MIT 100K Competition

I had the chance to attend the Semi-Final ceremony for the MIT 100K Business Plan Contest, which has outgrown its name and actually has prizes in the 100's of thousands across the various tracks.

This huge event in on of the large halls on the MIT campus featured a keynote speach from Johnathan Seelig the co-founder of Akamai and now managing director of Globespan. Interestingly he's also on the board of Zipcar, the founder Robin we met earlier in the week.

It was a great event from a number of perspectives. Firstly it was huge, with a good few hundred in attendance, showing the calibre of the competition and how popular the hard working volanteer students who run the event have made it.

Also Johnathan was a great speaker, and interestingly he re-presented his original pitch for Akamai from 10 years previous when he had entered the then 10K competition. Although a finalist, he didn't win the competition, and was the first to admit the flaws in his presenation. It was interesting to see how the business model has evolved, and how their original plans changed over time.

Unfortunately it will be a while until competitions such as Blueprint reach this size and stature, but at least they are heading in the right direction.

MIT

We were welcomed by the MIT crowd, and it was good to hear from current students about their experiences at Sloan. They certainly work hard, and I was staggered to find out how much they get involved with activities in and outside of the school. It was a great atmosphere at MIT, and the social activities were great.

The 100K was a huge event and I’m glad that I attended the ceremony. The scale of the venture was a big shock and it was great to hear how involved the students are in the organization. To hear Jonathan Seelig, the founder of Akamai, one of the biggest internet services speak was a great opportunity. Especially to hear how far he had come since he had entered the then 10K competition 10 years ago. For Jonathan to give the same presentation that he gave at the beginning of his company was very interesting because it was obvious how much has changed since then, although he always has aspirations to be a large company, I’m just not sure he thought quite so large.

It was a shame that the evening pizza event wasn’t more organized and hosted at a better venue with more of the students available to meet with us. It seemed that the event clashed with two very high profile events for Sloan students, which limited its attendance greatly.

Law, law, law

Our first talk of the day was from John Akula from MIT on the topics of law issues with employment, with focus on trade secrets, loyalty, non-competitive agreements through an interactive case study. John went through some of the issues that surround employment from a US perspective, which was interesting to hear. I was surprised most by the at-will contracts that are common in the US, where an employee can leave at any time, or can be let go at any time, without notice, or reason. Although there are many courteous reasons to give notice, this doesn’t have to be the case. This obviously has many implications for job security, and therefore affects areas such as loyalty and trade secrets.

There are many differences between both the laws and the cultures between the US and UK regarding employment law and areas such as non-competitive agreements. Having come from the games industry, where there is a lot of anxiety surrounding these areas, it was fascinating to hear another perspective on this. I was glad to hear that there are States, such as California that ban non-competitive agreements, and it seems to be a factor in the success of Silicon Valley.

The interactive workshop worked really well in this situation, on what could have been a very dry topic. However the interested case studies, along with the insights from the fellows, who all have a variety of backgrounds that they were able to bring to this area made it an enjoyable session.

MIT Entrepreneurship Center

It was interesting to visit the MIT Entrepreneurship center as I could see how much weight MIT has put behind its entrepreneur focus. It’s not surprising they are considered one the best colleges for entrepreneurs, especially regarding their 100K competition when they have a center and dedicated staff at the university, even if it is only run by 5 strong full time team. The center being outside the remit of the other schools seemed to be an important aspect of the success, along with the strong alumni network MIT has.

We had an interesting discussion with Bill Aulet regarding business plans and how they could be successfully implemented as a PowerPoint presentation. If you are able to create a 10 slide version of your plan, that acts as a plan of execution for your business.

He also went through the areas that a 100k plan would be marked on, in the areas of opportunity and risk. These are:
• Market
• Execution
• Team
• Plan
• Competitive Advantage (tech)
• Financial
• Other i.e. Green energy, political implications (where appropriate)

Further details on this were that the market needs to be broken down into manageable steps, rather than looking at the market as a whole. The example was you can’t just say you’re going to sell cars to 1% of the market, need to look at it on a much smaller scale.

Gross margin is an important consideration, and something that hasn’t been touched on yet. Bill said that you need to be careful when presenting the margin, near to 10% is what a distributor has, and 90% is Microsoft, which is very difficult to achieve and would be hard to convince a panel, or VC that you could work with this percentage.

Competitive advantage is usually thought of as tech, but can also be critical mass of customers, or even having customers locked into your system. Having the best technology is not always necessary, and often overrated by the entrepreneur. Speaking of VC’s he warned that all they care about is Internal Rate of Return (IRR), it’s what they are rated on and the most important figure to them.

Once you have a plan, it should be signed by all management so that they are all in agreement with its contents, and are all dedicated to its success. The plan needs to convince a number of people that it will be successful. Intially this is you, then your team and also your customers. Finally your mother, meaning it should be easy to understand. At all times it should stir up passion and excitement, only then will it be ready for others to look at.

An invention on its own is like counterfeit money, it’s not worth anything until it’s commercialized!

Innovation = invention + commercialization

Even if there is no competition in the market, then you need to explain why. If there is no competition, this will flag warning messages in anyone’s head looking at the plan. It’s best to frame it as, even though there is no competition right now, you recognize there will be in the future. It’s also a bad idea to compare your new product with a product a competitor already has on the market, they will often have new products with your functionality in the works that you don’t know about. A better way to look at them is to find out what they are competing on, and differentiate yourself that way.

One thing I was disappointed with regarding the center is their concentration on graduate and PhD students for the programs and not undergraduates. One thing I have learnt since being on this fellowship is that you can never start too young in teaching entrepreneurial practices and if you are introducing the practices to school children, then the opportunities should also be there for all students. It was also interesting to hear that they haven’t achieved any increase in students that wish to pursue entrepreneurship who finish at MIT compared to when they start.

I don’t want to sound negative, but have a few other observations about the center. They rely on donations from local businesses and past students for funding, which account for 70% of the income. This doesn’t seem like a sustainable business model to me, and could suffer in the future. It also appeared that the classes were generally given by lecturers at the university, and they rarely used active businessmen.

It was great to hear from Bill again, he really is an inspiration and has so much knowledge and insights into the process we are all going through its scary. I would jump at the opportunity to spend more time with Bill and his team.

MIT Seniority

Bill Aulet gave a great talk on how to approach a new market as an entrepreneur, with practical examples through a case study and insights into what problems a new venture faces with new opportunities. It was interesting to see how even a great new business can fail if they don’t approach new markets in the right way, keep up with market transitions and come to market at the right time.

Like all the talks so far, there was a huge amount gained from the session with Bill. Some of the main lessons were the importance to focus on particular markets, rather than trying for a conquer all strategy. The most successful companies are able to deselect markets, and dominate a good place in the market they are in. The DNA (vision) of a company is set by the founders and it can't be changing all the time if the company is to be successful. An interesting thing to note is a market pull company will move towards a tech company over time, and a tech company will move towards a marketing company. This should be realized and decisions based on this such as hiring staff.
There are three main areas that a company can compete on, price, innovation and intimacy (customer service) and you shouldn’t try to compete on all three areas. It’s also not a fun experience to only compete on price.
You should be aware in your marketing strategy what customers you are selling to at a particular time, such as early adopters compared to late majority. There are different kinds of sales and support that need to be provided for each customer.
The company should be built from the customer out, not the technology out and it’s not all about the effort, it’s about being at the right market at the right time.

The case study was an interesting read, but as the first Harvard case study I had approached, I was taken by surprise how much I was expected to know from the case study, and the depth of that knowledge. It was certainly a great learning experience to follow through in detail how the company unfolded.

Bill's session was very interesting, and he was able to articulate how important other aspects to a new venture are such as market positioning and sales are for a new business. This was a great expansion on other talks we’ve had so far. The learning experince just keeps on getting better and better.