Pareto Optimal

“Just because I’m a little biased doesn’t make me wrong,” said Wendy Schain, her impassioned voice filling the auditorium. Her ten-year-old son, Devin, sat rapt in the audience, and can still remember the room full of doctors erupting in applause at the end of her presentation.

Seven years earlier, when she had been diagnosed with stage 2 breast cancer at the age of 27, she thought she was going to die and leave her two young children motherless. She set aside the Psychology PhD she had been working on and underwent a radical bilateral mastectomy, clinging to what life she had left.

“We were very fortunate that not only did she live, but she thrived,” Devin recounts today. “She took that experience and became one of the world’s leading experts on the psychological effects of breast cancer. She also became a certified sex therapist and helped women all over the globe cope with the disease. She was a fierce patient advocate, a brilliant academician and Mensa, and the most dynamic orator I ever had the pleasure of hearing. Growing up, I was deeply moved by her work to give back to the community and make a difference. She was the one to really give me my soul for making a difference.”

The counsel of Wendy Schain was sought by Susan G. Komen in 1982 as she was dying of breast cancer. She was called to places like Israel, France, Germany, and Australia to work with high-ranking government officials and global thought leaders alike. In an era where big data and analytics were obscure concepts on a distant horizon, she understood the importance of getting life-saving information into the right hands. She was a fiery spirit blazing new trails with global impact, helping thousands of women confront the adversity of a physically and emotionally debilitating disease. “At every crossroad in her life, Wendy Schain forged ahead, determined to never let anyone or anything keep her from living a passionate life,” Devin wrote in the forward to the biography he had written for her, entitled A Mind of Her Own.

Inspired to lead a passionate life of his own, Devin was an economics major at the University of Pennsylvania when he first learned about the theories of Vilfredo Pareto, an Italian engineer and thinker who believed in the pursuit of perfect outcomes for the good of all involved. “In essence, his theory of Pareto-optimal is the idea that all sides should be made the best they can be,” he explains today. “People often look at things as a zero sum game, where if one side gets 52 percent, the other side gets 48 percent. But I believe we can expand the pie so every side can be better off. It’s good if each can get 50/50, but 54/54 is even better.”

Impassioned by the legacy of his mother, and inspired by the idea of creating opportunity for the good of others, Devin has devoted his fifty years of life so far to the tireless pursuit of Pareto-optimal states. He is the spark that has helped launch dozens of startups, fueled many early stage companies, and ignited for-profit, nonprofit, and purely philanthropic organizations alike, inventing opportunity for thousands upon thousands of people. A constant creator, he has never been an employee. His is a tour de force of deep resonance, the first notes of which were struck long ago by parents remembered most for their love and example.

Devin’s father was a blue collar entrepreneur who grew up in Baltimore. Known for his common sense and strong work ethic, he spent several years in the Coast Guard and then went to school at American University on the GI Bill. After marrying Wendy, the couple moved to Washington together, where he became a homebuilder and she got her masters in psychology from George Washington University. They had a daughter, Dara, and by the time Devin was born, they had moved to Rockville, Maryland. “I had a wonderful upbringing and was fundamentally shaped by the unconditional love of both my parents,” Devin reflects.

When Wendy received her diagnosis and came face-to-face with her mortality, she wanted Devin to have loving memories of her and resolved to give him everything he asked for during the time she had left. Then several years later, when she realized she wasn’t facing imminent death, she knew she had to begin setting boundaries and saying no. “I remember vividly being in the drugstore and asking for candy, throwing a temper tantrum at the age of five when she told me I couldn’t have any,” he recalls. “Thank God she began enforcing some limits!”

Discipline was a good look on Devin, and a year later, he made up his mind to start selling stickers in his neighborhood. With resolve, the six-year-old donned a stocking cap and his jacket, which was four sizes too big for him. He started making the rounds, mastering the art of the “knock, walk, talk, and sell” that remains a foundational and powerful technique in his business repertoire even today.

Other foundational elements of his life took hold around the same time. He remembers observing his father, who always got up early and demonstrated the importance of a strong, self-sufficient work ethic. His mother had the same unrelenting drive, and modeled the vital connection between leading and learning. “One of my favorite leadership quotes says, ‘Readers don’t have to be leaders, but leaders have to be readers,’” Devin recites. “My mother and I were both voracious readers. She also had a little sailboat she kept docked nearby, where she’d study and write.”

Devin remembers the life-changing day that Steve Gould moved into his neighborhood when both boys were only twelve years old. “We went to elementary, junior high, high school, and college together,” Devin recounts. “He had such a strong moral fiber, and I never wanted to disappoint him by drinking or doing drugs or getting into trouble, so I ended up having one too. He was my best friend and I wanted him to be proud of me.” Devin also served as president of his sixth grade class—a responsibility that piqued his interest in getting things done. “I enjoyed being busy and organized—so much so that I served as class president during my 9th, 10th and 12th grade years as well,” he says.

Devin was a star athlete as a kid, excelling in tennis, basketball, and especially soccer. When he was in 8th grade, he was asked to join the Maryland Soccer School by the coach of the high school he would be attending, just so they could begin working together earlier. Over the years, he went from camper, to counselor, to high school player, to team captain, ultimately winning a state championship that paved the way for his admittance to the University of Pennsylvania. “Sports cultivated in me a love of teambuilding,” he reflects. “They taught me to be competitive and how to work in a group to be successful. They also taught me to look at success not only through the binary lens of winning and losing, but as the simple act of doing your best. To quote John Wooden, the legendary UCLA basketball coach, I came to realize that if you always try your hardest, you’re always successful, regardless of the outcome.”

Highly motivated to make a difference, get things done, do well, do good, and foster deep social connections with the people around him, Devin spent his high school years cultivating his lifelong habit of staying up late and waking up early. Guided by the phenomenal role models he found in his parents, his soccer coach, and Steven, he finished high school strong and engaged in his first truly entrepreneurial experiment on the 4th of July of 1984, the summer of his freshman year in college. “Three friends and I bought 40 cases of red, white, and blue beer for $300,” he says. “We hauled them down to the National Monument and sold each of the 960 cans for a dollar apiece, grossing almost a thousand dollars.”

Devin had always set his sights on attending the best college he could, and thanks to soccer, that was Penn. Unfortunately, his parents divorced during his freshman year, but it had minimal impact on his grades or athletic performance. At the time, he imagined he might pursue a career as a sports agent, but his life took a decided turn during his sophomore year when several friends came over and remarked about the carpet he had procured for the cold linoleum dorm room floor. “People kept asking me about it, so I realized there was a tremendous opportunity there,” he recalls.

With a thousand dollars in his pocket earned waiting tables and working as a soccer school counselor, Devin went to his father’s carpet retailer with a 14-foot U-Haul truck. He could only afford thirty rugs, but he convinced the retailer to fill the truck on consignment, so long as he brought back whatever he didn’t sell. In six hours, and with Steve’s help, Devin sold all 114 rugs to gross $6,000. “I made $3,000 in one day, when it had taken me ten weeks to make a thousand bucks in those other jobs,” he says. “The value was clear, so I officially launched the business as On Campus Marketing (OCM).”

By his senior year, Devin had expanded the business to 28 campuses covered by fifteen friends, sourcing his rugs from a big carpet mill in Dalton, Georgia. He grossed $180,000 that year and was ninth in the country in the Association of College Entrepreneurs, earning a place for himself amongst young powerhouses like Michael Dell.

Targeting incoming freshman by marketing to their parents, Devin and his partner Mike Schoen continued the business after they graduated in 1988. OCM was moderately lucrative, but they were confined by the need to use trucks for delivery. In 1992, they began to ask around about what else might be of interest to incoming freshman, and landed on the need for specialized linens and comforters to fit the extra-long beds at most universities. “After a test run, we estimated we’d do 6,000 orders at $50 each in our first year, which would have earned $300,000,” Devin says.

Much to the dismay of the young entrepreneurs, the company did half that, earning $150,000 for 3,000 orders and leaving them with several hundred thousand dollars of inventory. Still, they weren’t ready to give up on the opportunity. They set up affinity relationships with the universities where they operated, wherein 10 percent of their revenue was given to the school to fund scholarships and other needs. Thanks to this win/win model, the following year, they were able to put the schools’ names on the direct mail pieces instead of their company name. “The mail to the parents read something like, ‘University of Pennsylvania Linen Program,’ with the signatures of the housing directors of the schools,” Devin recounts. “It lent solid credibility, and we expected to do about 8,000 orders at $60 each to bring in half a million dollars. But in no time, we received 32,000 orders at $105 each. Just like that, we were $3 million company.”

OCM had six weeks to come up with the inventory to fill the tremendous demand, so they launched a herculean effort to preserve the good will of the company and deliver on time. They rushed down to South Carolina, where they convinced their manufacturers to bump their Christmas clients and come up with the materials needed to get it done. By Labor Day, as promised, they had fulfilled every order on time.

Over the next ten years, OCM expanded to care packages and diploma frames, doing over $35 million in revenue and giving over $3.5 million to over 1,100 schools. In the aggregate, their twelve years of business amassed $10 million for scholarships. “That’s where I learned that you can do well and do good,” Devin says. “It was Pareto-optimal in action, and a tremendous defining moment that created more than just financial and qualitative value—it created a platform for us to be philanthropic and also allowed me to begin investing in other businesses.”

Amidst his burgeoning business success, Devin’s life took a sudden dramatic pivot when he received a phone call at the age of 29. His mother, who was running the UCLA breast cancer hospital at the time, had had a massive stroke, and the doctors didn’t think she would live. Devin flew out to Los Angeles immediately, drawing on the patient advocacy lessons he had learned from her over the years to ask the right questions and seek second opinions. “In an instant, she could no longer be my rock and the person I went to for support and guidance through difficult situations,” he reflects. “From that moment on, I had to be that for her, completely.”

After extensive research, Devin flew to San Francisco to meet with the godfather of neurology, who agreed to take a look at Wendy’s scans. While telling his mother’s story, Devin remembered she had recently done an interview with Harper’s BAZAAR magazine. He ran out to the waiting room, grabbed a copy, and brought it back to the doctor, flipping open to the photograph of his mother smiling from the glossy pages. “Your mother sounds like a real special lady,” the doctor said. “Let’s see how we can help her.”

With the doctor’s guidance, Wendy underwent a nine-hour surgery to place a clip in her brain. It was a full eight weeks before she could be transferred back to D.C., and Devin stayed in Los Angeles the whole time. Back in Washington, he found an independent living facility for her twenty minutes from his home, ensuring a nice quality of life with the care she needed. “On the day she had her stroke, I lost my mother the way I had known her for 29 years,” he says. “But we were so fortunate that she lived another 19 years. She never worked again, but she spent important, happy days with her children and grandchildren. She was living a nice, quiet life, and I hired a biographer to write her life story as a seventieth birthday gift to her.”

Life finally stabilized, and when Devin was 33, he sold OCM. As a parting gift, his 150 employees gave him a book entitled, Who Is Devin Schain? The pages depict him as an entrepreneur, visionary, marketer, philanthropist, leader, driver, and friend—a man whose genius had created both a market and a company. “We thank you for the legacy you leave behind,” the book read. “Here are some of the great moments over the past fifteen years, although there is no book large enough to celebrate them all.” The pages went on to chronicle over a hundred “Devinisms”—maxims and anecdotes either borrowed or coined by Devin and embedded within the culture of the company. It was a solid foundation, and today the company does almost $100 million in revenue.

“As a direct marketer, you learn quickly that it doesn’t matter so much what you think—it matters what the market thinks,” Devin recounts, of the lessons learned at OCM. “You have to put your ego aside and use empirical data to really listen to the market.” In 2003, when he sold the company in search of a bigger sandbox, listening to the market also meant recognizing the rise of the internet. “For my next business, I made a conscious decision that I wanted a bigger average order than the $70 average orders we saw at OCM,” he says. “And I wanted to be able to leverage the internet and its ability to get to people very cost-effectively.”

With that, Devin launched Educational Direct, a student loan consolidation business that grew to 470 employees, $120 million in revenue, and a $3 billion student loan portfolio value in only three years. “We were really the first ones to do online marketing in that space,” Devin recounts. “We were also among the first in the industry to create and utilize an electronic signature, saving us $1.2 million in mailing costs and picking up an extra 20,000 customers that would not have consolidated their loans with us if we hadn’t made it so easy.”

In 2006, when the company was valued at $375 million, Devin and his partner sold a third of the business to Providence Equity Partners and returned $150 million to their fifteen shareholders. As fate would have it, three months later, federal student loan law changed such that the market completely dried up. It was a quick rise and fall, and a good learning experience for Devin.

Over the following decade, Devin launched a series of companies and also got more heavily involved in philanthropy. Notably, he decided to launch a nonprofit online Hebrew school in 2011, which now has an executive director and twelve full-time employees. With an operating budget of $1.8 million, ShalomLearning has been used by 1,900 families in seven countries around the world, with free access for military families.

“Our nonprofit allows children growing up on foreign bases to learn from a teacher in real time or at their leisure,” Devin says. “We focus on excellence in terms of technology, curriculum, and teaching great teachers, which leads to what I call ‘economies of skill’. I’m very proud of ShalomLearning and the letters we’ve received from families thanking us for making this kind of learning accessible when their children wouldn’t otherwise benefit from Hebrew School because they’re too busy with sports, or because they live in a rural area that makes access difficult.” Devin’s two oldest children used the program, which allowed them to maintain their athletic commitments while preparing for their Bar and Bat Mitzvahs in Israel.

With one of his mentors, Verne Harnish, and a college fraternity brother, Gil Bonwitt, Devin also launched Gazelles Social Sector, a not-for-profit organization designed to help other not-for-profits grow. Devin had taken Vern’s Gazzelles methodology for for-profit growth businesses and applied it through the creation of ShalomLearning, discovering that it was also tremendously beneficial for not-for-profits. Together, they converted the curriculum for the social sector to make available to nonprofits powerful instruction on human capital, strategy, execution, and cash management. “Rather than Return on Investment, Gazelles Social Sector has been modified to focus on Return on Impact,” Devin explains. “We teach our executive directors and other clients how to make a difference and measure impact.”

For over two decades, Devin has actively invested in almost thirty startup and early stage companies, bringing an incredible eye for talent, drive, humility, resourcefulness, and good ideas. A third of those companies have not panned out, but a third have been monetized at varying levels with strong annual returns, with the fates of the remaining companies yet to be seen. “I’ve been very fortunate in these investments, and I think it’s because I put much higher value on the person behind a business, rather than on the business itself,” he says. “Ideally I’d like to understand the business, but that’s really secondary to understanding the founder or entrepreneur. It’s about the people.”

The human side of life, however, isn’t always easy. While traveling for work in Singapore in 2015, Devin got another life-changing phone call. His mother had had another stroke and passed away at age 74. “I remind myself that I was lucky I didn’t lose her to breast cancer when I was three years old,” he says. “I’m so grateful I got 26 character-defining years with her, and then she had an extra 19 years to enjoy life.”

Around that same time, he experienced his first significant loss in business with the failure of Campus MD, a telehealth company Devin had launched to provide instantaneous, 24/7 health services to college and university students for a flat annual fee. “Timing is often the single most important ingredient in business success, and at this point, no one has been able to make direct-to-consumer work in telemedicine yet,” Devin reflects. “Still, it was a hard blow at a hard time, and everything compounded to land me in a bout of depression. It’s so important to remember that mental illness is a disease, not a character flaw. One in four Americans suffers from some from of mental illness, and it’s critical that we fight against the stigma surrounding it so people can get the help and support they need. Entrepreneurs especially experience a lot of highs and lows, so it’s important to be aware of our susceptibility to depression.”

Devin has always been active in the Young Presidents’ Organization (YPO), a network of 22,000 young CEOs worldwide. With a colleague, he created a mental health group within the organization to help raise awareness and provide support. “When you hit a home run, no one ever calls it a great learning experience,” Devin points out. “You learn so much more from lows and tough times than you do from successes. I really hope that my work helps others be open to therapy, medication, and social support as avenues for improvement. Mental health is a spectrum, and it’s important to realize that we’re always shifting between different degrees of mental wellness.”

Even with his bout of depression, Devin was hardly down and out. When he sold a company in 2015, he was given another book of gratitude put together by his employees, not so different from the book he was given seventeen years earlier with the sale of OCM. “It included beautiful notes from people I’ll never forget, like my mentor Bruce Levinson, and David Rubenstein,” says Devin. Also in 2015, he received the University of Pennsylvania’s Joseph Wharton Award for his important business and philanthropic contributions to the community over the years, and continued his role as an advisor to the University of Maryland’s School for Not-for-Profit Leadership and Philanthropy, launched by Bruce and Karen Levenson in 2007.

Through it all, Devin’s wife, Sarah, has remained a constant source of support, wonder, and joy. The two met in 1997 when she was in DC earning her masters from George Washington University, and they happened to be sitting back-to-back at a restaurant one evening. They struck up a conversation, and as it is said in Hebrew, the rest was bashert—meant to be. “She’s a wonderful mother to our three kids, and she’s always understood and supported my passion to be involved in so many different organizations and areas of life,” he says. “She’s a lot of fun, and fantastic on so many levels.”

Through his long and varied career, Devin’s leadership style has always begun with listening. “A good leader has humility, resourcefulness, and good emotional intelligence, or EQ,” he says. “I’m not a Mensa like my mother, but my strength is learning to appreciate everyone and what they have to bring to an organization. Through empathy and strong interpersonal skills, I always try to find a way to get to yes and to make all people better off through Pareto-optimal.”

In speaking to young people preparing to enter the working world, Devin makes a point of taping a dollar bill underneath the seat of an unsuspecting audience member and then calling on them to stand up and look under their chair during his presentation. “The exercise is meant to illustrate that you have to get off your behind to make a buck in this world,” Devin says. “That’s what I did at the age of six when I started selling stickers across the street, and I haven’t stopped since.”

Beyond that, Devin echoes the legacy of his mother when he reminds us that we should strive to do good in the world as we do well for ourselves. “Your ‘why’ evolves through life, but the common denominator for me is that I’ve always enjoyed making a difference and connecting people,” he says.  “We all have a responsibility to make a difference and to make things better for others, each person in their own way.”

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