Business Plan Competition

Note! Our team has changed names to DynaGlass after some mentor feedback about our previous name. 

This year, I was asked to assist with the Georgia Tech Business Plan Competition (BPC). My TI:GER team decided not to enter due to our length of time to commercialization but I still wanted to be involved. Time keeping at the BPC was an amazing experience and hearing the wide variety of pitches and

judges’ comments helped mold our TI:GER team’s commercialization plan presentation. 

There were several traps that teams fell into most frequently:

1. Many teams focused too much on their valuation. They provided detailed pro formas for 5-10 years out and explained all of their assumptions. This took a long time and in a time-constrained presentation format, this can be dangerous. The judges did not seem to take these pro formas very seriously because they were so far out and many of these teams had failed to make a single initial sale. What these slides did do was invite questions from the judges that were often difficult for the teams to answer which leads to trap number 2.
2.  There were several attempts during Q&A for teams to answer questions about assumptions that were simple guesses. These assumptions were often difficult to find accurate numbers around and thus the teams would simply estimate or make up a number to make their financials work. When the judges would question these assumptions, teams would often just “make-up” a justification. This was fairly obvious to the judges and they would harp on that point until the team finally admitted they didn't have a reason. It’s always better to admit you don’t know the answer than to make one up.
3. Teams often did a poor job explaining their technology in appropriate detail and language. Some teams used highly technical language and went into great detail on how, exactly, their product worked. In contrast, there were teams that glossed over their product and focused entirely on their business model. The judges wanted a detailed description that they could understand. Even if they do not understand all the science, it needs to be presented in a relatable way. Without a detailed description of how the product works, it makes the project seem less developed. The question then must be asked “why you?” if you do not have a specific way of solving the problem.

4. Pricing seemed to be fairly random and the judges wanted to see value based pricing. While value creation is often difficult to quantify, most other pricing models were perceived as being more “random”. The teams that were able to determine and demonstrate the value they were providing their customers generally performed better than those that offered vague “savings”.

These four key lessons provided great insight into what judges at business plan competitions are looking for and common mistakes teams make. Often teams seemed so involved in communicating the value of their idea, they forgot to communicate the value of the product that their company was selling. All companies are driven by sales and these judges seemed to take a simplistic view of start-ups. If you’re selling a product that offers greater value to the customer than it costs you to make it, you have a good chance of being successful. For DynaGlass, we need to really focus on the large value we are providing the customers and quantify that value as much as possible. That way our team will be able to overcome the relatively high price of our product. We also need to come up with justifications (written and sourced) for each of our assumptions and be quick to admit what we don’t know (but will find out) during our Q&A sessions.

Valuation Part 1

The first year TI:GER course has shifted focus from customer discovery (although those interviews are still on-going, we have one on Monday with a solar panel installation start-up in the Atlanta area) to valuation.

Valuation is being taught by guest lecturer Mark Buffington who works as a venture capitalist in Atlanta. He provides great insight into how start-ups, specifically tech start-ups, are valued in the market. Since a large majority of entrepreneurial ventures require outside capital, learning how firm value is derived is important not just to VC's but to the entrepreneurs themselves.

So far, we have learned several different valuation methods: comparable transactions, revenue multiples, and discounted cash flow. We are now moving in to monte carlo simulation modeling that will allow us to assign weights and probabilities to a variety of success levels. This is particularly important when valuing start-ups because their chance for early exit is very high. Specifically in the medical device industry, the probability of achieving FDA approval and passing clinical trials must be included in any pre-approval firm.

Learning more about how firms are valued will allow us (over the next two weeks) to create a valuation for our start-up. We're at work practicing the monte carlo simulation tools this week, then it's time to assign weights to our on probability of success. I'm looking forward to really seeing how much of an impact our choices today will affect future value.

Customer Discovery Round 2

Our first year TI:GER teams are now in the middle of customer discovery interviews. This has been an incredibly interesting process and has been my favorite TI:GER experience so far. It's interesting to see ideas and concepts formed within a small group get such varied reactions when explained to the people whom would actually use our product. 

We met on Friday with Campus Services at Emory University. Both an environmental engineer and the director were on hand to answer questions from our team about sustainable design at Emory. The campus already hosts the highest number of LEED certified buildings on any campus in the nation, so our team decided they'd be a great place to start. 

What came out of our interview was that one of our more minor "customer value propositions" (aesthetic appeal) was, for Emory, a major concern. They believe current solar technology is being held back by appearance as well as costs. This finding has certainly shifted our group's focus to aesthetic design in a strong way. 

That is, at its core, what the customer discovery process is all about. We are working towards creating a prototype that is tailored to customer needs and that involves getting out of the office to talk to customers! We have several interviews left with folks further on the construction side of the industry. Emory provided some great contacts with various links in the building materials supply chain. Hopefully understanding more about this process will allow our team to target the correct channel as well as customer to get our product to market. 

TI:GER Integration with MBA program

Our TI:GER team is still hard at work interviewing potential customers and industry players. We have found some early success in reaching out to these decision makers and influencers but still have several more to go to complete our customer discovery assignment. 

For this blog post, I'd like to talk about the TI:GER program as a whole and how it fits in with the MBA program. We're about to start the 2013 recruiting season and having spent a semester and change in the program, it seemed like a good idea to reflect about the experience. 

I see the TI:GER project as an integrative complement to my other classes. Many business school classes are case-based which provide an excellent opportunity to analyze how companies addressed various subject specific challenges. The TI:GER project is different in two main ways. First, the project is entirely new. Instead of critiquing an unsuccessful plan or praising a successful idea, the project requires more imaginative thinking to create an answer when none exists. Similar to the difference between multiple choice tests and short answer, this is an alternative way of thinking and helps reinforce concepts learned in core classes. For example, we have spent time in our Marketing class critiquing other company's plans and advertisements. This information has been used fully with our TI:GER project as we generate target segments and value propositions for our product. 

Secondly, the TI:GER project reaches across subject area. Between IP law lectures, finance valuation practice, and the economics-of-cost, we are learning the basics of all facets of a start-up company. Using a single core idea and seeing how each of the concepts relate to it allow us to understand how all the pieces fit together and influence each other. Very few jobs are "finance" or "operations" and require an integrated understanding that is often hard to learn in core classes. 

So far I have really enjoyed our project, the team dynamics, and the learnings of the TI:GER class. It provides a nice complement to the more subject specific core classes in addition to the entrepreneurship content. 

Customer Interviews

At the end of the 1st semester of the TI:GER program, my team had assembled a detailed Industry Analysis of the Solar industry. This report addressed the competitive forces, the major players, and the diverse markets of the industry.

Now comes the challenge of our second semester- picking the best of these markets to target for our business model canvas. The business model canvas (http://www.businessmodelgeneration.com/canvas) will provide a framework for our go-to market strategy this semester. This requires two steps:  identify and understand potential customers for our solar cell and discover how to best reach them.

Rule No.1 of customer development is that you must get outside your building to find any worthwhile facts. For us, this means that we need to do detailed interviews with at least 10 potential customers to fully understand what the market needs and how customers would be most apt to address their pain. This is not a sales pitch, but a great opportunity to have a dialogue with potential customers (and industry experts) to gain insight into what the market views as important.

Today we had our first interview and already we're finding out about new opportunities and customer needs that we had never thought of in our group.

I'm looking forward to this process and this semester, I'll keep you posted!

Pitch Off Competiton

The 2012 Pitch Off Competition pitted the 2nd Year TI:GER students against Dr. Ku's class with three minute pitches. There were two preliminary rounds, with 4 finalists being selected to pitch once again. This was a great experience to watch these teams boil their innovations down to a tight explanation of what they were doing, what the market was for their product, and how they were going to sell their idea. As a first year student, it's always great to look at where we will be taking our solar cell over the next year and trying to make sure our focus is always on commercialization. I took video of the four finalists (Go Now , BluMetric , ANG , LymphaTech) and congrats to two TI:GER teams for placing 1st and 2nd! Apologies for the low lighting, but the powerpoint presentations and the audio are well worth watching.

My TI:GER team has been hard at work on an Industry Analysis report on the photovolatic industry to close out the semester. Look for a post on that tomorrow!

IP Law and Business Plan Competition

In the second half of October, our TI:GER class has started to focus more on intellectual property and patent law. Our weekly classes have been held at Emory with great guest lecturers that are able to tailor these legal concepts to an audience with a wide range of backgrounds. While I don't think law school is for me, it has been very interesting to get an insight into the patent process and how it relates to innovation. For instance, there are strict rules surrounding the timing of public disclosure or display of an invention and filing for a patent. This will be very important for out team as we seek outside help on our project because it limits what we can share about our product in the absense of a non-disclosure agreement. I'll also need to watch what I say in this blog- luckily most of the disclosure related to our project is of a highly technical nature and I wouldn't understand it enough to describe it accurately.

We are also conducting a prior art search for our product. This involves finding references (usually previous patents or academic papers, but other sources are included) to materials or processes related to our product. A solid understand of what is and is not novel about our idea will determine what the claims of our eventual patent can be. We would obviously like for our patent to be as general as possible because that would force more companies operating in a similar space to pay licensing fees for use of our patent. We are also generating a list of patents that we will need to license use of to produce our product as well. The interdependency of patents in manufacturing has been a very interesting concept to learn academically and I'm excited about applying it to our project in particular.

Our TI:GER team has also been debating participation in the Georgia Tech BPC. This annual competition compares start-up business models that groups of GT students have created. These models can either be a purely academic exercise, or as a precursor to actually creating a start-up venture. While the competition isn't until next semester, there is an outstanding lecture series on alternating Tuesday nights that help walk teams through the process of upgrading an idea to a business. While we cover a lot of this material in TI:GER, these lectures are presented by Venture Lab and provide a slightly different perspective than the TI:GER lectures (focusing less on the legal and technical challenges). My main take away from the lecture this week was the importance of customer identification and need. Much more research has been done for our TI:GER project on the solution (PhD) than the problem. In response, we're planning on getting out in the field and doing customer and market research in the coming weeks to understand the extent and the responses to mobile power generation. I'm looking forward to understanding more of this complex issue and tailoring our solution to meet a generic need.