SECOND ACT: FreeMarkets founder Glen Meakem contemplates future in politics

When a young George Washington first surveyed the land accessing three rivers at present-day Pittsburgh, he observed in his journal that it would make a strategic outpost to secure British control of the land west of the Allegheny Mountains.

Some 240 years later, when a young Glen Meakem first arrived in the city, he saw it as the strategic location to launch a new company that would revolutionize the process of corporate purchasing.

Like Washington, his mentor from history, Meakem has made his initial mark in life in this neck of Penn's Woods.

A year ago, he sold FreeMarkets Inc. -- the company he grew from a kernel of an idea to having its name glow alongside the likes of Mellon and Federated Investors in the modern Pittsburgh skyline -- for nearly $500 million.

At age 42, fabulous wealth has not slaked his ambition as he plots his life's second act. He has staked out a dual path in Pennsylvania politics and venture capital investing in young Pittsburgh companies, while building an expansive new home in Sewickley in which to raise his five children.

He believes he can make bigger money and yet a bigger difference by nurturing companies that will create jobs and by supporting candidates who will steer Pennsylvania away from what he believes are slothful tax and spend policies that stymie entrepreneurism and stunt economic growth. In July, former Lt. Gov. William Scranton introduced Meakem as the chairman of his campaign for the Republican nomination for next year's gubernatorial election bid to unseat Gov. Ed Rendell.

While hurling full throttle into future, Meakem is a serious student of the past, who is winding down his service as chairman of the Sen. John Heinz Pittsburgh Regional History Center.

He said he marvels at Pittsburgh's role as a platform for driving much of the significant change the nation has undergone from Washington's forays here, through the Industrial Revolution and on to the present where ground-breaking discovery is underway at the area's universities and research centers. It's where men like H.J. Heinz, George Westinghouse and Andrew Carnegie rose from nothing to become masters of industry and philanthropy.

Meakem said he chose Pittsburgh over his native New York because he felt it was a place where he can make his own mark in history.

"I clearly can have an impact in Pittsburgh," he said. "I've made my success here. Three of my five children were born here. I want this to be a growing, vibrant place for them if they would choose to settle here too someday."

Meakem was born the second of five children in Armonk, N.Y., a bedroom community 40 miles north of New York City. His mother was a homemaker and his father was an accountant for a pharmaceutical company.

Meakem's older brother, John, said that Glen had always had a knack for "making something out of nothing."

He said his family home had a small hill outside, and that one day while watching the winter Olympics, Glen decided to go outside and build a bobsled run. John Meakem recalls he didn't have high hopes for his brother's project.

"He would be out there for hours building up the snow and icing it down," he said. "We had to shine lights outside so he could work on it at night. After a while, you could get a pretty good ride on it. He definitely made something out of nothing there."

He added that his brother, the president of his high school student council, was involved, "in just about everything."

John Meakem, a lobbyist for the National Association of Electrical Manufacturers trade association in Washington D.C., said he could see his brother becoming interested in politics, because their parents "raised us to be public spirited."

They were also raised as devout Catholics, and Glen Meakem is a regular at Sunday Mass.

He earned an undergraduate degree in government from Harvard and took an executive job with Kraft Foods in 1987, where he met his wife, Diane. Their first date involved chocolate -- a lot of it -- because he accompanied her on an assignment to do an inventory audit of a chocolate processing vat.

He delayed entry into Harvard Business School to serve in combat duty as a captain in the Army Reserve during the first Gulf War. At war's end, he became a consultant for McKinsey & Co. before landing a job with General Electric Co., one of the world's largest industrial conglomerates.

Meakem slid imperceptibly into Pittsburgh in 1994.

While rummaging for ideas to turn into viable businesses for GE, he researched a method for marrying electronic commerce to the mundane world of corporate purchasing. The lumbering GE took a pass, but Meakem was convinced he had found a way to fundamentally change the way corporate purchasing had been done for decades.

The key people he needed to get the venture off the ground were in Pittsburgh.

So just as he had confounded family and friends by delaying entry to graduate school to go off to war, he left his good-paying job, uprooted his family, which then included two infant daughters, and launched a company with a totally new and unproven model in a city he knew very little about.

The company he created, FreeMarkets, became one of the darlings of the business-to-business electronic commerce explosion of the mid-late 1990s. The company's stock shot past $360 per share in its first few days of trading, making Meakem for a few short months in 1999 a paper billionaire -- a high he said he knew could not be sustained.

But when the bubble burst, FreeMarkets survived as Meakem focused on doing something most of the other companies that entered the Internet gold rush didn't -- making a profit. When Meakem and his board realized that while a solid company, FreeMarkets' days of rapid growth were behind it, they decided to sell last year.

Meakem never considered staying on in a caretaker executive role with Ariba.

Instead he decided to put his "entrepreneurial ecosystem" of former FreeMarkets hands and professionals at local law, public relations and other firms to work as he sought out new young companies that he could lend his money and his expertise. He has been like a magnet for dedicated, smart and driven people who, like him, think big.

"I'm into new technology, new ways of thinking, new growth. How do we get people moving forward," he said.

In the post-industrial chrysalis the Pittsburgh area finds itself in today, Meakem senses an opportunity to influence the region's latest phase of reinvention.

"I get such a thrill to find a great company with loads of potential," he said.

Meakem's enthusiasm engenders intense loyalty.

Shane Tulloch was a McKinsey consultant working in Australia in 1997 looking to get in on the ground floor of an Internet start-up when he came across FreeMarkets.

"Glen convinced me to join over the phone. He was a pretty compelling guy who painted a very compelling picture," he said.

Tulloch joined when FreeMarkets was still in its infancy with a dozen employees and less than $1 million in revenue. He was preparing to leave FreeMarkets last year when Meakem invited him for a visit with a Pittsburgh software applications company that had fallen on tough times.

"I wasn't looking for something else to do, but answering the call, I came to that meeting," he said.

Tulloch bought into Meakem's vision again of turning around SEEC Inc., a developer of Web-based software applications for the insurance and financial services industry, and came out of that meeting the company's new chief executive officer.

Meakem is the non-executive chairman, providing insight, networking contacts and recruitment assistance to the company.

"He is a force of nature," Tulloch said. "He goes out of his way to help you be successful. I'd walk into hell to guard his flank."

Tulloch says Meakem will be well-suited to life as a venture capitalist, especially because Pittsburgh has a well-documented lack of fresh homegrown capital for financing start-up companies.

"That's a vacuum Glen would be able to fill nicely," he said. "When you see a firm over a period of time invest in the right businesses, it creates wealthy entrepreneurs and jobs for thousands of people at those companies and create a sense of dynamism."

Tulloch said the only people who have a problem with Meakem are those who aren't prepared to change.

"If people are not prepared to move, that's where you get a clash with Glen. He wants to see things move forward .... If he comes across an obstacle, he doesn't hesitate to walk through a brick wall," he said.

Luke Skurman was a recently minted graduate of Carnegie Mellon University last year who, together with a handful of former classmates, had launched a business selling college guides to high school students and their parents. The guides, written from a student's perspective, delve into topics not normally found in the brochures put out by the schools themselves, such as the quality of the young men and women on campus, an overview of the drug scene and a rating of the food.

Skurman asked for a meeting with CMU President Jared Cohon to find out what he thought of his company, CollegeProwler.

Cohon, likely sensing kindred spirits between Skurman and Meakem, who sits on the board of trustees at CMU, arranged for the two to meet.

Skurman brought along a copy of his company's Harvard guide to a meeting at the Duquesne Club. Impressed, Meakem invited him back to his offices. A week later, he met the rest of CollegeProwler's small staff in their bare bones offices and could feel his entrepreneurial gene take over.

"Six weeks later he invested $500,000 in our company, and we named him chairman of our board" Skurman said.

Skurman said Meakem has been the ultimate mentor for him and his company.

"He and I speak several times a week and we're trading e-mails all the time," he said. "He's always trying to figure out a way to further the brand and get more people aware of it. I just learn so much from talking to him."

Skurman describes Meakem as a motivator who doesn't put himself on a pedestal.

"He feels almost like an older brother," he said. "He loves working people with energy who want to work hard. If you show that you want to work, he will work right along with you."

Meakem has put that same enthusiasm into his charitable giving. Besides his work for the History Center, he has led successful fund-raising campaigns for the Pittsburgh Symphony and other arts groups.

While initially focused philanthropically on culture and the arts, Meakem's nonbusiness interests have steered toward education. A charitable foundation he established with his wife has turned its attention to infusing the region's education bureaucracy with a dose of free market reform through its support of Christian and charter school alternatives to the public system.

This has included support of the Catholic Diocese's Extra Mile Foundation, as well as the Propel charter school start-up that is opening its second and third schools this fall in the McKeesport and the Montour districts, and Imani Christian Academy, a K-12 school serving minorities in the Penn Hills district.

But it is his political role that has taken the forefront of late with his appointment to the Scranton campaign. His interest in politics reached a flashpoint after he was invited to serve on the executive committee of the Hillman-Roderick Commission in 2003, which was investigating solutions to Pittsburgh's financial crisis.

Fresh from laying off people from FreeMarkets because of the bursting of the Internet bubble, he was outraged by the bloat he said he found in the city government, and in the fire department in particular. He calculated that FreeMarkets in 10 years in Pittsburgh generated $10 million in taxes for the city.

"Every penny we had paid was wasted on that fire union.... I couldn't believe it. Here I am laying off talented young, creative, hard working people to support people working 42 hours a week, who really aren't working during a lot of that time."

He said the biggest obstacles of change in his new forays into politics and education are public service unions.

"Unions are the most anti-change, arch-conservative reactionary force in society," he said.

Meakem said he doesn't have faith in the Pittsburgh electorate to put people in place that will make real change. He said he supported Bill Peduto and Michael Lamb in the Democratic primary, and urged that one of them pull out of the race and support the other in order to present a realistic chance against front-runner and eventual winner, Bob O'Connor, whom he doesn't view as a strong agent for radically transforming the way the city does business.

He said he sees more opportunity for change at the state level.

Talk in local circles earlier this year was that Meakem was considering a jump into the race for the GOP nomination.

Jerry Bowyer, a conservative radio and television host, believes Meakem's local profile will grow rapidly over the next five years.

"If we want Pittsburgh to be what it was 100 years ago, you need guys like (Meakem)," he said. "We have an entrepreneurial deficit in the region."

Bowyer sees potential future political appeal in Meakem with his military background combined with his strong family commitment.

"He's military, entrepreneurial and religious. But he's also really into inner-city education, culture and fine arts and hangs out with the theater crowd," he said. "I like guys who can build bridges with red-state and blue-state America"

Bowyer said Meakem also reminds him of a younger version of Jim Roddey, who also was a successful businessman with a military pedigree who became the Allegheny County's first executive in 2001.

Roddey, whom Meakem recently recruited to the board of SEEC, believes Meakem will take a stab at statewide office, and that chairing the Scranton campaign will be a good dress rehearsal.

"It's important to know the leadership of the party throughout the state and not just Western Pennsylvania," he said. "The campaign will give him a bit of an idea of how difficult it is to run in a statewide race."

That could include a run of his own for governor in four years if Scranton is unsuccessful, or for the U.S. Senate to replace Arlen Specter if he is forced to resign for health reasons or if he does not run for re-election in five years.

Roddey said he wouldn't be surprised to see Meakem appointed to a Cabinet undersecretary post in the next administration if a Republican wins election to succeed President Bush, similar to the recent appointment of Dave McCormick, the man Meakem tapped to replace him as FreeMarkets chief executive officer last year to an undersecretary post in the Commerce Department.

But Meakem said he is not interested in returning to government in a secondary role.

"I'm a top-of-the-ticket kind of guy," he said.

Sam Kinney, the first person recruited by Meakem to help develop the idea behind FreeMarkets, said he isn't surprised to hear that his friend had tossed around the idea of running for governor.

"Glen never does anything halfway," he said. "That's the platform that has enough reach to effect the changes you need to be made."

Kinney wonders whether Meakem would succeed in politics. Being an entrepreneur, he said, is a "long series of tough discussions" on what products to develop, which customers to target, which people to recruit and which to fire.

"That's emotionally hard work. It takes stamina and a willingness to lay yourself bare every day and make those hard decisions," he said.

The decisions at the end of the day have to be made with only the best interest of the company at heart, even if that means firing a friend, or killing a pet project that doesn't fit with a new strategic vision -- decisions that most politicians don't have the incentive or fortitude to make in government.

People with the integrity to make those kinds of decisions are rare in the public arena, Kinney said, and unlike venture capitalist investors who keep entrepreneurs' feet to the fire, the electorate in general doesn't reward those who tell the truth and are willing to make hard decisions.

"(Glen) is a principled-centered guy and has very strong points of view about what is the right thing to do. So often in politics, you're forced into very dysfunctional compromises," he said.

Meakem is ready for change. The next few years will determine whether Pittsburgh, and Pennsylvania, is ready for his attempt to make history.