By Helen Graves
November 1, 2006

Forget circuitous — Circles founders Janet Kraus and Kathy Sherbrooke have graphed a straight trajectory up the success chart. Starting out in Kraus’ extra bedroom in 1997, they’ve grown the lifestyle services company to almost $45 million in revenue and 600 employees in two locations.

Kraus, as CEO, and Sherbrooke, as president, did it not by starting out with a product but on the strength of their shared values, personal synergy and common vision for a company’s structure and contribution.

Once they hit on the time-starved professional as their target, they then began the trial-and-error process of trailblazing a new, untried but immediately welcomed concept in lifestyle support at the Fortune
500 level.

What’s more, they’re now in the midst of launching a second line of business and, once again, pioneering a new frontier.

For their commitment to enterprise, their adherence to a founding premise, their capabilities in forging new industries and their attention to customer and culture, we present Janet Kraus and Kathy Sherbrooke with our 2006 Hall of Fame Entrepreneur award.

Their milestones? Landing $26 million in four capital rounds: friends and family, angels and two institutional rounds. Reaching and overtaking the $5 million mark, when the start-up turns long-term. Hitting profitability in Q4 2001. Adding to their Boston headquarters a second site in Canada in 2004. Starting a new concept with a contained rollout targeting the affluent in 2006.

Instant synergy is what brought the co-founders together their first week at Stanford’s Graduate School of Business. Working together on projects outside of class time cemented their conviction.

“We wanted to make something big out of nothing,” Sherbrooke says. “We took a 360-degree view of business, which is about all the different impacts that you have in the market on customers, on employees, on business partners.”

After graduation, each set off for a different job in different locales and teamed up as planned a few
years later.

Staying true to starting a company and not a business as espoused by their professor and mentor Jim Collins, they batted about ideas until the time-starved professional target began to stick.

Customer interviews and focus groups led to the realization of a need larger than simply locating a dog walker or a housekeeper — the need for a trusted source across all kinds of wants and requests.

“We started with a dual strategy,” Kraus says, “selling our services to consumers so we could move faster and find out what they want, and we always had in mind moving into selling to large corporations as benefit to increase employee loyalty.”

Six months after their start, the co-founders signed on Circles’ first corporation and abandoned the consumer route to focus on B2B. Restructuring was relatively easy since there were five on board at the time, and the corporate focus quickly required rapid hiring and incremental adjustments to growth.

Concierge was and remains Circles’ primary service. What has changed is the emphasis in the corporate and financial services markets they serve, with customer loyalty growing even larger than the employee loyalty market.

“In employee loyalty, we are serving hourly employees at Taco Bell to executives at Ernst & Young,” Kraus says. “In customer loyalty, we’re adding a benefit/enhancement mostly to the high-value customers of credit card companies and private wealth management firms.”

Over the years, Circles has developed an incredible knowledge database, called The Source, which allows its employee concierges to respond in minutes to individuals seeking help with their dining, travel, tickets, gift and service provider needs.

And then there’s the 20 percent of requests that can’t be categorized but have been fulfilled — getting someone off Mount Everest, finding a black cat in the middle of the night, planning an engagement on top of the Eiffel Tower complete with a hidden photographer, tracking down someone after the tsunami.

To accomplish the daunting — which also covers “routine” requests like getting tickets to a sold-out show at a reasonable price — the co-founders have set high standards for employee selection that they back up with a supportive workplace.

“In one word, our culture is ‘vibrant’ or ‘dynamic,’ ” Kraus says. Adds Sherbrooke, “We have to find people who are passionate, driven and want to learn all the time. And then we make this a place where performance is rewarded, not just financially but also with flexibility.”

Although the co-founders at first worried that they were too similar to succeed, their very different roles evolved naturally. Kraus is the networker/rainmaker and Sherbrooke is the one who gets things done. “Where we meet in the middle is vision and strategy,” Sherbrooke says.

To be sure, they have had their challenges. “We say we’re building an industry and a company at the same time,” Sherbrooke says, “so it’s hard to know when something’s not working, is it the marketplace or haven’t we figured out how to do it? We have to be both ready to change and willing to stick to our guns. It’s always a decision-making challenge.”

Growing 30 to 40 percent year over year is another challenge that Kraus and Sherbrooke have
mastered. Good thing — they’re embarking on a second leg of growth that will definitely test their entrepreneurial skills.

“We’re at an exciting juncture,” Sherbrooke says, “launching a Web-based direct-to-consumer concept that takes advantage of all our core capabilities and our deep knowledge of the affluent and the
affluent lifestyle.”

“We’re not just taking our current service and making it direct-to-consumer,” Kraus adds. “We’re evolving the offering to take better advantage of the Web. We will have more specifics to talk about in January.”

So, with all they have been through, what is their winning advice for other entrepreneurs?

“Find your champions,” Sherbrooke says. “Maintaining your confidence in your ability to get it done is 90 percent of the battle.”

“Building on that, network,” Kraus advises. “Every woman entrepreneur should think that the world is small instead of thinking that it is so big.”