Prisoners Pitch Silicon Valley Venture Capitalists

By Matthias Gafni
Contra Costa Times.


For a jar of Folgers coffee and a Heath candy bar, Steven Klaas persuaded a fellow inmate to sketch a brand logo for his personal shopping business plan.

Last Thursday, the convicted murderer stood confidently underneath a basketball hoop in a Vacaville prison gymnasium and pitched The Shopping Sherpa to six venture capitalists in business suits.

“Shopping can sometimes feel like you’re climbing Mount. Everest,” the 46-year-old Klaas, who has been in prison since he was 21, told the investors while holding an index card with notes. “It doesn’t have to be.”

Klaas and 29 other inmates of the California State Prison Solano completed the final step in a rehabilitation program called CEO of Your New Life, culminating in short business pitches to Silicon Valley investors and business owners. It’s the first such program in the California prison system by the nonprofit Defy Ventures, which has similar projects in other states.

Inmates, including many with Bay Area ties, competed in a “Shark Tank”-like competition with the top five finalists receiving IOUs from $100 to $500 to spend when they are released from prison.

The months-long program works to develop the inmates’ street leadership skills, organization, hustle and passion, and channel them into the business world. A judge asked a former drug dealer and gang leader who wanted to start a house flipping business: “Have you run a crew before?” He had.

The day started off with a meet-and-greet. Many of the prisoners had never spoken to a businessperson before, and it was the first time inside a prison for many of the volunteers. One venture capitalist worried that his blue shoelaces would show support for the notorious Bloods gang. He was politely reminded the Crips claim blue and his feet were fine.

Defy founder Catherine Hoke had the two groups stand on either side of a black line, blue prison-issued slacks and shirts facing striped business suits. As Hoke posed questions, participants took steps forward or back to signal their answer. And some responses revealed commonalities.

When Hoke asked for reaction to the statement: “I consider myself to be a natural born hustler,” both sides took a step forward.

Nick Darveau, Google’s director of performance advertising, volunteered for the program after Hoke spoke at the Silicon Valley giant and one comment stuck with him: “Imagine if you were known for the worst thing you’ve ever done.”

“I had more in common with a murderer that I thought I had,” Darveau said. “It’s a fine line and it takes one big mistake to cross that line.”

Such a business competition was relatively new to Klaas; the TV in his cell gets poor reception of the popular ABC show “Shark Tank.”

But Klaas, who became a certified drug and alcoholism counselor and earned associate degrees in business management and business studies, jumped at the chance and spent the past few months reading, watching DVDs and accepting coaching.

“It was a smidgen of self-help, a smidgen of business and a great deal of personal investment. Being honest with yourself is key,” Klaas said.

Klaas grew up with a single mother in a violent home. He was addicted to cocaine and alcohol by age 16.

After a short stint locked up for two robberies, Klaas was paroled. On Sept. 20, 1991, he severely beat Craig Sepulveda, 31, and set him on fire in a parking lot. He pleaded guilty to first degree murder and was sentenced to 25 years to life.

Klaas speaks candidly about the crime, calling himself “a tsunami event in other people’s lives.”

His business plan has strong personal elements. Klaas’ mother has brittle bones from chemotherapy treatments, making it hard for the cancer survivor to shop for herself. Klaas’ wife, whom he married while in prison, has a back injury, limiting what she can carry.

Shopping Sherpa would be a service targeting those people who are older or suffering from disabilities, Klaas said in his pitch. The service would go to farmer’s markets and other specialty stores often overlooked by formidable competitors, such as Google, Amazon and Safeway.

Narrow your target to outlying areas outside major cities, one judge suggested. Start with a used van to deliver goods before venturing into electric bikes for deliveries, a businessman told him.

“There’s a real opportunity for him to build value-added delivery services,” said Rodrigo Prudencio, an Oakland investment director who hears pitches daily. “One of the things (about) entrepreneurs outside prison, the best are resilient and defy expectations in their own way. These guys already have a step up on them.”

Starting their own businesses can help the inmates navigate one particular obstacle after release back into free society, checking the felony conviction box on job applications.

“In general people are fearful of individuals that get out of prison, so they have an extra difficulty to prove themselves,” said Eric Arnold, warden of the Vacaville prison. “The truth is there are ex-felons in every town and city in the nation. So trying to give them an opportunity to move away from crime and have the ability to make a living makes us all better off.”

Harry Cooks has served 32 years of a sentence for murder. The Oakland 52-year-old watched the activities while holding his collection of pencil drawings under his arm.

Cooks didn’t pitch his graphic arts company called Aqbulon, a word tattooed on his right forearm, but said he but planned to join the Defy program next year.

“It gives me an opportunity to showcase my work, get an understanding of business and meet with business individuals who don’t see us like thrown-away garbage,” Cooks said, spreading his artwork across a table.

Dana Harper worked the auditorium, schmoozing and showing off his laminated portfolio of tattoo designs. The 41-year-old from Richmond, convicted of first degree murder, hopes to open his own tattoo studio called Vizualeyez.

“They help us change the way we think and help us reinforce the values we didn’t learn on the street,” Harper said.

Harper’s polished presentation took first place, winning a $500 IOU from Defy, granted to him upon his release from prison. The judges said his idea was simple, but well-formed.

“I remember first reading the application for the program and telling myself I can’t do this,” said Harper, addressing the crowd after his win. “I thought, ‘Well, maybe I’ll give it a try.’ Now, here I am. Wow.”

Klaas, who is up for parole for the fifth time next year, won no money and didn’t make it out of the first round. But he isn’t giving up.

“Now, I have to go refine my ideas and take all the feedback I got from people,” he said. “I hope I won’t be here for next year’s competition, but if I am, I will definitely enroll and pitch again.”

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