A publication for the USC Marshall School of Business communityWinter 2006

WARRENBUFFETTUSC MarshallMBAs Meet The Oracle ofOmaha

SABRINA KAY’SPattern ofSuccess

RUDOLPH GIULIANIAnd USC MarshallCelebrate Leaders

STUDENTS REACH OUT TO AIDVICTIMS OFHurricane Katrina,Pakistan Earthquake

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A Patternof Success

IInn 1990, entrepreneur Sabrina Kaystarted a company called CaliforniaDesign College, her modest office dou-bling as her bedroom in her parents’house. Her first class consisted of sixstudents studying for certificates incomputer fashion design.

Just twelve years later, in 2002, Kaysold her school to Pittsburgh-basedEducation Management Corporationfor enough money to retire. By then,California Design College had grown to500 students and offered accreditedAssociate and BA design degrees in bothfashion and computer fashion design.

So you might assume when Kayenrolled in USC Marshall’s ExecutiveMBA program in 2003, already a mil-lionaire many times over, it would be awalk in the park. Not so.

“It was a very humbling experi-ence,” she recalls with a laugh. “The firstweek, I was panicking. I didn’t under-stand ‘z’ statistics, multiple regressionanalysis or MPV calculations,” she says,referring to her courses in probabilityand finance.

“I never knew any of that. Cash

by Robert Barnett

Profile | Sabrina Kay

Sabrina Kay

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flow was the way we did accounting inmy company,” she adds. But she lovedthe academic challenge, and went on tograduate with honors.

And now, armed with an MBA, atrack record in the business world and achance to catch her breath, Kay sharedsome of her observations in a recentinterview with Marshall, Inc. about entre-preneurship, the value of underestimatingrisk and the benefits of perseverance.

Kay’s story begins in Korea whereshe lived until she was 19, when she withher family moved to Orange County,California.

“Growing up, my mother con-vinced me I was the prettiest andsmartest kid on the block,” she says.“As soon as I moved to the U.S., Iwas convinced overnight that I wasthe ugliest and stupidest. I wasn’tfive-ten and blonde, and I didn’tspeak a word of English.”

With a BS degree in computerscience from California StateUniversity at Long Beach, where shealso studied industrial design,Sabrina went to work for a school thattaught fashion design. A self-confessedoverachiever, she rose in five years froman admissions recruiter to director ofinternational students.

“My international students were pay-ing a lot of tuition,” Kay recalls, “but theyweren’t getting the value they deservedout of their education due to languagebarriers. They really didn’t know whatwas going on.” Kay suggested that theschool add courses for the internationalstudents, such as English as a SecondLanguage, and offered to coordinate theprogram. Her idea failed to catch on atthe school, but stayed alive in her mind.

At about the same time, Kay becameinterested in the new CAD/CAM tech-nology, which was just being introducedinto fashion design. With their three-dimensional capabilities, the new com-puter software programs had the poten-tial to revolutionize the fashion industry.The programs along with the proprietaryhardware were being sold to apparelmanufacturers for $250,000 each, but

there was no ongoing training for theindustry, which affected sales.

“I told the computer software com-panies that they were having a hard timeselling the computers because the fash-ion houses didn’t have people who knewhow to use them. I knew a lot of fashionstudents who would be interested inlearning,” Kay recalls.

Kay saw herself as a bridge betweenthe two groups and her school was born.

“I signed a lease. I rebuilt the leasedspace, got all the furniture, wrote thecurriculum, the catalogs, the textbooks,negotiated a deal for the computers,

hired all the staff and faculty, recruitedthe students, and started the school. Allin four months.”

Then began years of Kay pulling all-nighters.

“The night security guards and jani-tors were my best friends,” says Kay,adding, “When you’re a micromanager,you know every single inch of your busi-ness. I had to. I knew how much toiletpaper we needed because I was the onewho changed it when we first started.”

In Kay’s 15-year business plan, thefirst five years would be devoted to estab-lishing the school as a real academic insti-tution with a real product. The second fiveyears would focus on becoming profitable.The third five years called for the school toexpand globally through online education.

Kay met her first two goals, but Kaybegan to have second thoughts as sheapproached stage three of her businessplan. Expanding into the internationalmarket would take more capital and anew corporate strategy. She had also puther personal life on hold for more than a

decade. When Education ManagementCorporation, which owns and operates71 technical and professional schools andcolleges in the United States and Canada,came knocking, Kay decided to sell.

Following the sale, she enrolled inUSC Marshall’s Executive MBA pro-gram, a fertile two years that led to somereassessments about corporate strategyand insights into her management style.

“When I sold my company, I had nodebt,” says Kay.“Going to business school,I realized that’s probably not the bestbusiness practice because the corporationhad absolutely no leverage.” And rather

than manage her next company as aself-described “benevolent dictator,”Kay says she looks forward to beinga “servant-leader,” a person whoteaches rather than manages. She isalso taking her time in consideringoptions for her next business ven-ture, she says, concerned that successmight be more elusive.

“The second time, you’re notdesperate or driven enough. You’remore careful, with too much dele-

gating. You’re not enough of a micro-manager,” she worries.

In the meantime, Kay has agreed tojoin the board of a new business bankopening in downtown Los Angeles inspring 2006 and she is serving on theplanning commission of the City of LosAngeles, appointed by Mayor AntonioVillaraigosa. Among her many philan-thropic activities, is an after-school pro-gram for inter-city kids and a full-servicehomeless shelter with the WeingartCenter in Los Angeles.

As for selling her company, Kay saysshe has no regrets.

“I was very, very lucky that the busi-ness didn’t fail. It gave me enoughmoney to retire and everyone in thebusiness was taken care of. And the com-pany is still doing a good job,” she says.

Starting California College ofDesign reminds her of a passionate,intense love affair, she says, adding,“A first love may be your strongest love,but I’m looking forward to experiencinglove again.”

“The night securityguards and janitors

were my bestfriends,” says Kay.

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