Mandatory Reading For All Entrepreneurial "Business" People

One of the most annyoing things about business school were my many classmates that had "an idea for a start-up" that never did anything to realistically pursue the idea.  Many of these classmates were just poseurs.  Others had personal constraints (family, fear, debt, etc.) that precluded them from taking the first step - which is perfectly understandable.

I think that the underlying problem for a lot of these people and - quite frankly - most business people with an "idea" is that they don't know how to take the first step.  

Turns out that most business folk don't know that ideas are worthless...and that getting from "idea" to "product" requires incredible amounts of work, thought, patience, etc.  Getting from "product" to "company" is about 10X as difficult.

Too many that think that the first step is writing a business plan and then hiring some contract developers. Too few realize that the correct first step is a technical co-founder.

I sent this article by David Albert - An Open Letter to Business People - to some of the entrepreneurial faculty at UNC Kenan-Flagler Business School with the hope that they would share it with every MBA student with an idea that "just needs a developer":

So you have an idea for a startup? Awesome! The world needs more people like you. You're going to have to start by finding a technical cofounder. This is hard because you're not a programmer, so I'm going to teach you how to do it.

You'll notice I said "technical cofounder" and not "developer." That's important. If you decide to pay someone a few thousand dollars for a web app made to your specifications, you will probably fail. Why? Because your idea is not very good yet. You're going to have to iterate a whole bunch of times before your idea succeeds. You need someone who's going to be in it for a long haul. You need a technical cofounder.

I posted this today because my friend Patrick Vernon sent me the following email:

By the way, I can’t tell you how often I share this article. I’m forwarding it again this morning to a former student with a “great idea.”  :)

MBAs and Start Ups

Lots of buzz of late regarding MBA grads and start ups.  A couple of representative soundbites vis a vis the value of an MBA when it comes to starting companies:

I have an MBA - UNC Kenan-Flagler 2009 - and I'm starting a company.  And I also have a few opinions on the matter:

In descending order according to value, the most important outcomes from a top quality MBA are relationships, direction, and education.  And they're all very helpful when it comes to launching a company.

Relationships have been incredibly important to our efforts to will Argyle into relevance...and the vast majority of those that have been helpful have come directly from my ties/time at UNC Kenan-Flagler.  I made a list of 100+ prospective investors, advisors, customers, etc. a few months ago - most of whom would immediately return my phone call and all of whom at least know who I am.  That's pretty powerful when I consider the networks of those 100+ people and especially powerful when I consider the vacuum from which so many companies try to launch.

Note that you don't get the same kind of relationships from a part-time MBA.  Nights and weekends programs are helpful for the hard skills - (which I've already stated to be much less important) - but sub-optimal when it comes to relationships.  Do a part-time MBA to get a promotion...especially if you can get your company to foot the bill.  Don't do a part-time MBA to find your co-founder or to learn about launching a company.

If relationships are the most important part of the business school experience - which it will be - then you should use this as a filter when determing where to apply and attend - ESPECIALLY if you're harboring entrepreneurial ambitions.  Think about who you would like to be friends with and go there.  Not to undermine the fluffy stuff like "culture", "fit", etc. - but you're probably best off making friends with people at the best school that accepted you, provided it is a consensus Top 25 or so school.

To me, the direction one can gather from 20 months of business school is much bigger than the first job out of school.  I was able to dabble in lots of areas and work a lot of internships/part-time gigs - all in an effort to figure out what I like and what I am good at doing.  (By the way - not all MBA students do it this way.) 

Starting a company is a life decision - not a job decision.  And I used my time as an MBA student to aggregate a lot of inputs and experiences to ultimately make the decision. The most helpful classes vis a vis launching a company weren't the entrepreneurial classes - they were the "what do you want to do with your life" classes....which for me helped me answer the quintessential start up question: "How poor are you willing to be, for how long, and in exchange for what potential pay-off - monetary or otherwise?"

With regards to the education piece, I've more or less forgotten most of what I've learned.  With deep apolgies to my teachers, I probably couldn't DCF model my way out of wet paper bag.   

And it doesn't matter at all.  The first 6 months of Argyle have been about hustle, product, and customers.  And the next 18 months will be, too.  You don't need an MBA to work (productively!) for 14 hours a day and build a compelling product - you just need furious passion and an overwhelming love for the customer/problem. 

And the "I'm getting an MBA to study entrepreurship" line is total bullshit.  For one - the entrepreneurship cirriculum in most business schools is completely antiquated.  (And that is me saying it nicely.)  All about writing business plans and raising money from VCs - which is educating, but not the way the world always works.  For two - entrepreneurship doesn't happen in a clinical environment.  I wish someone had grabbed me by the shoulders during my 2nd year, shaken me violently, and told me to stop learning about starting a company and to start starting a company.

When it comes time to build a team and run a company, the MBA education will pay off in spades.  I'm sure of it.  And I'm not necessarily talking about the "how to build an enormously complex financial model" training.  (I'll hire a recent MBA grad for that.  Zing!)  I'm talking about the how to relate to people, build a team, and get sh!t done.

And then there is the tiny detail that no one discusses - money. 

Most students that graduate from business school leave with a crippling debt burden - anywhere from $150k to $250k - that more or less precludes starting a company or joining a start-up right after graduation.  So most students follow the money and who can blame them!  Some of my classmates are making bank and deserve every penny because they're incredibly talented and productive.

The problem is that many of these classmates want to start companies.  I know it for a fact because they've told me as much.  But they won't.  They're making fat salaries...and will make fatter and fatter salaries as they continue to perform...which raises the personal burn rate for all and renders the "leave my job and start a company" hurdle insurmountable for most.  This is a fact and this is how the MBA kills start ups.

Due to a variety of factors, I'm extremely fortunate to have graduated with a fraction of the typical MBA debt load.  My student loan bill is the equivalent of a monthly payment on a new Honda Accord - which gives Kelly and me incredible flexibility that we otherwise might not have.  Had I attended another school and had to rack up a ton of debt to pay my tuition and Kelly's shoes - there is absolutely no way that Argyle would exist.

The minimal debt has helped me keep my personal burn extremely low, which has enabled me to stay alive as an impoverished entrepreneur, which has given me time to figure out what to do, find a partner to help me do it, and start making things happen.

So to summarize what has turned into quite the rant:

  • Go to business school to build relationships and find direction.  Then learn stuff along the way.
  • Don't go to business school to start a company or to learn about starting a company.
  • If you're going to business school, give UNC Kenan-Flagler a look.  :)

VCIC, Round II

My team and I head up to Charlottesville, VA tomorrow afternoon to compete in the regional round of the VCIC.

Since winning the Kenan-Flagler competition, we've met with 7 (?) advisors - VCs, attorneys, enterpreneurs, etc. - to talk shop and strategy and we've taken a venture capital valuation course.  We feel like we're primed to make a strong showing.

Should be a good time.

KFBS Student-Run Private Equity Fund

I recently joined up to help start a student-run private equity fund at Kenan-Flagler. It's a pretty cool gig and certainly worth writing about.

We think we're one of the first - if not the first - funds of this type in the nation, at least in terms of our stated goal of delivering a significant return to our investors. (In other words, this isn't a creative way to raise funds for the school.)

The team has four 2nd year MBA students, four 1st year MBA students, and will recruit 2 undergrad analysts over the next few weeks. We made our first investment in January in TransEnterix Inc., a medical device startup company in the Research Triangle that recently closed $20 million in financing. In the future, I'll focus my efforts on sourcing and evaluating early-stage technology deals.


Aside from the first investment, evaluating a handful of other opportunities, and trying to get our act together in general, we've done nothing but try to raise more money. We already have $1MM in the bank and hope to raise another $2MM by the end of May. Talk about a trial by fire. The people I've pitched haven't pulled any punches or done us any "it's for the students" favors, which has made for an extremely educating experience.

We don't have a website yet, but here's a press release and an article from The Times of London. I'll post more as we continue to pick up some steam.

Mild Embarrassment In Strategic Innovation

Today is the first day of Mod III classes. Like many of my classmates, my course schedule is still very much up in the air. As a result, I haven't bought any of my (non-returnable and obscenely expensive) course packs and have only invested time in the courses that I know that I'm going to keep.

It remains unclear whether or not I'll keep Strategic Innovation , but not because I don't think the course is great. On the contrary, it would probably be a co-favorite along with Business Innovation in the Digital Age. (Notice the trend?) Regardless - my status in the course is uncertain, thus I didn't buy (or prepare) the case for the first day of class, nor did I submit the brief online questions.

I did, however, make the mistake of reading the online questions and entering "asdf" in the required fields such that I could advance to read all of the online questions.

At the time, I didn't think it would matter. In fact, I don't even remember clicking "submit". Turns out, Prof. Nerkar likes to include student responses in his class presentation...for all of the class to see. Consequently, my name appeared on screen several times in class as:

Eric Boggs: asdf

For good reason, Prof. Nerkar jokingly called me out...and laughter ensued. I'm pretty sure that I blushed - primarily because the class is 37/40 2nd year students, most of whom I don't know.

Luckily, he also lofted me a softball. He had just finished explaining to the class how our course will explore how organizations can "crack the code" of managing innovation. Thus, when he asked me what I meant by "asdf", I told him that it was "the code that organizations can use for managing innovation" - that I had actually cracked it.

I found my answer both strategic and innovative. Prof. Nerkar seemed to like it, as well.

Integrative Exercise = Hot Mess

Kenan-Flagler welcomed its students back from Holiday Break with an "integrative exercise". Basically, the program gives us a massively complicated, completely ambiguous, and utterly painful problem that "integrates" all of our learnin' and then gives us ~36 hours to solve and present it.

Usually - I like this stuff. This, however, has been a complete pain. My team and I are all sluggish from the long break and certainly not in top form. Plus, the crux of this problem is an equity valuation, which admittedly isn't my cup of tea. To make matters worse, no one on my team has a finance background - whereas other teams have guys that did this kind of stuff for a living before they came back to school.

Our case requires us to find a share price for Harley-Davidson. That's it. Just one number. Said number requires a lot of legwork and insightful assumptions, but, at the end of the day, it is still just the result of lots of math which, when worked carefully, isn't very difficult.

By this afternoon, we got to a number. Unfortunately, said number was $1.02.

(Harley closed today at $41.23.)

Deepak and I are at school now hoping to get to something more reasonable before it gets too late. Ugh.

Comfy Clothes

My friend Ryan posed an interesting question over lunch today:
Why do people use finals as an excuse to wear sweatpants to school?

Have they been studying so hard that they don't have time to put on a decent pair of pants in the morning?

I don't think so.

He's exactly right. During finals, the sweatpants/pants ratio at Kenan-Flagler goes from nil to 50% overnight. Same thing with baseball caps. We're usually a fairly natty group, so the comfy clothes are fairly amusing...

I didn't really have a response other than to point out that my sloppy attire is at least consistent and predictable...and that I would probably wear sweatpants to school every day if my wife would let me.

At The Threshold Of Hell

I have 4 finals coming up this week.  (We took our (hilariously easy) Marketing final on Friday.)

I spent most of yesterday and will spend all of today and much of the week studying.  However, I learned a few lessons from Mod I finals that I have already started to apply to this round of finals:

- Don't weight study time equally. Instead of breaking my neck to exhaustively prepare for all 4 exams, I'm going to focus on prepping for Finance and Strategy. Of the remaining exams, I know these 2 courses the best and therefore think that I have a very strong chance at landing an "H".

I'll still study for Macroeconomics and Operations - just nothing beyond reading through my notes and getting reacquainted with the concepts and formulas.

- Grades do/don't matter. It is worth noting that I could choose to spend the next 5 days doing absolutely nothing and still get a very comfortable "P" in every course. Yet - I'm going to study pretty hard.

Why? Two reasons:

1.) I'm a (Little Lebowski Urban) achiever, thus have an unquenchable compulsion to achieve.
2.) I just know that some recruiter is going to ask me about my grades at some point.

Does getting an "H" mean that I "learned more"? Maybe, maybe not. It probably just means that I did well on the homework, said a few smart things in class, studied for the final, and then brought the heat come game time.

- It is never as bad as it seems. Despite the "threshold of hell" title, Time seems to move pretty quickly when I'm studying. Plus, I'm on an abbreviated schedule compared to last mod. This time around, I'll be more or less done Wednesday at 9PM when I go to the Carolina basketball game. After the game, I'll go to sleep, wake up, take an Operations exam, and then get Christmasy!

Back to it for now.

VCIC Victory

My team won the KFBS internal Venture Capital Investment Competition (VCIC) this weekend. Our victory means that we get to compete in the VCIC regionals at UVA's Darden School of Business in February against teams from Dook, Emory, Rice, Georgia Tech, and Wake Forest.

We're pumped because our team is seriously strong:

Charlie - former consultant, jack-of-all-trades, killer low post game.
Kate - life sciences expert, same last name as Uncle Jesse from Full House.
Jason - medical device guy, pitch artist, cellist.
John - raised VC as an entrepreneur, way smarter than the rest of us.
Me - trying not to mess it all up.

VCIC is a bit different than other case competitions. The teams get 3 (real) business plans from start-ups seeking funding and have a day or so for due diligence. On the big day, the entrepreneurs show up on campus to pitch their business plan. Following the pitch, the teams get a 12 minute "interview" session with the entrepreneurs.

After that, the teams have about 2 hours to put together a term sheet and a presentation for the judges - all VCs or VC-backed entrepreneurs. Teams are then judged on the term sheet, the presentation, and the "interviews". (The judges were in the room as we questioned the entrepreneurs.)

Saturday was seriously intense and seriously educational. Of the 3 case competitions I've done this far, I think that VCIC has been the most enjoyable.

Lenovo Case Competition

Lenovo recently sponsored a business plan competition for Kenan-Flagler students. The company charged the teams with writing a go-to-market plan for a pretty cool technology gadget. (I think I can say that without breaking the NDA I had to sign...)

Unlike the Innovation Challenge, the objective and course of action for this competition were both reasonably clear - which made for a nice change of pace and a much more realistic simulation of a corporate marketing project.

I was fortunate to join a stacked team:

Danvers - case competition legend, amazing public speaker, taskmaster.
Chanel - technology marketing powerhouse, mind-boggling productivity.
Chris - idea man, pitch artist, jack-of-all-trades.
Me - happy to help. happy to be there.

Truth be told, Danvers and Chanel - both 2nd years - did the lion's share of the work. Chris and I - both 1st years - spent much of the previous week cranking through various homework assignments and thus had to play more of a supportive role.

The teams gave pitches to several Lenovo executives last night at their RTP headquarters. In a strategic risk, we decided to deliver a somewhat unorthodox presentation. Essentially, Danvers led the charge by moderating a conversation among Chris, Chanel, and myself - with each of us playing the role of a market segment.

I wore a t-shirt and Chuck Taylors (everyone else was in a suit) and played the role of the "technology nerd", our chasm-crossing target segment. Chris played the "middle manager family man" and Chanel played the "on-the-go professional". In a very conversational style, we talked about how the product appealed to us and how Lenovo's marketing strategy captured our attention. The presentation was both fun and effective.

Turns out that our gambit paid off. We won the competition and took home the cash prize. As a result, I think that all of the gifts that Kelly and I give this Christmas will carry the text:

Merry Christmas! (Brought to you by Lenovo)

Innovation Challenge Recap

I participated in the Darden Innovation Challenge case competition finals in Charlottesville, VA a couple weekends ago. The pre-Thanksgiving crunch, post-Thanksgiving malaise, and post-post-Thanksgiving scramble have kept me from jotting down my thoughts on the experience until now.

The Concepts

We had to answer 2 basic questions:

- How can American Express help its small business customers grow their businesses internationally?
- How can Hilton raise awareness for its efforts to implement environmentally sustainable practices and operations?

Obviously - these were pretty difficult questions. Both sponsors provided some helpful resources and a general sense of what they wanted to see. Other than that, everything was completely open ended.

(I don't think that I can legally discuss the details of our concepts because they're now the property of Hilton and AMEX.)

My friend Danvers - a 2nd year that finished 2nd in the competition last year - gave my team some help getting started, which was incredibly gracious on his part considering that we were his competition. Only after the fact did I realize that he gave us only enough help to avoid embarrassment and no where near enough to actually be competitive...

Our biggest handicap was the fact that we were first year MBA students that were already waaaaay over-extended. Given everyone's class work, recruiting events, and other personal commitments, we didn't have much time to pull our thoughts together.

Presenting

I missed the first day of the event to attend CVF Match Day, so I only participated in our Hilton presentation. Unfortunately, we had to follow my friend Danvers' team - the odds on favorite going into the competition. As expected, they knocked it out of the part.

As I kicked-off our presentation, I tried to position our concept against all of the others. Without going into the boring details, every presentation to that point - and even after - offered a slightly different take on the same handful of themes:

- Hilton "goes green".
- Reward points for guests for making "green" decisions.
- Ambitious - and unrealistic - partnership programs.
- An environmental scorecard program.

Our concept only had one of these - the scorecard. We consciously avoided the others in a bit of gamesmanship. (Obviously it didn't work because we didn't win...)

Still - it was fun to stand up there and honestly say that our idea was (kinda) different from everyone else's and see the judges respond/agree.

The problem with our presentation was that we didn't really practice...unless you count the one 6AM run-through we pulled together that morning. Plus, we didn't prep for the 15 minutes of Q/A. As you might imagine, we took a pretty good pounding from the judges. My team and I tap danced as best as we could, but still couldn't dodge all of the blows.

The Event

First class all the way. Darden is a beautiful school. The judges were all top-caliber and quite friendly. The event was well organized. Best of all - I didn't spend a cent the entire time I was there and will be reimbursed for my travel expenses.

For me, the highlight was the awards dinner in The Rotunda. Dean Robert Bruner from Darden made a few remarks and led us all in a toast to Thomas Jefferson - a (somewhat odd) tradition at UVA. I sat at a table with my teammates and executives from Hilton and Whirlpool. The food was good and the conversation was enjoyable.

After the dinner, Polly LaBarre - author of "Mavericks At Work" - delivered the keynote. She offered a number of interesting ideas as told through a handful of fascinating business anecdotes. For what it's worth, her book is on my Christmas list.

As expected, the other UNC team took home the prize. A team from India School of Business won 2nd - (this was a bit of a shocker...I was not impressed at all by their Hilton pitch.) - and a great team from London School of Business placed 3rd.

One of the judges at our table told my teammate that we were "right there" and "in and out" of the top 3 - so we took that to mean we finished 4th. (Which probably isn't true because I thought our AMEX concept was a bit of a turd...and because the judge was probably just letting my overly eager teammate down easy. Still - I'll continue to pretend like we finished 4th.)

After the dinner, we headed back to Darden for the after party, sponsored by Google. Good times.

The Takeaways

A few quick thoughts because this has already taken way too long to type:

- The networking was absolutely fantastic. I especially enjoyed my conversations with the sponsor representatives from Whirlpool, Harley Davidson, and Google and the MBA students from the UC Berkeley Haas team.

- Q/A is about giving more information and clarifying concepts, not disagreeing (or arguing) with judges. (I learned that one the hard way...)

- You win these competitions by presenting the most ridiculous idea that you can articulate and defend as reasonable/profitable/feasible. If I had it to do over again, I would have kept pushing my team to think bigger. I felt like we were on the right track with both concepts, we just stopped the ideation process too soon...

- The biggest lessons I learned through the process revolved around teamwork - building consensus, disagreeing respectfully, iterating ideas, etc.

- Can't wait to do it again next year. The $20K prize is coming back to Kenan-Flagler.

I Am The Nutcracker

This has been another week that has caused me to (jokingly) question why I decided to subject myself to the endless punishment that has become my MBA experience.

(I say "jokingly" because I self-select into the stress with all of the extra-curricular jive - case competitions, committees, advisory boards, and such.)

At the moment, however, I couldn't be happier.  Kelly is picking me up in a few minutes and we're going to the Ronald McDonald house in Chapel Hill.  I'm dressing up in a Nutcracker costume and we're going to give away tickets to the Carolina Ballet's Nutcracker performances at UNC Memorial Hall this weekend.

My stress level normalized the moment she suggested the idea.

There are a lot of things more important than my finance homework...and this is one of them.

Vandelay Industries Is An Unstoppable Force

Dave, Roberta, and I are working on a manufacturing simulation for our Operations class.  Basically, we buy machines, adjust order quantities, quote lead times, etc. for an imaginary company that we've called Vandelay Industries.  (Yes, we're in latex.)

We were a little late getting started, so we're in the bottom quartile of the class rankings.  However, Dave and I just put our heads together and have moved up 2 places in the past 10 minutes.  Boom!

Are we a little too excited for such a minuscule uptick?  Perhaps.

Does our uber-spreadsheet-model project absolute domination over the coming days?  You bet.

Serenity now.

Prime Time Week

This is a seriously prime time week for me.

On Friday, I'll participate in the Finals Match Day for the Carolina Venture Fellows program. Essentially, I'm competing for the opportunity to interview and possibly land a summer internship at a local venture capital firm.

Match Day is a bit of a cattle call. VCs from several local firms will be on campus and herded into a room. The finalists - there are 10 of us - will each get 5 minutes to give a pitch to the room. No notes, no slides, no handouts. While some are worried about the rules of the pitch, I think that they actually play in my favor...

After the song and dance, the VCs rank whom they wish to interview and we rank the firms with which we wish to interview. Once the matchmaking magic happens, there are 4 15-minute interview slots lined up back-to-back. Kinda like speed dating for an internship, right? (Obviously, one would arrange for subsequent interviews if all goes well on Match Day. )

I feel like I have a pretty good shot. I've already met VCs at my 3 targeted firms and feel like I'm differentiated enough from the other (very qualified and very smart) finalists such that I'll be able to make a pretty compelling case to the firms that focus on early-stage technology investments.

Immediately after I'm done with the Venture Fellows process, I'll hit the road for Day 2 of the Darden Innovation Challenge in Charlottesville, VA. My team has prepared marketing concepts that we'll pitch to executives from American Express and Hilton. I like what we've got and think that we stand a reasonable chance at taking down the $20K prize.

(I broke my snare drum this weekend, so I need the money...)

Word on the street is that Google is sponsoring the event after party. Should be cool to hang out with some real, live Googlers.

To top it off, I have a Macroeconomics mid-term and Marketing case brief due this week as well...a handful of lunch meetings...and an IM basketball game...and the Heels' season opener.

As much as I tend to whine to Kelly about being busy, I hope that I can continue to make forthcoming weeks just as action-packed.

It's Officially Ridiculous

When people ask me about my schoolwork, I usually play it cool and describe it as reasonably interesting, somewhat challenging, very time-consuming, but quite manageable.

Now I'm ready to come clean:

The amount of work I have to do between now and Thanksgiving is completely ridiculous.

Granted, much of the work is related to extra-curriculars such as the Darden Innovation Challenge and the Carolina Venture Fellows process.  Still - the classwork itself is more than enough to keep me miserable for the next 2.5 weeks.

I'm not whining. This is a matter of fact.

Please Don't Call On Me...

I just sat through my Operations class REALLY hoping that the professor didn't call on me. I read the case for the day and had a general opinion on the problem, but I definitely was not prepared to bring my "A" game. (Or probably my "C+" game either.)

My excuses:

- This was the first time I haven't been mostly prepared for class. Honest.
- I spent 11 hours at school yesterday working on extra-curricular jive.
- Game 4 of the World Series > Executive Shirt Company, Inc.

As I fired a barrage of mind bullets at my professor - which appears to have effectively jammed his cold call radar - I realized that I was enduring (what I suspect to be) a quintessential MBA experience...and that there were probably numerous others in my section doing the same thing.

Had he called on me, I guess I would have done what the other less fortunate and less-than-prepared victims did:

- Confidently state an opinion.
- State that my calculations were different than his.
- Mumble unintelligibly and fumble around with pieces of paper at my seat until he realizes I'm about to say something stupid and moves on to someone else.
- Do my homework for the next class.