Elaborating an Opportunity
Shamshir Jessa

Elaborating an Opportunity

Shamshir Jessa was in his third year of a Civil Engineering program with an Entrepreneurship Minor when he chanced upon an opportunity to connect short haul truckers with contractors working on road-building projects via a web page. At the time he was enrolled in a coop program working for a Civil Engineering consulting firm. His partner in the venture under consideration was the person whose work he was responsible for reviewing on behalf of his employer.

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In 1990, the Jessa family moved to Canada from Tanzania by way of Portugal. Shamshir’s uncle, who sponsored their Canadian immigration application, owned a mid-sized business manufacturing kitchen cabinets in Calgary where his father promptly went to work as a foreman. Shamshir was 14 by the time he arrived in Canada.

Shamshir’s parents had told him since he was a small child that he would be a doctor. During his high school years Shamshir typically got very high grades with very little work. From grade nine on he had worked around 9 hours a week in his uncle’s business as a laborer and learned in the process that there was no way he wanted to end up as a common worker. From grade 11 he obtained a number of sales jobs, on top of his laboring job, at a variety of retail stores including Aldo Shoes, The Sony Store and Lenscrafters. “I loved working on commission because the harder and smarter you worked the more money you made. That is where I started learning about sales techniques. I was the top part-time sales person at all three locations.” In 1996 when he enrolled at the University of Calgary he signed up for pre-med. With his poor study habits from high school he found after two years that he wouldn’t likely qualify for Medicine. From his earliest childhood Shamshir had been a Lego aficionado. “By the time I was five years old, I completed the final kit for fifteen year olds. In my family there were only two things for a person to be, either a doctor or an engineer, so I settled for Civil Engineering as a second choice.”

As a member of the Ismaili community Shamshir attended the mosque several times a week and became active in the volunteer organization. For one year he was responsible for the management of a group of sixty volunteers. He was also active in the Partnership Walk program and as a Scout leader. “From seeing people who owned their own businesses I learned that if you have your own business you can do whatever you want, however you want, whenever you want.”

In 1998 the Engineering Faculty introduced a joint five course minor in Entrepreneurship with the Management Faculty. “When Dr. Irving Haliday was setting up the program he was talking about it in class. I jumped right in and must have been the first person signed up for the new program. Rather than add a half a year to my education I increased my course load.”

Since two Project Management courses were a required part of the Civil Engineering program Shamshir had an opportunity to discover a deeper interest in the subject. “When I was looking for evening courses to accelerate my graduation I found a Master’s level course in Project Management that appealed to me. From that course, I discovered that there are a lot of mistakes that people make when they set up projects and they all typically can be related to a breakdown in communications. In my opinion, any business is a project – like in a project you have your front end planning, your launching and your commissioning. In Project Management courses as in Entrepreneurship you learn to think outside the box. I also learned from one professor that he was making $600 per hour simply to give his clients common-sense advice about project management.”

“When I was taking the first course in Entrepreneurship I had a chance to compare what I was learning in the course with what my uncle was doing in the second year of running his restaurant. I learned you could apply this knowledge directly. In the second course we had this phenomenal idea to advertise at the airports across the country with TV screens. Not only were there regulatory complexities but also the capital requirements were beyond our capacity. The fact that a private consulting firm from Vancouver began to implement virtually the same idea within four months suggests that the idea was a good one. From these two courses, I really learned how to generate ideas. I must have considered about a hundred ideas and initially explored about thirty ideas. I look for ways of improving or simplifying what is being done wherever I go. It is just part of who I am now.”

For my second two entrepreneurship courses I had the same professor. “In the Opportunity Identification course I learned how to critique opportunities. In that case our venture project was a web-based textbook exchange introducing buyers and sellers.In that particular case however we were having trouble seeing where the revenue was going to come from. I now have a better idea of what could go wrong. I also learned that there are many different ways to overcome problems and lots of possible creative solutions. I am currently taking my fourth course and have one to go.”

As part of the Civil Engineering Major, students who want to do an internship to get job experience have the opportunity to do so. Shamshir was one of the 25% of the class to get accepted for an internship post. Shamshir found himself in the enviable position of being able to pick among four different placement opportunities. He chose to work in an engineering consulting firm that specialized in Civil Engineering. As part of the contractual arrangement Shamshir had to sign a document agreeing that any knowledge created while working for the company would be the property of the company.

During his fourth month of full-time work he was assigned as Assistant to the Project Manager on a highway expansion project. Since his boss had personal problems that kept him away from the site, Shamshir was, in reality, functioning as the project manager, representing the interests of the owner. His primary function was to oversee the work of the general contractor.

The superintendent and project manager representing the general contractor for the project was a Ken Klassen. “My first impression of the man was that he was a big fellow that I wouldn’t want to mess with.” In his job, Shamshir not only had to do inspections of the work as it progressed but also had to review the work of materials testing consultants doing tests on ‘base course and gravel compaction’. In effect Ken’s responsibility was to make sure that the various sub-contractors were doing their work properly, and Shamshir’s responsibility, in turn, was to make sure that Ken was doing his work properly. It was a system of checks and more checks still. When Shamshir was confident that the work was done well then it was his responsibility to authorize progress payments from the government agency involved.

Right from the beginning Shamshir took a liking to Ken. “He was a reasonable fellow. He wasn’t one of those guys who would beat around the bush but would tell you straight up. Ken knew that I was a student so he took extra time to explain things to me. I could tell from the way he adjusted his communication style with different people that he was an intelligent person.”

“After a month of working with Ken I started realizing how the work was being done and what was really involved. When I was on inspections with him as he drove around he was making one phone call after another, in particular organizing gravel trucks for the next day. Ken had a list of truckers in each area where a project might be undertaken. For the current four-kilometer project he had a list of about 50 to 100 different truckers. When I was on the project site I must have seen 30 different trucks from about 15 different trucking companies. It seemed to me that he must have been spending at least two hours a day on the phone coordinating the flow of trucks for the job the next day. I thought this is a waste of time, there has got to be a better way. The first idea that entered my head was to use the Internet.”

Shamshir began to give the issue some real thought. His problem was to determine an efficient way to get truckers and contractors communicating about daily work over the Internet. The key was to make money, “…otherwise there was no point in doing it”. It consumed his thinking both day and night. After considering a slew of possibilities, he concluded that a website containing two portals would provide the solution. Through one portal, truckers would enter to view information on the jobs currently within their driving range . Through the other portal, contractors would post their jobs and view lists of available truckers in the vicinity where they will be working.

“Within a couple of days, I asked Ken if he thought if it would be better to have the truckers contact him over the internet instead of by phone. I sat down with him and explained how it would work – what my vision was. He loved the idea and said right away: ‘let’s do it 50%/50%’. I couldn’t believe that he said yes to the idea right off the bat. I thought that he would have some resistance. He said he would provide all of the contacts (and that he had been in the business 20 years or more and spoke the lingo) and make all of the phone calls to get the parties to sign up for the service. I would be responsible for everything else, such as getting the website up and maintaining it. We would be responsible for doing the management between us, but it was my job to see that we were up and running. I thought that the potential was so good between the two of us that I said yes immediately.”

“When I went home and told my friends and my mom what had happened they all challenged my giving up 50% of the company right off the top.”

For the next two weeks Shamshir got together with Ken every few days to put their idea together. Initially they were thinking about charging the truckers a small fee (approximately $5.00 per month) and the companies, a bit larger fee ($100 per month). According to our knowledge of the industry we figured that there were about 2,000 truckers and about 100 contractors. On the basis of Ken’s contacts they figured that they would be able to attract about 1000 truckers and about 20 contractors within the first two months.

Meanwhile Shamshir was searching for a programmer. Ken and Shamshir thought that a good strategy would be to find a programmer who was willing to work in exchange for equity in the company rather than cash. As it happened, about a month earlier Shamshir had met a fellow (Nav Kanji) who had a web design company and free community newspaper targeted to post-secondary students. Nav had previously provided Shamshir with some advice on an earlier web-based venture project Shamshir was part of in his Opportunity Identification class that Fall. The two of them met twice a week to play squash. When I asked Nav to become involved in the roadwork web project he was interested but wanted to know more about how the project would make money. After a couple of meetings,Shamshir decided to offer20% of the company to Nav to develop and maintain the website (even though Nav had only asked for 10%).

About this time Shamshir was beginning to think that he should inform his bosses what he was doing. “When I told my senior project manager back in Calgary that I was considering going into business with Ken Klassen his face turned a different color and I could see that he was very uncomfortable. He told me to close the door to the office and said that I was putting him in a difficult position. He told me that what I was doing was in reality a conflict of interest because I would have to complete the project over the next season and would still be supervising Ken’s work while we were starting a company together.”

Shamshir went to the person in the department who had hired him for the internship placement and told him what had happened. He didn’t foresee a problem because I had no real signing authority and was only a student. He took it to his boss who passed the word down that everything was okay and that Shamshir should go ahead and not worry about the supervisor who saw a conflict of interest.

When it was time for Shamshir to receive his evaluation to be sent to the university his current supervisor wrote:

“Shamshir has ethical issues to resolve before he graduates.”

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With 12 months yet to go in his Engineering degree Shamshir was launching his business at the end of the Winter term. Although he wasn’t all that concerned about making money in the first year he wanted the company to do well enough so that he could jump in full time on graduation.

For the Winter Term of 2001 Shamshir was enrolled in two classes, one in Masonry Design in Engineering and a Start-Up class in Entrepreneurship. On top of the courses he had a regular workweek of responsibilities in his internship placement in the Calgary office of one of the largest civil engineering firms in Canada. He was making $14.40 per hour and if he were to continue with the firm after graduation he could expect an annual income of around $42,000.

One of the requirements for his Start-Up course was to do an executive summary on the business idea on which they were going to spend the term. Two other students decided to join Shamshir’s project: one was a long-term friend and the other was attracted by the quality of the idea. “For the summary, we refined the financial forecast for the business. We found that there were 1380 individual trucking companies listed with one to ten trucks each. Assuming an average of three trucks per firm we assumed that there would be approximately 4140 trucks. There were 19 rural paving contractors and approximately 100 earth moving/excavating contractors.”

Shamshir’s partner, Ken Klassen, asked a number of different truckers with whom he had been working what they would be willing to pay for a web-based service that provided information on the trucking requirements of jobs currently available in the province. Ken got a range of responses to his questions. The most common response was that although it was a great idea on the one hand, on the other hand, it would undermine all of the work that they had done developing special relationships with contractors. It would put them all on a level playing field, giving any trucker in the province easy access to jobs. It seemed to Shamshir that he must have talked to 10 to 15 truckers asking them about their receptiveness to the service and their willingness to pay. “I gave them a thirty second to a minute pitch on the site telling them that it would be a place where they could find jobs and asked them what they would be willing to pay. Typically they wouldn’t give me a price so I would ask if they would be willing to pay $5 to $10. They just laughed. The way they put that was the cost of a coffee. We thought that if we charged $12 per month but $60 for 6 months and $90 for a year. Since there were only about 8 months of construction season we thought we would be financially ahead with this plan.”

Ken and Shamshir created a list of anticipated expenses for the first six months of the year:

1. Legal fees – $200
2. Incorporation fees – $272
3. Server fees – $642 for a year
4. Verisign (web based payment processing service) – $450.
5. Bank fees – ?
6. Optional stuff – mail-out, business cards and stickers.

They estimated that the total cost for the first 6 months would be about $3000. Each would pay half of the expenses. Initially they thought that once the website was finished that Ken would get on the phone and just contact truckers and contractors. Ken shared his idea with his boss who asked Ken how he was going to sell it to another contractor given that he was competition. Shamshir was asked essentially the same question by his classmates in the entrepreneurship class. “One of the members in the class suggested that Ken should be a private shareholder in the company so his name wouldn’t pop up anywhere. We decided that Ken shouldn’t contact the contractors and when he contacts the truckers he will say that he works for Southrock Ltd. and he will be using this service. He won’t mention any affiliation with the company.”

As a result Shamshir and Nav were to pick up the responsibility to get the other contractors online. The group’s idea was initially contact the contractors by fax, then call them and finally go and visit them personally one at a time with a laptop , going over the whole website with them. “That way it will be easier to sign them up because they will be using the program. They will be able to see the benefits and the added value.”

Early in the New Year they had initially planned to launch the website by February 15. Because Nav’s programmer was unable to complete the website they were delayed. The website (www.roadworkscanada.com) was finally completed by the end of March.

Although Shamshir was only going to be working 40 hours a week at his internship employer until the end of April he was slated for the ten weeks from May through Mid-July to be working 12 hour days with 21 days on and one day off. “It is the critical time for this launch and I won’t be available. However it is not all bad news because I will be spending days baby-sitting a site and I will have a lot of free time to make phone calls. The site also is only about ten minutes away from Ken.”

Discussion Questions:

1) What do you think about Shamshir’s vision for this business? How complete is it? What additional thinking is necessary in your opinion?
2) What ethical issues surround Shamshir’s involvement and Ken’s involvement?

3) Is Shamshir being realistic about what is required for success of this business?
(Hint:You are expected to carefully consider the various numbers presented in the case and develop some financial projections that lead to the development of, and support for, your arguments.This question is worth more than the other two, but that does not indicate that you should largely ignore the first two questions.)