JD Bliss (JDB): After practicing tax law and helping manage a family business, you founded the Omanhene Cocoa Bean Company, the first company in the world to make gourmet chocolate out of 100% cocoa beans from Ghana. Given your entrepreneurial career, why did you originally decide to go to law school?
Wallace: I had always intended to get a graduate degree and decided to go to law school at the University of Chicago because what lawyers did had always appealed to me: solving problems and resolving disputes under the law. I also thought I would like the intellectual challenge of the law and decided in law school to focus on tax law because the tax professors were both very cerebral and intellectually idiosyncratic; they were funny in an offbeat sort of way. I liked that because almost everyone else in law school took themselves so seriously. The tax professors could detach themselves and see the humor in what we all were doing.
JDB: Where did you practice once you got your law degree, and did you find that practice personally satisfying?
Wallace: I joined a 30-lawyer Washington, DC firm in 1986 and focused on federal tax law. The things I found most interesting about the work were the individual stories that showed the huge impact of the tax code. Home ownership, marital status, estate planning – all these are greatly affected by tax law, and working with people and learning their stories, which were either sad or wonderful, was fascinating, almost in a voyeuristic sense. Ultimately, however, I found something missing in being a lawyer. What I did was esoteric and intangible, and sometimes I had a sense of just moving papers from one side of the desk to the other. My most fascinating clients had businesses and factories, and I wanted to work with something tangible like that.
JDB: That would seem to set the stage for your move to your family’s business. What did that involve?
Wallace: I had wanted to return to Milwaukee, where my family lived and where my grandfather founded a men’s sweater and sportswear business during the Depression. The company was named Midstates Sportswear, but by the 1960s my father had transformed it into a combined wholesale distributor serving the screen-print and embroidered industry.. I became VP of marketing, and it was soon apparent to me that industry consolidation would make it necessary for us to sell the business. We did, but probably waited too long to do it. It was a useful lesson that helped prepare me to launch my own company.
JDB: Could you start at the beginning and explain the company name and how you developed your interest in Ghana’s cocoa?
Wallace: “Omanhene” in the Ghanaian language means “paramount chief” or “highest of leaders.” My association with Ghana goes back to 1978, when I spent a summer during high school as an American Field Service foreign exchange student living with a traditional family in a small Ghanaian village. I became fascinated with the people and the country, and learned that Ghana grows the world’s best cocoa beans. However Ghana exported virtually no chocolate; most of their beans are mixed with those grown elsewhere and are made into chocolate products in other countries. When I wound up my family’s business in 1991, my thoughts turned to a business idea I had formed years before: creating an entrepreneurial company in Ghana to transform the cocoa grown by local farmers into finished chocolate products.
JDB: Having developed such a unique business proposition, what were your first steps to turn it into reality?
Wallace: On my own I learned all I could about the cocoa industry, and in 1992 I spent three weeks in Ghana visiting the country’s only cocoa processing factory. I met with a private sector adviser from the U.S. Agency for International Development, as well as with administrators of the huge, 43,000 person bureaucracy that oversees the country’s cocoa industry. What I wanted to do was unprecedented, because at this time virtually all of the investment focus and development interest was on public works projects and large infrastructure installations, not small factory investments.
JDB: How solid and detailed was your original business model?
Wallace: Let’s just say it was probably not something I would have advised a client of mine to do if I were still a tax lawyer. But I knew exactly what I wanted to accomplish. I did not want to be an extractive operation such as simply pulling oil, gas or minerals out of the earth. I wanted to keep agricultural and manufacturing dollars in the country, with everyone getting a fair price. And I wanted all the business operations --- all of the value-added manufacture -- to be in Ghana, with very little being done in the U.S. I finalized my agreement with Ghana’s Cocoa Board in 1993, and began producing Omanhene gourmet chocolate products in 1994. Omanhene has since become one of the most successful and creative joint ventures between the U.S. and Ghana. We have won accolades from United Nations Secretary General Kofi Annan, Shirley Temple (the former ambassador to Ghana) and President Jimmy Carter. We produce value-added gourmet chocolate tailored specifically to export markets, resulting in enhanced foreign exchange revenues for Ghana.
JDB: How did you personally handle the technical details of the startup?
Wallace: From a practical standpoint I couldn’t have done it without my legal training and the backing of my wife, who is also a practicing lawyer. I focused on creating the strategy for the project, and first went to Ghana with a 75-page joint venture document I had drafted myself. I soon realized this wasn’t really helpful. The administrators of Ghana’s Cocoa Board are highly educated and sophisticated but are also somewhat risk adverse, so my primary task became personally selling them on this somewhat risky venture. We ended up with a two-page operating agreement that simply and fundamentally documented the economic advantages to Ghana under the prevailing rule of law.
JDB: Omanhene’s U.S. management staff, which is still based in your hometown of Milwaukee, consists of you and three other persons. Given that, what is your role in the company today?
Wallace: In a word, I do everything. I handle the marketing of Omanhene products, oversee new product development, secure capital, negotiate with government officials, and do a lot of hands-on work. Some years ago I was in Ghana on a trip with then-U.S. Commerce Secretary Ron Brown, and it suddenly struck me that I had been working in the company warehouse just a few days before. I don’t want to overstate the workaday aspects, because there are some executive functions that only I can do such as negotiating with Ghana’s government for a planned expansion or arranging for joint ventures of a strategic nature. Signing the United Nations Global Compact and becoming active in the Global Compact’s promotion of good corporate stewardship is something that only I was positioned to work on. I’m to the point where my big challenge now is to identify experts in areas like marketing and packaging so they can do things I no longer have time to do.
JDB: What has been your greatest satisfaction as an entrepreneur, when compared to being a lawyer?
Wallace: Omanhene challenges all of my strengths and my full intellect. That compares to tax law, where you’re concerned about things like the length of a specific depreciation period for a particular asset rather than the larger strategic picture. My company gives me an outlet for my creative side in issues like packaging and branding. When you consider that a year ago we were one of only two companies highlighted by the United Nations in a video they produced, it’s clear that we’re doing some remarkable things.
JDB: Based on your success at establishing a new company and business concept, what advice would you give to attorneys who would like to become entrepreneurs but are reluctant to consider such a major change?
Wallace: I started Omanhene when I was 29. I wasn’t married, lived in an apartment, didn’t have a car, and probably would have been happy sleeping in a tent. I simply didn’t have as much to lose as would someone making a career change later in life. I didn’t have a fear of failing, or of being ashamed if I did. My thinking was that I didn’t want to turn 80 years old some day and ask myself, “What if?” I wanted to try starting a company before it became too difficult. But it meant giving up things that I was used to and that appealed to me as a lawyer – technology, staff, a nice office, even office politics. What I’d suggest to someone who isn’t 100% sure about pushing ahead to something new and giving up what they have, is to look for ways to expand the scope of what you’re doing now. The lawyers I’ve always admired most are the generalists – the older partners whose clients love them because they are always there and are able to tackle anything. Young lawyers are trained to be specialists, and I think that can be inherently unsatisfying. Try recapturing a little of the generalist spirit, perhaps through pro bono work. The satisfaction that I get in everything from working in a warehouse to negotiating a trade agreement is a reflection of that generalist spirit. I think it can bring greater satisfaction to more lawyers if they pursue it.