage Resources.
“It is always a great discussion to have with your wife when you’ve got three kids and a mortgage to pay for, but she was the one who looked me in the eye and said, ‘Let it ride.’ And that’s what we did. We gambled everything and ultimately the story worked out.”
Saying it worked out is an understatement. Mills and his management team redirected the company’s strategy from servicing independent contractors to courting major corporations, created several cutting-edge concepts, and made a key acquisition–significantly increasing growth since 2002, when ZeroChaos brought in $50 million in revenues.
For Mills and other new BE 100S CEOs, success is defined by hard work, a solid business strategy, and a network of genuine and reliable business relationships. These factors have earned them a spot among the 2007 BLACK ENTERPRISE Freshman Class.
Chaos Control
Mills, a Harvard Business School graduate, started his career at General Electric in 1991 and moved to Ameritech in 1993, where he quickly advanced, managing a workforce of 300 in 37 states. In 1999, Mills became executive vice president at CoAdvantage, then an $80 million holding company with several firms under its belt, including ZeroChaos.
In 2000, Mills was charged with building up ZeroChaos. He hired staff and set up the company to handle the taxes, payroll, and help-desk needs of independent contractors. Revenues grew to $500,000 by 2001, but the company floundered as it struggled to collect money from small entrepreneurs who dodged their bills.
So the management team had to regroup and create a turnaround plan. The strategy: Two revolutionary concepts called Open Book Accounting and e-Contractor. The clients: IBM, Nokia, Accenture, and GlaxoSmithKline–huge clients that needed contract talent and would have no problems paying their bills.
With Open Book Accounting, the entire transaction is transparent, meaning ZeroChaos shares with clients how it determines its fee based on taxes, wages, and other expenses. E-contracting allows individual contractors to create profiles on the Websites of companies they’re interesting in working for, allowing the companies to directly assess a private talent pool. In turn, the company pays ZeroChaos a fee to develop the software and manage the Website.
After several years working for CoAdvantage, Mills led a management buyout of ZeroChaos in the fall of 2004 with $13 million in private equity funds from major investors such as AP Capital Partners, a black-owned private equity firm based in Orlando. Within five months, Mills was able to close the transaction, he says, “but it felt like 10 years of road shows and PowerPoint presentations.” At the time, revenues were close to $90 million.
ZeroChaos went on to acquire New York-based payroll and staffing company FlexCorp Systems in late 2005 for an undisclosed sum, more than doubling revenues in just one year.
Mills, who hopes to grow the company to $1 billion in three years, says competing in a $200 billion worldwide industry isn’t difficult because the industry is highly fragmented, with at least 14,000 providers. “Every time I go to a customer, I have to displace one of their existing providers,” he says. When it came time to go after IBM’s business, Mills went head to head with Manpower, the largest staffing firm in the world. That experience alone made him realize that this was serious business because “then you know you have something real that people can value.”
Building a Legacy
By all accounts, Evans Nwankwo, 48, had a successful job as an engineer working for New York-based Turner Construction Co. After 12 years at the firm, he had earned many promotions. But something kept him from truly savoring his achievements and enjoying his work environment. “When someone else is occupying the corner office, you don’t know how you’re viewed. You don’t know if that promotion you’re getting is a token promotion. So I, like most African Americans in the corporate world, went through this uncertainty about my career path.”
On Oct. 22, 1993, Nwankwo decided to face the uncertainty that lingered in his gut and start his own construction management and general contracting firm–Megen Construction, based in Cincinnati. Leaving his job was easy, but starting a company from his basement with just $1,716 in the
bank proved to be a challenge. Nwankwo had the experience from his years at Turner, and his wife, Catherine, was also an engineer who worked full time for Turner. But his decision to go after government contracts landed him in a position where he could not compete with the big boys.“The biggest thing is looking for that first contract, and we were bidding for government work,” recalls Nwankwo. “When you bid for work publicly, whoever is low gets the job. There’s also bonding requirements. My bonding only allowed me to bid on projects that were under $100,000. So, at that low level, it was very difficult to compete. A lot of the jobs that we were bidding on [in the beginning], we were not successful.”
Nwankwo eventually had to reassess his business plan, deciding that instead of chasing government contracts he’d go after private jobs, such as commercial buildings, where the owner isn’t obligated to choose the lowest bid.
Health insurance firm Humana gave Megen its first contract and was so impressed that it offered Megen the opportunity to renovate its entire building, a $1.3 million contract. For the next five years, word of mouth scored the entrepreneur more small-scale private jobs. Nwankwo’s wife quit her job to work at Megen full time as vice president of preconstruction, and he hired five more seasoned professionals to join his team.
Once the company landed a $7.1 million project turning an old brewing company into an entertainment complex around 1998, Nwankwo was able to secure a larger bond to go after even bigger private projects. Now with more than 270 projects completed and 58 employees, Megen (No. 88 on the BE INDUSTRIAL/SERVICE 100 list with $38 million in sales) has even built homes for singer John Mellencamp and NBA Coach Isiah Thomas. Nwankwo hopes Megen will continue with modest growth, with revenues increasing 15% each year.
In the process, Megen has earned a reputation for integrity, efficiency, and success in Cincinnati. “There are certain things I found that worked for us. Being able to pride yourself as a firm–not a minority firm, but a free-standing firm–is important,” Nwankwo says. For that reason, Megen has partnered with major companies such as Messer Construction, Turner Construction, Dugan & Meyers, and Parsons Brinckerhoff. “For the first five years, we shied away from getting any minority programs and assistance so that we could prove we could stand on our own,” he says
. “That made us a very strong [candidate] for bigger companies that are going after bigger jobs and require a certain level of diversity.”
Relationship Building
Relationships are
Ideally, Byrd wanted to leverage those same relationships into lucrative sales during his career, but there was just one problem: “I couldn’t use those relationships in my investment bank career because typically, at a Dean Witter or a Merrill Lynch, someone already had those legacy relationships in long standing. A lot of the senior-level relationships were already had by senior-level people of the firm,” explains Byrd. “So, either I was going to wait 20 years to make [senior vice president] or I was going to have to find another avenue.”
Byrd began taking a hard look at starting his own boutique, as a minority business enterprise, because there he could leverage his entrepreneurial relationships without stepping on the toes of senior-level colleagues. But without a revered institution behind him, he thought clients would be reluctant to trust him with their funds.
Not one to gamble, Byrd decided in 1998 to apply his craft at one of the small boutiques and begin to execute the strategy of folding some of the relationships from his days as an entrepreneur into his investment banking business. “I did that with the full intention of beta testing my strategy, prior to launching my own firm,” says Byrd, who was able to transfer about 80% of those relationships over to the investment firm, including PSE&G, Con Ed, and Prudential. “After about three years, I felt pretty comfortable with my strategy. I had accomplished it in a major way at the firm that I was working at. In any given year I was one of the top producers at the firm.”
After trying unsuccessfully to get equity at his firm, he and three colleagues–Vernon Gatling, BLACK ENTERPRISE board member Paul T. Williams Jr., and Wendell Bristol–began mapping out a strategy to start their own firm, Toussaint Capital Partners (No. 8 on the BE INVESTMENT BANKS list with $17.6 billion in total managed issues). The group chose Byrd to head the company because of his previous entrepreneurial experience, and they began hammering out a business plan,
which consisted of a thorough market analysis, how they planned to generate business, and a very conservative capitalization structure. “We made sure that we raised enough capital that, if in the first year we didn’t do any business, we would still be able to exist,” Byrd says. “Of course, we did much better than that, but we thought that was a very prudent way to go about building our business plan and selling it to investors.”By early 2003 they had raised more than $1 million in capital from individual investors; investments from the partners; and with money from Byrd’s building maintenance enterprise, Bradford & Byrd Associates. Byrd became the majority owner of the fledgling firm, with 70% ownership. His wife, Trina, owns nearly 15%; Williams owns 10%; and the rest was split between the other partners. The firm would focus on new-issue debt and equity underwriting as well as secondary debt and equity trading with institutional portfolio managers, money managers, pension funds, treasurers of municipalities, treasurers of pension endowments, and corporations.
Each partner brought with them quality relationships, such as MetLife, Western Asset Management, and the city of New York, which became the company’s first clients. Those relationships provided a track record that Byrd uses to go after new clients. He hopes Toussaint will grow in the 20% to 35% range each year.
Another factor Byrd hopes will ensure the company’s success is his desire to acquire money-management enterprises and established broker-dealers, domestically and internationally, in markets such as Latin America and the Caribbean.
“The U.S. capital market is changing dramatically because of overregulation, which is making some emerging markets look very attractive,” he says. “You’ve got to follow the flow of money, and inevitably it’s going off-shore. We’re simply positioning ourselves to remain viable.”
B.E. 100s
Freshman Class 2007
Industrial/Service
14 ZeroChaosOrlando, FL
40 NDR Energy Group L.L.C.Upper Marlboro, MD
41 Bobcats Sports & EntertainmentCharlotte, NC
53 Roberts Hotels L.L.C.St. Louis, MO
55 Military Personnel Services Corp.Falls Church, VA
79 1 Source Consulting Inc.Lanham, MD
88 Datrose Inc.Webster, NY
88 Megen Construction Co. Inc.Cincinnati, OH
Auto
31 Kristal Auto MallBrooklyn, NY
38 Sunset Ford Inc.Westminster, CA
51 Infiniti of ChantillyChantilly, VA
66 Sand Springs FordSand Springs, OK
72 Classic Ford Lincoln MercurySmithfield, NC
96 LTD Ford Lincoln MercuryCentralia, IL
97 Saturn of Wyoming ValleyWilkes Barre, PA
99 Jaguar Land Rover ToledoToledo, OH
100 Orangeburg FordOrangeburg, SC
Private Equity
92 1st Century Group L.L.C.Dallas, TX
Investment Banks
8 Toussaint Capital Partners L.L.C.New York, NY
Banks
25 South Carolina Community BankColumbia, SC
Asset Managers
12 Piedmont Investment Advisors L.L.C.Durham, NC