Serial Entrepreneur

Kurt Zuch credits his success to talented, ambitious teams and niche strategies

Image of Kurt Zurch
Kurt Zuch

Four years into his first job after graduation, Kurt Zuch (MSCI ’90) made a move that would define his career course over the next two decades, engage his creative energies, and reward him extraordinarily for his efforts.

Zuch was working at what was then Andersen Consulting (now Accenture) in Washington, D.C., but he left to launch the first of what would be three consulting firms specializing in the energy industry.

All three grew briskly, and each was sold to larger consulting companies within a short time. The third, Atlanta-based Five Point Partners, was acquired in May by Ernst & Young after topping $50 million in revenue in five years.

Raised in Virginia Beach, Zuch learned about the value of hard work, resourcefulness, and risk taking from his father, who spent 22 years as a Navy aviator and bought and ran a small business after retiring, and his mother, an experienced volunteer, teacher, and artist. As a teenager, Zuch worked part-time delivering newspapers — an early morning commitment for years, to over 200 homes at one point.

Eagerly jumping in

The decision to quit a good job at a major firm and strike out on his own, he recalls, was less about meticulous planning than of eagerly jumping into the pool and hoping the water was deep enough to swim!

Image of Kurt Zurch with family
Kurt Zuch, who considers his 20-year marriage one of
his "most precious accomplishments," says it's
imperative for entrepreneurs to balance the leadership
needs of a small firm with enjoyment of life and family.

He and his wife Celeste, whom he had met at work, had gained a distinctive set of knowledge and skills at Andersen. Newly wed and with no children, the couple figured it was time to test themselves as entrepreneurs.

With support from some friends, they established Pathways Consulting. The beauty of consulting is that you can start a business with limited funds, so Pathways was self-funded from Day One and never received outside capital, Zuch says.

We were blessed with talented and ambitious professionals, loyal clients, and a niche strategy that allowed us to grow quickly. He and his partners also kept a close eye on cash flow, increasing expenses only when revenues allowed them to do so.

A seven-figure deal

The fledgling firm was only two years old and its founder was not yet 30, when it was sold (to a public company that was itself later acquired by Computer Associates).

The opportunity to monetize a seven-figure deal at such a young age was very gratifying, economically and professionally, Zuch says. He had no regrets whatsoever post sale but continued to wonder what the firm might have blossomed into had it stayed its course, even as he moved on to new positions at new workplaces.

He became vice president of professional services at the Atlanta office of a software company before leaving a year later for another, where he was made senior vice president of operations.

Back to business

After that company was acquired, Zuch decided to reboot as a business owner and launched Capstone Consulting Partners. As with his first venture, it wasn’t long — not quite three years, in fact — before Capstone’s success attracted attention and led to its sale to Alliance Data, a publicly traded company based in Dallas.

The deal had Zuch stay on as senior vice president for strategy, mergers, and acquisitions. Soon after his two-year contract ended, Zuch took an 18-month sabbatical to help raise his four young children and spend quality time with Celeste. Itching for a new professional challenge, he later co-founded Five Point Partners.

Two macro experiences dictated my path to becoming a serial entrepreneur, he says. There is the initial experience itself: once you get a taste of leading a small business, it’s hard to walk away from future entrepreneur environments.

Worlds of difference

The other overarching experience was his work at larger, publicly traded companies. These stints accentuated the differences between the two worlds: Public companies can provide a number of favorable benefits to their employees and clients via strong capital markets. However, ensuring near-term quarterly earnings can often have a negative influence on long-term decision making and investments, whereas small companies tend to have greater flexibility managing toward their long-term strategic objectives.

Consulting in the mining, gas, and power industries all require speciaized knowledge.
Because specialized companies are at risk for
industry-wide economic downturns, Zuch helped
Five Point diversify, taking on mining, oil,
and gas clients.

What fires him up is the process of creating and maturing an enterprise — maintaining a static environment would not be as much fun, he says, nor would preparing for targeted growth requiring uncomfortable levels of financial or operational risk.

Zuch says, however, that he didn’t build any of his firms with a speedy sale in mind. In his view, a small business owner should be concentrating on engaging fully in the opportunity and experience of entrepreneurship. I’m not naïve about the perks of monetizing a business, but focusing on a sale and future personal wealth isn’t productive day to day — suboptimal decisions will be made over the short term and the business’s valuation potentially derailed.

The ingredients of success

Each of his companies has specialized in serving the energy sector, reflecting Zuch’s early assignments at Andersen as well as his growing expertise in the industry.

He attributes his success to many ingredients, including diligence, decisiveness, and luck. He launched Five Point, for example, betting, correctly, that the 2009 American Recovery and Reinvestment Act would lead to major investments in utilities and their supporting infrastructure.

Critical, however, was niche. Describing the specialization of his small businesses as being an inch wide and a mile deep, Zuch says it allowed for a concentration of expertise and experiences that often proved difficult for heftier competitors to surmount.

Always deliver the A team

At niche small businesses, innovative solutions developed and executed by the ‘A team’ are consistently deployed to each client. Big companies are often hit-or-miss, because their sizeable, pyramid-structured employee base can result in the B or even a C team being assigned.

Competing as the small guy, in fact, has been a task Zuch has relished. He also cherishes the culture he feels he has promoted in his companies, one marked by high performance, flexibility, ambition, innovation, and collaboration, with little of the corporate politics inherent in larger organizations.

Small businesses, of course, face a myriad of hurdles. Zuch knew specialization in and dependence on one industry can threaten success, even survival. I had good friends with successful small businesses, including one with revenues of over $100 million, that nose-dived when the telecom industry — their only market segment — struggled for a number of years.

Strategic diversification

Diversification for Five Point included mining, oil, and transportation.
Five Point had many clients in transportation and
utilities. Its information systems capabilities can help
EY expand its own services, EY executives say, and
"create a better utility industry customer experience."

Five Point duly diversified strategically, taking on mining and oil and gas clients and offering managed services, which often had multi-year contracts that could shield it from specific industry downturns.

Small enterprises also bump up against what Zuch calls the balance-sheet glass ceiling— Five Point’s relatively small financial size curbed its ability to vie for large-scale jobs at the biggest utilities, he says, which were wary of the political risks involved in selecting qualified small businesses for mega-million dollar projects, despite our ability to execute within reason.

To finance a growth plan aligned with its strategic vision, Five Point closed on $10-million in mezzanine debt in late 2012. It was seeking a private equity investment to eliminate this debt and leverage the strength of its equity, Zuch says, when Ernst & Young came calling.

A new partner

Parting with his latest business has been emotionally challenging, Zuch says, but he prefers to dwell on the pluses: broader professional opportunities and better financial security for his employees, and fewer obstacles and distractions to business development, permitting a stronger management focus on growth, innovation, and human resources.

And he himself is once again back at a big firm, only one much bigger than those before. However, he is very excited, Zuch says, to be a principal/partner at Ernst & Young.

EY is, in many ways, a very entrepreneurial company. It empowers its partners to act with structured oversight, providing systems, tools, and protocols to ensure compliance, manage risk, and work toward the firm’s macro strategic goals. It’s like running small businesses within a very large organization.

Finding balance

Image of Kurt Zurch
Kurt Zuch's philanthropic philosophy is "we're
merely a steward of the wealth we've obtained."

Zuch, who considers his 20-year marriage one of his most precious accomplishments, says it’s imperative for entrepreneurs to balance the leadership needs of a small firm with enjoyment of life and family. This equilibrium, he adds, however, has often eluded him.

Further ahead, he would like to head down a different path. My professional career has consumed most of my adult life, so my next phase is going to be primarily dedicated to others — not only my family, but also our foundation and the ability it has to support those in need of financial assistance, mentorship, education, and basic necessities many of us take for granted.

(A generous donor to Virginia Tech athletics and Pamplin, Zuch supports a number of other causes through the family foundation he and his wife established.)

A successful journey

His philanthropic philosophy is that we’re merely a steward of the wealth we’ve obtained, Zuch says. While it provides my family immediate benefit in terms of financial security, giving to others is clearly why we’ve been blessed to receive what we have. The more we can donate to others and those helping others in need, the greater our success and ultimate satisfaction will be.

On his desk Zuch keeps a quote that he contemplates nearly every day. Based on Scripture, it deliberates the difference between being successful and living successfully. One, he says, is measured by money, power, and fame; the other by faith, love, and service to God, family, and community.

One is fixed on a destination, the other on the journey itself. It’s quite compelling when thoroughly digested.

Virginia Tech Pamplin College of Business Virginia Tech Pamplin College of Business Magazine Fall 2014

Shadow for bottom of page