The San Mateo County Times

February 11, 1998

By Tim Simmers
Staff Writer

EAST PALO ALTO - Karen Sue Kepney opened the Children's Outreach Center here to help young people realize a future beyond taking drugs and living on the street.

Kepney knows how important that is. She sold drugs and lived on the street herself before she got help from a start-up that's different from any seen before in Silicon Valley.

"Start Up" is a non-profit organization created by Stanford business school students that helps people in East Palo Alto run their businesses.

"Start Up helped me learn to write a business plan, manage money and do budgeting so I could get my business moving," said Kepney, who is one of many in the program who tasted the dark side of street life. "Now my thing is to help children in the community."

Kepney still has bake sales and fish fries to fund her children's center, but the business skills she got from Start Up classes are making a difference. Now she serves 50 children instead of 25, and she teaches them reading and writing and takes them on field trips.

More than 100 people have been helped by the program, which provides classes, mentors and small loans for owners of small businesses.

On Tuesday, a representative from the President's Initiative on Race visited Kepney's new office to recognize Start Up as a model program for teaching entrepreneurship and reducing racial disparity.

"(This kind of program) re-establishes the neighborhood and re-establishes the family," said Robert Thomas, a former president and CEO of Nissan Motor Corp. and an advisory board member of the White House's race initiative. "You should be very proud of yourselves," he said.

Thomas participated in a round table discussion with Start Up founders, directors and graduates. He often picked their brains, trying to discern what makes the program so successful, so he could take the information back to the president.

Start Up was founded in 1994 as a joint effort between the Stanford Graduate School of Business and East Palo Alto community leaders. Since then, it has brought on board members from the private sector, including supporting companies such as Silicon Valley Bank, the Menlo Park law firm Cooley Godward, management consultants Bain & Co. and McCown Deleeuw, an equity investment company. The firms add their expertise in law, banking and management to help the program and its participants.

To date, Start Up has graduated 127 people from its entrepreneurial training courses, helped start 14 new businesses in East Palo Alto, and supported 30 existing businesses that have subsequently boosted their revenues.

"I had an idea and a dream of my own business, but I didn't know how to make it work," said Carolyn Khojasteh, who plans to open Carolyn's for Hair, a hair salon in East Palo Alto.

"Start Up taught me what I need to know to open my own shop," added Khojasteh, who also told Thomas she had sold drugs before turning her focus to running her own business.

Start Up has also made more than 21 loans of up to $5,000 each to support the capital needs of its graduates and their businesses.

"We wanted to have a lasting impact on East Palo Alto with the program," said Mike Zimmerman, who helped found Start Up as a class project in school. He and his fellow founders had seen similar programs at Stanford fizzle out in the past.

Zimmerman said the unique collaboration with Stanford business students, the community and the Silicon Valley private sector has given it staying power. Zimmerman also is beginning to enlist some members of the venture capital community in Menlo Park to contribute funding and consulting to Start Up students and graduates.

The Stanford students teach the classes and often perform consulting on a one-on-one basis. They are also available at a drop-in night on Tuesdays for further consulting.

For many folks in East Palo Alto, the program has been a Godsend.

"It inspired me to get my contracting license," said Bishop Wethington, owner of Soroc Construction. "I hope to see East Palo Alto grow and I want to be a part of it."