October 2009
Go Time
Summer sizzled for student recipients of the Wharton Venture Award
Launching a business wasn't how MBA students Jeff Raider, Neil Blumenthal, Andy Hunt, and David Gilboa thought they'd spend their second year at Wharton. Last spring, as first year MBAs, they teamed up to write a business plan for a Healthcare Entrepreneurship course, but in the process discovered a unique market opportunity – providing high-quality, stylish eyeglasses through an online platform at a fraction of the price of traditionally-sold glasses.
After completing the course with a fully developed business plan, they applied for the Wharton Venture Award, which is managed by Wharton Entrepreneurial Programs. During the application process for the $10,000 Venture Award -- which assists students financially over the summer in lieu of full-time internships so they can focus on developing their ventures -- they received "tremendous" feedback from other entrepreneurs and VCs about their plan, which built the team's excitement and confidence.
Raider's team of eyeglass entrepreneurs felt strongly that the venture needed to be launched while they were still in school rather than waiting a year until graduation. "It was a moment of truth for all of us when we officially incorporated the company and spent our life savings to fund the business at the beginning of the summer," recalls Raider. "But we knew that launching a business in school would be an amazing opportunity because Wharton is the perfect place to incubate a business with thousands of dynamic people from all over the world who could be our first customers."
So when summer began, it was "go" time. After completing Wharton's Global Immersion Program, Raider met up with Blumenthal in China to tour eyeglass manufacturing facilities. The two leveraged the experience and contacts of Blumenthal, who had previously worked for the nonprofit group VisionSpring.
After choosing the best facility for their needs, the teammates flew back to the U.S. where Raider shared office space in New York City with a friend to get the company's infrastructure up and running. With his teammates in full-time internships in other locations, the group relied on nightly phone calls to discuss progress such as the design of the Website and selection of a brand name, which is now Warby Parker.
After spending the summer preparing to launch the business, the team has returned to Wharton with a strategy to keep up the momentum. A major part of that strategy is taking advantage of all of the entrepreneurial resources available, particularly classes that will help them further the business such as "New Product Development" and "Contagious: How Products, Ideas and Behaviors Catch On," a Marketing Dept. course. Raider adds that after spending the summer negotiating with buyers, vendors, and potential partners, his "Negotiations" course will prove "incredibly helpful."
Raiders group also took a cue from their first-year learning team experience and went through exercises to ensure their motives and core values are aligned in terms of what they hope to accomplish with the business. "We established operating principles that we hold each other accountable to, such as always responding to each other's emails within 24 hours and having check-ins every four to six weeks along with weekly meetings every Tuesday night," says Blumenthal. The company plans to launch its initial product line in November.
Another dimension to the award is the feedback and mentoring provided by prominent VCs. Rob Coneybeer, a 1996 Wharton MBA alum and Managing Director of Shasta Ventures, served as a judge on the Venture Award selection committee and believes the process for applying for and winning the award makes it invaluable to nascent start-ups since mentoring is built-in.
"All of us on the committee were incredibly impressed by the quality of presentations and drive of the entrepreneurs," he says. "It is important for students to realize that, through this award, support is available to them during the crucial summer months and beyond. Students I met who have stayed in touch with me are adding an element to the award that goes well beyond the financial assistance."
MBA student Michael Melby also won a Venture Award last summer, but instead of New York, he went home to Newport Beach, Calif. to build his business, PayDivvy, Inc., a financial technology company providing collective payment and finance services for roommates. He says that thanks to the Venture Award, he met his two main goals over the summer: finding a business partner and developing the technology for his venture.
"It was fine being a one-man show last year, but going forward it was too much to handle and the expertise needed was beyond my boundaries," he says. In the process of searching for a partner, an old friend reached out to wish him a happy birthday. During the conversation, Melby learned not only that his friend was making a change from consulting to move back to Newport Beach and was interested in a startup role, but also that he had experience in ecommerce with financial institutions.
The two agreed to a provisional period to see if they were a good match to run the business. By summer's end they were full partners. "That was my biggest accomplishment of the summer," says Melby, who adds that the award provided them with "sustenance" as well as paid for the technology set up and legal and accounting tasks.
Despite the challenge for the California-native of leaving his home on the beach at the end of the summer, Melby says he was excited to return to Wharton where he is continuing to work on the business. "It's easier now that I'm back because I have professors to reach out to and classes that are applicable to my business," he notes, adding that he is currently pursuing an independent study with Prof. Eric Clemons to analyze the landscape surrounding online payments.
A finalist at the 2009 Wharton Business Plan Competition Venture Finals, Melby also is supported by WEP's incubator, the Wharton Venture Initiation Program (VIP). He says, "I have office space and resources like a phone, fax, copier and a pool of advisors that I can reach out to as well as monthly meetings where I set milestones and then have to achieve those milestones. That keeps me paced to run the business, which is a huge benefit."
Second-year MBA student Patrick Curtis, also a VIP member, won a Venture Award for NewBurbia Corp., which is focused on building niche online social communities, agrees that it's important to utilize all of the entrepreneurial resources at Wharton now that he's back at school. "I'm taking classes that I'm really interested in and that are relevant to my business such as "Contagious," Negotiations, and "Monetizing Emerging Media," he says, adding that he's also networking to find as many contacts in the Wharton community as possible who can provide advice about online communities.
Curtis, whose business runs the WallStreetOasis.com and RecWave.com online communities, says his decision to pursue the start-up after graduation was made possible because of the Venture Award. "Before the summer, the business wasn't bringing in enough to live off of, but with the award I had the time to work on it and the community is now bringing in plenty for me to live off of so I can pursue it full-time after May."
Posted October 2009