Aboard the Enterprise Entrepreneur Cites Sigma One Success The market was ripe for their fruits and vegetables. But Jordanian officials didn't know how to take full advantage of their European neighbors' demand for high-quality, safety-tested produce. David Franklinand his Research Triangle Park-based Sigma One Corp. did. Franklin hired a team of experts fromU.S. companies and universities and, along with his own employees, developed a new way of doing things in the Jordan Valley. The first thing to change was the box. As Franklin (Ph.D. economics '79)says, "The boxes weren't nice boxes." They didn't protect the produce or, worse, fell apart. The solution? A wax box - de rigeur in the United States - that costs a bit more up front but saves money in the long run. Although the new box was sturdy, there was still the problem of produce spoiling in shipment. So the next step for Sigma One was showing the farmers how toget their newly harvested crops cooled down as soon as possible to keep those tomatoes blemish-free for arrival in Amsterdam or Antwerp. Today, Sigma One has a resident team - a biochemist and a crop physiologist - working in Amahwith a private sector firm to conduct crop pesticide residue tests to meet the strict environmental and safety standards of the European markets. Thus the duality of Sigma One, says Franklin. The 13-year-old agricultural development company, run by Franklin and his partner, Marielouise Harrell, was hired by the Jordanian government to help farmers improve their marketing enterprises both technologically and through better management. In the process, a private enterprise - the one that does the crop testing has emerged. Since 1990, Sigma One has shifted much of its focus and funds from government policy research to developing partnerships with a small number of businesses around the world. Franklin, 50, is sort of an entrepreneur's entrepreneur. He's a vegetable exporter in Mexico, a jewelry maker in Ghana and a shrimp farmerin Indonesia. His motivations are simple: first to make money. After all, Sigma One is an at-risk equity investor in these start-up companies. His second motivation is to get out of these investments and get into new ones. Franklin likens Sigma One's role to that of a wet nurse: Help or develop an emerging enterprise, watchit mature and then let it go out on its own. Usually Sigma One supplies on-site staff support of one or two employees with the, long-term plan, that the business will become so viable that it can buy out Sigma One and operate on its own. In a nutshell, that's the philosophy of the company, says Franklin. "The best solution for the problems of poverty is to create opportunities for the poor people to solve their own problems, and that's fundamentally what we're about." he says. "In the last few years we've primarily focused on that second generation issue of how do you actually form small businesses?How do you get them capitalized? How do you deliver technology? How do you find marketsfor them? That's what we're doing now." And they're doing it well. So well that Sigma One was named the Minority Enterprise of the Yearby the N.C. Small Business Administration (Franklinis Mexican-American) andwas featured in a June 1993 Entrepreneur Magazine article called "51 AmericanSuccess Stories." Sigma One was chosen to representNorth Carolina. Even the inner workings of the company have an entrepreneurial bent. There isno secretarial support - telephones are manned by whoever has phone duty that day. Yes, Franklin also takes a turn. And appropriate to a corporation with worldwide ties, the, person answering the phone is likely to have an international accent - Hispanic, Australian, Pakistani. All of Sigma One's employees are highly educated, often with the help of the company, which provides grants for tuition and fees at one of the Triangle's universities. Inthe 13 years the company has been in business, two employees have earned M.B.A.s at UNC-Chapel Hill, one has earned a Ph.D. at Duke and two have earned Ph.D.s at N.C. State. In addition to his staff, Franklin hires agricultural experts, many from NCSU, as each contract requires. The company's first contract was in 1981 with the government of Tanzania. The African nation was beset with an inadequate food supply, which was blamed on the drought, and a hungry populace. Ironically, Franklin found the problem lay not with the climate but rather with his client - the government. The state run National Milling Corp. was inefficient and mismanaged. The recommendation: Get government out of marketing basic foods and grains. Tanzanian officials followed Sigma One's recommendations and the story has a happy ending. "When I arrived in 1981, there were not many shops - and empty shelves in those that were there. By 1986, the shelves were filled and the farmers were smiling," says Franklin. The story is indicative of what's often wrong withgovernment interference in business enterprises, he says. "It's not only important to get government out of these enterprises but, if you've had many, many years of the government helping you out, then you have no experience in organizing your own enterprise to replace the government." Sometimes all it takes is organization, says Franklin. A few yearsago he helped strengthen an alliance of farmers in northwest Mexico who wanted to expand their markets to large multinational companies such as DelMonte and Dole. Sigma One helped raise the capital needed, conducted an analysis of markets, did business plans for the farmers and even took some of them, literally by the hand, down to the bank. Sigma One offered guarantees on loans and set up trust accounts with the Bank of America, ensuring that the farmers' debts would be paid. This farming alliance was successfully establishing new markets two years before the North American Free Trade Agreement.This venture should be financially rewarding for all entities. Franklin says. Franklin was not hired by the Mexican government or even a large corporation to help the alliance. He was hired by a friend. Franklin was raised in northwestMexico by his Mexican mother after his father,who was from Kentucky, was killed in World War II. If you ask, Franklin will say he was raised in poverty, but he has memories of a happychildhood. If you ask if that's why his life's work is spent alleviatingpoverty, he'll say "no." "I'm Sure there's a strong sense of social responsibility in what I do," he says. "But my life's work is researchon poverty. My philosophy is a result of my professional work, not a result of my upbringing." Franklin's "Professional philosophy" was born at N.C. State University when heheard "The Economics of Being Poor," a lecture by Nobel laureate Theodore W. Schultz. What Schultz espoused wasthat poor people are capable of using their "meager resources" to get out of poverty and wish to do so. In other words, poor people should be helped in ways that enable them to help themselves. "You don't do people good by doing good for them," says Franklin. They have to "make good" on their own. Recently, Sigma One was approached by community leaders in Charlotte concerned about the decline in the number of minority-owned farms in North Carolina. They want the company develop a plan to make these farms viable. There are fewer than 1,000 in operation. Franklin says he's facing his toughest obstacle yet - debt. "Working with poor North Carolina farmers is harder main working with farmers from other placesbecause [N.C. farmers] are very indebted. By forgiving their debts, the government has condemnedthem to never having access to credit." Still, Franklin has developed a plan, albeit in the beginning stages,for these farmers. He sees an opportunity in horticultural production and the fact that the majority of these farms are located along the I-95 corridor in the state. His plan calls for late spring and early fall vegetables to come in on the shoulders of the Florida season and before the Mexico and California seasons. These plantingswould be in additionto the farmers' traditional row crops. He is trying to convince people who buy truckloads of produce from northwest Mexicoto stop in Lumberton to pick up the N.C.crops for distribution inthe northeastern states. "We'll get it to I-95," says Franklin. "All I, need is just one truck a day to stop." Franklin is planning to tapinto the organic foods market with crops such as herbs, broccoli and cantaloupes. Right now, his greatestobstacle is getting the heavily indebted farmers, who are understandably suspicious, to buy into his plan. The idea of taking on a business partner is hard for most of these independentgrowers to accept, says Franklin. He accepts that there will be successes and perhaps a few failures along the way.And that's OK, because it's all part of being a small business, he says. His goal for Sigma One is, not surprisingly, tosee the company's profits and revenues go up while never losing touch with the individual entrepreneurs. As a businessman, Franklin's goal is part that of a matchmaker and a mother: taking people who are already entrepreneurial and helping them get together with the resources - and then nurturingthe offspring. -L. Coffey The Alumni Magazine of North Carolina State University - May 1994 Back to Corporate Experience Back to Top of Page Sigma One Services | Corporate Experience | Enterprise Development | Agribusiness Expertise | About Us | Contact Us | Career Opportunities | Press Releases | Agribusiness Home | Sigma One Home | Other Resources Agbiz@SigmaOne.com Copyright © 2003 Sigma One Corporation Website Maintained byMark Harrell