By Derek Reveron
November 2000 - One recent evening, Proxicom Inc. founder and CEO Raul Fernandez learned that a major competitor in the Internet consulting business lowered its earnings expectations, and Wall Street would likely downgrade the entire sector. He called analysts and shareholders late into the night to assure them that Proxicom’s business was still strong. The next morning, he made more calls. About halfway through the day he told HISPANIC BUSINESS: “It gives me a headache to deal with something that’s not my own creation. I have to constantly restate the obvious to a lot of people because of sector problems. It’s not fun on days like this.”
But the good days far outweigh the bad. Proxicom’s business has doubled every year since Mr. Fernandez founded it in 1991. Last year the Virginia-based company posted revenues of $82.7 million, with profits of $4 million. It employs nearly 800 people and has a deep roster of Fortune 500 clients, including General Motors, General Electric, Merrill Lynch, Mobil, and Mercedes-Benz Credit Corp.
Best of all, Mr. Fernandez took Proxicom public in April 1999, and he still owns about 25 percent of the stock. Fortune recently named him one of the country’s 40 richest people under 40. The magazine estimates his net worth at $287 million.
The 34-year-old entrepreneur, a former aide to Congressman Jack Kemp, is having the time of his life. He owns interests in the Washington Wizards basketball team and the Washington Capitals hockey team. He has talked with Miami Dolphins owner Wayne Huizenga about buying a stake in that team. In June, he married Jean Marie Ferenz, a former cosmetics company executive. Tony Bennett sang at the wedding, attended by 270 people. In July, he spoke at the Republican National Convention.
Hobnobbing at parties and charitable events with Michael Jordan, Muhammad Ali, and Dan Marino, Mr. Fernandez has emerged as a celebrity in Washington, D.C. “I’m viewed as a kind of a poster child for new Internet riches in the Washington area, and for making the transition from the Hill to high-tech and to sports team ownership,” he says. “I like the attention because it helps build the company’s brand recognition, but I’m basically a private person.”
Much of the star treatment stems from Mr. Fernandez’s status as a local success story. He grew up in Silver Spring, Maryland, son of a Cuban father and an Ecuadoran mother. After arriving in Baltimore, his father worked as an agronomist for W.R. Grace & Co. and later for the Inter-American Development Bank. In 1980, the couple enrolled their only son in St. John’s College High School, a private Catholic military institution for boys. The strict demands for discipline shocked young Raul at first, but he adapted quickly. “The biggest shock was off-campus, with some of the 1970s anti-military attitude still in existence,” he remembers. “People made snide comments. One person called me a baby killer or something.”
While still in high school, Mr. Fernandez attended a Capitol Hill fundraiser for Hispanic Republicans with his father, one of whose friends introduced them to Mr. Kemp’s chief of staff. The aide mentioned that the Congressman could use a part-time intern able to translate Spanish documents. The young Mr. Fernandez got the job. Meanwhile, at home and at school, he spent hours on the laptop computer that his parents had purchased. The caption under his high school yearbook reads, “Most remembered for being the first to have a computer.”
After graduating from St. John’s in 1984, Mr. Fernandez worked for Mr. Kemp part-time while attending the University of Maryland. College buddy Josh Young recalls that he stuck out from other students because he was the only one who wore jackets and ties to class (so he could report to Capitol Hill immediately after school). “He was different from other kids,” says Mr. Young, now a writer for George magazine. “He was very focused. He had a time for everything – a time for work, a time for class, a time for going out, and a time for family.”
On Capitol Hill, Mr. Fernandez worked on tax legislation and issues involving Central America. He programmed spreadsheets and ran programs to simulate the impact of various tax plans on different income groups. Eventually, he helped write speeches for Mr. Kemp.
In 1988, Mr. Kemp left the House of Representatives, and so did Mr. Fernandez. With an economics degree from the University of Maryland, he landed a job as a marketing manager for a systems integration firm in Bethesda, Maryland, that handled government contracts. But he yearned to run his own business.
At about that time, Mr. Fernandez learned that a childhood friend had a rapidly spreading cancer. He spent days at his buddy’s bedside before he died in 1989. “That hit Raul hard,” says long-time friend Steve Vermillion, chief of staff for Florida Congressman Lincoln Diaz-Balart. “Raul saw it as an example of how life can be snatched away, and if you have a dream you should go for it.”
So he did just that. In 1991, Mr. Fernandez launched his own systems integration company with $40,000 in savings and two employees. He named the startup Proxima, for the Spanish translation of Next Inc., a firm run at the time by Apple founder Steve Jobs. In 1992, Mr. Fernandez changed his company’s name to Proxicom and shifted its focus to Internet consulting, specifically the design and implementation of Web sites. Business exploded. By 1994, Proxicom landed its first big clients, AOL and MCI, and was on its way.
The company hit trouble early, owing to splits within the management ranks. “It became clear that we had some people who no longer shared my vision,” admits Mr. Fernandez. “I eventually let them go, but I let other people down by letting the situation linger.” He vows never to make the same mistake again. He offers the following advice to young entrepreneurs: Hire people who are committed to your values.
Mr. Fernandez’s friends say riches and publicity haven’t swelled his head a bit. They describe him as the same affable and generous person as always. He has donated $1 million to St. John’s for a new technology building. And although he jets around the world and puts in workaholic’s hours, friends say he still finds time for them. “He showed up at my kid’s birthday party recently and surprised me with a guayabera shirt after I admired one that he was wearing a few weeks earlier,” says Mr. Young. For his bachelor party, Mr. Fernandez loaded Mr. Young, Mr. Vermillion, and six other buddies into a jet and whisked them off to Cancun for a few days of fun.
Loyalty ranks as one of Mr. Fernandez’s strongest traits, friends say. He often cites Mr. Kemp, who now sits on Proxicom’s board, as his role model. The entrepreneur was basically apolitical before working for the congressman, he says. “He was a guy who judged you by the quality of your ideas and thoughts, no matter your background or age. That was very empowering. That’s why I became a Jack Kemp Republican,” says Mr. Fernandez.
“I’ve sometimes stepped back and wondered if this is my party anymore, because of the rhetoric coming from some House leaders. I’ve never voted for a Democrat, although I have financially supported some. But I wouldn’t rule out voting for a Democrat, because I focus on individuals and issues.”
As for Proxicom, his five-year plan envisions a billion-dollar revenue producer with worldwide operations that is a leader in the wireless Web revolution now underway. Proxicom also is on the lookout for possible acquisitions, he acknowledges.
Unlike many Internet millionaires, Mr. Fernandez intends to stick with his startup-turned-giant over the long haul. “One of the things wrong with our industry is that we have a whole bunch of people who build [companies], flip them [to new managers], and leave. That’s not me. I’m going to be here a long time,” he says.
1999 revenues: $82.7 million
1999 profits: $4 million
Stock symbol: PXCM (Nasdaq)
Stock price: $22 (at press time)
52-week high: $67.50
52-week low: $18.58
Market capitalization: $1.2 billion
Most Popular Stories
- Tablets, Cars Drive AT&T Gains
- 2015 Mazda MX-5 Miata Is Fast and Eager
- Small Businesses Add 3 More Worries to Their List
- DOMA Tech Adding Jobs to Process VA Claims
- Apple Warns of China iCloud Attack
- Tech Firms Flock to LA's 'Silicon Beach'
- Job Hunting Is Hard Work
- Stocks Subdued After Gains Earlier in Week
- Ford, GM Expect to Report Strong Profits
- IS Funded by Black Market Oil Sales, Racketeering