by David Jastrow
Special to Phillytech

Foster Chamberlain founders John Ulrich (left), Stephen Shoff and Todd Peterson
help old economy companies join the new.

While most local start-ups that were formed during the last five years changed their business models to survive the dot-com downturn, Foster Chamberlain L.L.C. stayed on course.

By specializing in helping large companies launch new ventures, the Philadelphia-based firm has grown steadily, while bigger-name players soared to astonishing heights only to crash and burn.

"Our focus is different because we launch businesses for established corporate clients," said Todd Peterson, a founder and principal of Foster Chamberlain. "We haven't really noticed a decline in our business. In fact, our deal flow today is higher than what we saw a year ago."

In 2000, Foster Chamberlain generated $1.6 million in revenue, up from $1.2 million a year earlier. This year, the six-person company expects sales to continue to climb. It also hopes to add at least two employees before the end of the year.

Not shabby considering that the Federal Reserve Bank of Philadelphia recently predicted that weak business investment and declining production would limit economic growth in the United States this year to 2 percent, down from an estimated growth of 2.2 percent predicted earlier this year.

Company founders Peterson, 31, Stephen Shoff, 33, and John Ulrich, 35, credit Foster Chamberlain's success in a shaky economic climate to four primary factors: First and foremost, the company continues to focus on corporate ventures. Foster Chamberlain's client list includes Boeing Co., Armstrong World Industries, and Prudential, Fox & Roach, the Philadelphia area's largest real-estate brokerage.

Secondly, the firm is not focused solely on technology. It is willing to work with old-line business projects.

Also, Foster Chamberlain has been self-funded since its launch.

Finally, the founders say that theirs was one of the first businesses to help large companies start smaller firms.

"A Fortune 500 firm is usually better positioned to launch a new business, but in many cases, they don't have the resources to launch new ventures effectively," Ulrich said. "We help them marry the flexibility and speed of a start-up venture with the assets a big company brings to the table, including distribution capabilities, brand equity and intellectual capital."

OLD ECONOMY MEETS NEW

Armstrong World Industries, a 141-year-old, Lancaster-based manufacturer of floors and ceilings, called Foster Chamberlain to help plan for more high-tech endeavors, said Barbara Goss, vice president of innovation for Armstrong's building products division.

Armstrong wanted help marketing i-ceilings, a new product that enables commercial architects, building owners and faculty managers to integrate sound and wireless systems into ceiling planes without wires and faulty acoustics.

"We wanted to clearly and succinctly communicate our business plan to our senior management group, and Foster Chamberlain worked with us to help us develop a framework for doing business planning for new venture opportunities," Goss said. "They helped us focus on what the real nuggets of information were so we could communicate our strategy to people who didn't work on the project for six months."

Foster Chamberlain's capabilities extend beyond planning. The firm has helped companies implement separate ventures, from concept development to business launch.

The firm is in the process of helping Boeing Ventures, a division of Boeing, to capitalize on its vast research and technology resources to develop new products and services outside its traditional aerospace manufacturing operations. Foster Chamberlain's Peterson is an interim member of the management team of one of Boeing's ventures, a new technology product expected to be launched in the next 12 months.

"We are helping them secure funding and commercialize new technology outside of the aerospace and military space," Ulrich said.

Fred Whitford, director of Boeing Ventures, the new business development arm of Boeing, said that when Foster Chamberlain presented itself as a provider of corporate venturing services, he felt the company could be a good fit as a partner.

"Big companies don't have a lot of expertise on how to run a small company," Whitford said. "A big company takes for granted certain aspects of what a company needs, like human resources support, accounting systems, and getting all those things up and running. [Foster Chamberlain's] expertise is in how to make that transition, because if you're not careful, you can take up all of your time focusing on housekeeping. They have provided advice about how to enter markets, how to make preliminary contacts, and also specific advice on fund-raising. The relationship has been very fruitful so far."

Foster Chamberlain has come a long way from humble roots, when Ulrich and Peterson created it as master's degree students at the Wharton School of the University of Pennsylvania.

"Our clients are not looking for a presentation in a three-ring binder," Peterson said. "They want a business."

Sept., 2001 - Phillytech

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