e+i Dec 2011
Who you are, what you know, and whom you know. Even if you have nothing else, you have these basic means, from which you can create multiple ends. This past summer’s crop of Darden Business Incubator participants would recognize this as one of the principles of effectuation—the entrepreneurial decision-making approach that Darden professor Saras Sarasvathy has long researched and taught.
For many Incubator participants, effectuation has become more than a theory. Consciously or not, many of them are applying to their ventures what they’ve learned in Darden classrooms and in the School’s entrepreneurship community about the effectual process—enlisting stakeholders early on in the development of a business idea, moving quickly to market to learn from actual customers, risking only the resources they can afford to lose, and expecting twists and turns along the way. z
We’ll here take a closer look at four of the 2011 participants: Kevin Abt, Thomas Giedgowd, Hunter Murchison, and Greg Herrington. A couple of these young entrepreneurs are still working to develop prototypes, explore the capabilities of the technology, and develop suitable business models. One, Hunter Murchison, has recently launched a product that is available in Apple’s App Store.
Regardless of where they are with their ventures, these entrepreneurs return again and again to their basic means: their previous professional and educational experiences, their passions, a familiarity with technological trends, an awareness of their own skill gaps, an understanding of customers’ needs, a rich network of contacts (many from Darden and the larger U.Va. community), and the time, space, and mentoring provided by the Incubator.
Kevin Abt: Abt Labs
“I need to be doing something that I love,” says second-year Darden student Kevin Abt. It’s not surprising, then, that the idea for his start-up, Abt Labs, was born during a baseball game at Wrigley Field.
A pitcher in high school and a lifelong fan, Abt began to consider possibilities for injecting some high technology into this very traditional pastime. “Sports equipment has mostly been ‘dumb,’” Abt says. He began to envision a “smart” baseball equipped with a sensor that would capture and transmit (to a smartphone or other handheld device) information about its motion as it’s thrown: not just speed but horizontal and vertical movement and rotation. The data could also be uploaded to a PC with software that would provide a deeper, richer analysis.
Major league pitchers, Abt knew, had access to similar technology at high-end training facilities, but he set his sights on a different market: scouts, who travel the country looking for talent. A smart baseball, Abt thought, could provide objective data about pitchers’ throws that could help scouts make meaningful comparisons among them.
Outside voices and views helped advance his idea. A pitcher from West Point introduced Abt to an MLB scout who offered advice about the kinds of information that the device would, ideally, capture. He also suggested that the smart baseball could help coaches decide whom to put on the mound during a game. Other scouts Abt met were more skeptical, but it was through these discussions that he was pointed toward a market he had not considered: high school players and, more important, their parents, who are willing to spend money on equipment that can help their children develop their abilities. Abt points out that buying this baseball would be much less expensive than hiring a personal coach.
Abt’s idea is possible only because of incredible advances in sensor technology, but this is where he bumps up against his own limits. “Having this idea but not being an engineer can be frustrating,” Abt says. “You have to find people who have the skills that you don’t have and will be patient as you learn.” To develop the technology, he reached out to the engineering department at U.Va., where he found a couple of instructors willing to help him run simulations and explore the capabilities of sensors.
“I’m hoping the engineers will tell me if my product should change in some way,” Abt notes. As he tracks their progress, he is envisioning how other sporting equipment, such as golf clubs and tennis rackets, could also provide feedback to players. His business could become not just a smart baseball company but one that redefines how athletes interact with a variety of sporting goods.
Tom Giedgowd: TeeGee
Second-year Darden student Tom Giedgowd came to business school to become an entrepreneur. “For me, business school, and certainly the incubator, gives me a risk-free time to try out my idea.” Like Kevin Abt, Giedgowd saw a market that had yet to take full advantage of the miniaturization and decreasing costs of technology: toys.
As he was expecting his first child and looking around at the toys that would soon enter his home, he saw only superficial interactivity. A stuffed animal might have a button on its paw that, when pressed, would cycle through a set of songs or stories. To him, this was not so different from a teddy bear with a built-in cassette player he’d had as a child. He wanted to push the technology to develop a sentient toy, a “robotic buddy” that would know a child’s name, recognize its voice, and know its likes and dislikes. This would work through a device, housed inside the stuffed animal, that would download information a parent would enter on a website. He also envisioned “smart accessories” that would elicit a reaction from the toy when brought near it.
Although Giedgowd has a technical background, he needed people with complementary skills to help develop the hardware. He found such a person through a friend from his undergraduate days who is a PhD student in U.Va.’s engineering department. And through the artisan website etsy.com, he asked a woman who was making a charming plush monkey to design a “Space Monkey” with an antenna that would house a sensor.
Through meetings with local toy store owners and other retail buyers, Darden alumni in the industry, and others involved in toy start-ups, Giedgowd came to realize his “sentient stuffed animal” idea would be difficult to implement and might not make sense as a business model. Building software that would provide a customized experience for each owner presented a huge coding challenge, and the constant updating of the child’s information (likes and dislikes, for instance) would be a burden for parents. He was also unsure how best to charge for software updates.
Inspired by the explosion of the market for smartphone apps, Giedgowd is now pursuing an application-centric model. Parents will still visit the company’s website but there they will download apps—such as interactive stories and a Spanish language exercise—they think will best suit their children at various ages. “Scaling back the idea of personalization was a major turning point for me,” Giedgowd says, “but I see lots of possibilities. Going to the app model turns the toy into a platform for which partners will be able to create content.” He now has a prototype of the monkey and an initial user: the child development lab at U.Va., which plans to load the toy with an app that will help researchers conduct a memory study.
His immediate next steps are to get the toy in front of more children for testing, file a patent application, and raise the capital he needs to exhibit at the 2012 toy fair in New York City, the industry’s largest event. There he hopes to get more feedback on the toy and how to gain visibility in this market.
Hunter Murchison: SynkMonkey
Before arriving at Darden, Hunter Murchison, (MBA'11), had worked on Wall Street for five years. Becoming an entrepreneur had never occurred to him. All that changed in his first year in the MBA program, when he listened to entrepreneurs speak at various events and heard his classmates talk about some of their new-venture ideas. “I was bitten by the bug,” he notes. “I began to imagine what it would be like to reap all the rewards of my own hard work.”
Murchison’s progress toward that goal has been faster than he ever imagined: His product, SynkMonkey, became available in Apple’s App Store on September 2 and was immediately noticed by Business Insider as one of the week’s best new iPhone and iPad apps. Murchison was also recently selected to pitch to venture capitalists and angel investors at the Distilled Intelligence event in Washington, DC.
SynkMonkey, a social event-planning app, makes it easy for people to make plans with one another, regardless of what kind of phone they use and whether they even have the app (those who don’t receive event invitations and updates as text messages). SynkMonkey also integrates maps to direct users to events—a feature absent from other web-based scheduling tools—allows participants to send updates and chat, and integrates a user’s calendar.
SynkMonkey fills a niche that Murchison and his partner, Darden classmate Jay Subhash, noticed among their smartphone-using peers. “As Darden students, we live and die by our calendars, but the tools we were using to schedule our academic and work lives seemed too formal for our social lives. We saw the need for a tool that would help people, say, meet up at a restaurant for brunch.”
Murchison and Subhash’s first step was to talk to potential users (they found many among their Darden peers) and to find a developer, which they did through a Darden alumnus. From the feedback they received, they concluded that the “sweet spot” of target consumers would be 20- to 26-year-olds, most of whom are already heavy smartphone users but may not yet be wed to more formal calendar tools, such as Outlook. Once they had a rough prototype in hand, they distributed it broadly among their peers for closed Beta testing, which yielded helpful feedback.
Murchison is now working on an updated version based on users’ reactions. He’s also contemplating various revenue models, including advertising, fees for ad-free service or special features, and sales of key words to advertisers. He’s also exploring marketing the app to businesses as a way to conduct mobile event marketing with consumers. To move ahead, Murchison sees, he will need to hire more developers, expand the website, and continue to generate excitement for SynkMonkey in the crowded mobile app space.
Greg Herrington: DealStage
Greg Herrington arrived at Darden with a track record as an entrepreneur and an intuitive feel for how to use his basic means—especially his rich network of contacts—to pursue a business idea. As a fourth-year undergraduate at UVA, Herrington won a business concept competition for an e-mail marketing newsletter for publishers to send targeted content to various audiences. He ran this business, Topik Solutions, for several years after graduating from college before applying his technology background to another venture, developing software for music labels with a friend in Los Angeles.
He then moved back to Charlottesville, where he started meeting Darden students through his first-year roommate at U.Va., Chip Ransler, who was pursuing his MBA at Darden. Getting a business degree began to make sense to Herrington, too, and he soon joined the Darden community and became active in the E-Society, where he met his current business partner.
The roots of DealStage are in that partner’s current position at a large East Coast law firm. Soon after starting as an associate in the firm’s M&A practice, he spotted a problem in need of a solution. The problem is the challenge of managing a deal closing, which requires coordinating many people across multiple firms to keep up with a complicated work flow. The lead firm on the deal sets up a “closing room” of wall-to-wall files and manages what Herrington calls a “complex paper chase” in a process that is inefficient, time-consuming, and subject to errors.
Herrington’s partner wondered if software could streamline the process, so he turned to his friend Herrington, who has now developed a prototype of a program that offers a “virtual closing room.” DealStage does correct for some inefficiencies in the existing system but, as an acknowledgement of the importance of tradition in this field, does not totally overhaul it. Now the challenge is figuring out when and how to test the waters with actual users. “My challenge is to stop coding,” Herrington says. “I know we need to get feedback from some potential customers, but this effectual thing sounds easy until you actually do it.”
In an industry not accustomed to start-ups, how can they explain what they’re up to? How should they approach law firms as potential early customers? He’s hoping to find some local firms, perhaps through his Darden network, willing to use DealStage, perhaps in a process shadowing a closing conducted the traditional way.
Herrington foresees pivots ahead, perhaps in the way the software will be delivered or used. Whereas they’ve designed it to be a collaborative tool, managed by the lead firm in a deal, perhaps standalone uses internal to a firm will emerge. Or perhaps they’ll discover other legal processes in need of automation. Herrington’s entrepreneurial experience and Darden education will serve him well in this regard: He’ll be ready for the unexpected.