Love of flying has this alumnus riding high – in the air and on Wall Street

Alumni Profile

Shawn A. Dorsch (BA Economics, ’86) makes time to fly antique aircraft, sometimes half-way ‘round the world. It’s a challenging, exhilarating and sometimes risky hobby. In many ways, it reflects his professional career.

As president and Chief operating officer of Blackbird Holdings, Inc., based in Charlotte, NC, Dorsch flies – in the passenger seat – on the more traditional commercial aircraft between offices in New York, London and Charlotte. He also makes frequent trips to Tokyo where Blackbird once had an office, and where it may once again.

Dorsch’s Wall Street career actually began in Tokyo. While working toward his BA in economics, with Prof. Edward Erickson as his mentor, he studied Japanese to fulfill his language requirement. The language choice seemed logical, since his father had traveled to Japan several times a year on business for more than three decades, and his family frequently hosted guests from Japan.

“At that time, if you studied Japanese for four years and did well, the North Carolina Japan Center would help you get a job in Tokyo for one year,” he said. Dorsch was the first non-engineer in that program, and went to Japan in 1986 right after graduation. “I was working with Unisys, helping them market ATMs there,” he said.

That was also the time when Japan began opening its markets to foreign investment, and “there was a huge demand for American staff who could speak Japanese,” Dorsch said. He accepted a job with JP Morgan, working on a project to help the firm gain a membership on the Osaka Stock Exchange. “That’s how I got into the world of online trading,” he said.

After a nine-month stay in the States for a JP Morgan training program, he returned to Tokyo to begin trading Nikkei stock index futures and options. In 1993, he returned to the United States, this time to work with First Union Bank (now Wachovia), helping it to start its derivatives group in Charlotte.

Building Blackbird

“In 1996, I left and embarked on the adventure of starting my own company, to build an online system for interest rate swap trading,” he said. Swaps are form of OTC derivatives trading used by companies to moderate their exposure to interest rate fluctuations.

“Though now not so unusual, in 1996 online trading of complex OTC derivatives very leading edge,” he said. “As a result, I ended up raising the money from friends and family members and investors outside of North Carolina.”

In the mid-1990’s stocks, bonds, and foreign currency trading was all beginning to go online. Having seen the success of Reuters and EBS with online trading systems in the foreign exchange market convinced Dorsch that something similar with the more complex derivatives transactions would also be highly successful.

“Our customers are the world’s largest financial institutions who are buying and selling interest rate derivatives with each other,” he said. The process is similar to buying and selling futures on interest rates, which allows institutions to hedge their interest rates and protect themselves against miniscule movements up or down – movement which could make a difference of millions of dollars for the size of loans needed by firms to build oil rigs, for example.

“Banks do this all the time, over the phone,” he said. His company is helping them move the transactions to the Internet, using proprietary software that they developed. The Company and the system, known as Blackbird, was named for a U.S. spy plane developed during the Cold War and still one of the fastest planes ever built.

Blackbird spent about three years building the product, which Dorsch describes as an online business-to-business exchange for OTC interest rates swaps.

Dorsch was ready to go live with the launch his system in the fall of 1999, “about the time the Internet boom started,” he said.

The young company soon signed on about 20 large banks as customers and then decided to take their business global, setting up offices in Tokyo, London and New York City.

In 2000, raising money for expansion wasn’t as difficult as it had been on their first go-around. “After a heated competition between Kleiner Perkins and Internet Capital Group (ICG), we raised $30 million from ICG for about 20 percent of our stock – we were worth about $150 million on paper, with no revenue yet,” he said.

“We then set about building our business, going from 20 people to 100 people in about six months. I went from having a small office in New York and one in Charlotte to having one in Tokyo and London, and embarking upon global expansion – pretty exciting for a little company that started in my living room in North Carolina.”

His success was frequently covered by the business press - and then the Internet boom ended.

“The stock market was falling and the guys who invested $30 million in us were in trouble. No one ever worries about the investors having a problem,” he noted. The venture capital firm began selling its investments to other companies to raise cash. “They sold their stock in us to a competitor who did things over the phone,” Dorsch said.

This change in control of such a large block of stock then set off an 18-month hostile takeover attempt of Blackbird. He was back in the business news columns again, but this time publicity helped to drive clients away as they assumed he would lose the battle. Dorsch had to fire about 80 people, close his office in Tokyo and scale back in London.

Rebuilding

But he didn’t lose the battle, and since 2003 has been rebuilding his business. “Now the company is back together and we are putting it back into the marketplace,” he said. “I went from being worth an ungodly amount on paper to virtually nothing. Most people would have walked away, but we knew it was a good product.”

How did he get through the tough times?

“It’s all about tenacity,” he said. That’s something he says he learned while working at JP Morgan, where he was the lone non-MBA grad amongst the Ivy League alumni. “You are the most important determinant of your personal success, so stick with what you’re doing.”

He did, even though at one point he had to sell his house and put everything into the business, and his tenacity has paid off in many ways.

Stranded in London while on a business trip on Sept. 11, 2001, he was introduced to the woman who last summer became his wife. His offices are up and running in London and New York, and he is back to traveling to Tokyo regularly.

He’s also back to flying vintage propeller aircraft again, a hobby he set aside during the difficult years.

Back to flying

“In April, I was co-pilot on a four-engine 1948 Lockheed Constellation airplane - the kind designed for Howard Hughes, as seen in the movie the Aviator - that we flew across the Pacific Ocean, from California to Korea via Alaska. This particular Constellation was once owned by John Travolta and most recently by one of the men who founded Microsoft with Bill Gates.

As with the wild ride that he’s had with his business, tenacity helped him and his co-pilots get through that often tenuous plane ride. The heater quit working soon after takeoff, causing the flying team to spend nine days and 37 and a half hours in the air with near freezing temperatures. They stopped in Anchorage, hoping to stock up on warm clothing, but it was early April and the WalMart in town had already shifted to its summer clothing stock.

Their next stop was Cold Bay, in the Aleutian Islands. “With only 57 residents, no trees, terrible weather, the airport it surrounded by airplane wrecks from people who tried to land there in bad weather,” he said.

Their first attempt to depart Cold Bay was thwarted by a snowstorm, and then by an engine that wouldn’t start. On the advice of one of their experienced pilots – age 82 – they got the other three engines running and did a high-speed taxi down the 12,000 foot runway. The air movement basically push-started the reluctant engine and they were airborne.

“We finished that trip with large numbers of handwarmers in our shoes, three pairs of pants and sleeping bags,” he said.

Having now flown across the North Pacific in the winter, in a 57-year-old airplane, he’s now got another trip in the works. This time, he is helping to bring a vintage plane from South Africa to its new owner in the United States, via South America and the Caribbean. “It’ll be a lot warmer,” he says.