01 Apr 2001
New Ventures New Gains
HBS Business Plan Contest ThrivingRe: Alison Wagonfeld (MBA 1996); Bill Nussey (MBA 1996); Jennifer Fonstad (MBA 1997); David Rosenblatt (MBA 1997); John Iannuccillo (MBA 1997); David Perry (MBA 1997); Bryn Zeckhauser (MBA 2001); Bob Rosin (MBA 2000); Sarah Boatman (MBA 2000); Bob Dreyer (MBA 2000); Tony Tjan (MBA 1998); Matthew Burkley (MBA 1998); Alexander Scherer (MBA 1998); Kristin McClure (MBA 1999); Kathy Krueger (MBA 1999); Karl Wiley (MBA 1999); Paul Conforti (MBA 1997); Kim Moore (MBA 1997); Kristen Krzyzewski (MBA 1997); Stig Leschly (MBA 1997); Myra Hart; Josh Lerner; William Sahlman; Joseph Lassiter; John Deightonby Julia Hanna and Susan YoungTopics:
Entrepreneurship is nothing new at HBS. The first course in entrepreneurship was
taught over fifty years ago, and the list of alumni who have founded profoundly
influential companies from Continental Cablevision to Staples to Bloomberg
is lengthy and impressive.
But while past alumni often waited seven to ten
years before setting up their own shops, todays graduates are taking the plunge
much sooner. In 1997, the first-ever HBS Business Plan Contest yielded a formidable
number of participants and mobilized a strong contingent of entrepreneurs who turned
an academic exercise into business realities. In recent years, the student
appetite for entrepreneurial ventures has increased significantly, says HBS
professor of management practice Myra M. Hart, who has studied the career trends of
HBS graduates. The contest gives them an excellent opportunity to test their
ideas in the public arena.
In the process of teaming up with fellow students to write business plans, working
with their faculty advisors (and getting academic credit for their efforts),
attending seminars designed to help them with the nuts and bolts of starting their
own business, and pitching their final plan to a panel of real-world venture
capitalists and entrepreneurs, HBS Business Plan Contest participants gain a unique,
out-of-classroom learning experience. Since the contest was first launched, it has
played a crucial role in shaping the career paths of many HBS students.
Class Project to Religious Quest
Like the businesses that have sprung up from the contest, origins of the HBS Business
Plan Contest can be traced to a classroom exercise. In 1996, Alison J. Berkley
Wagonfeld and William C. Nussey (both MBA 1996) proposed the contest as a project
for Professor Josh Lerners Venture Capital and Private Equity elective.
We looked at it as not just a theoretical paper for class but a sustainable
plan, says Wagonfeld, who was then president of the Small Business &
Entrepreneurship Club and is now a SVP of Greenlight.com, which recently merged with
CarsDirect.com. It moved quickly from class project to religious quest,
adds Nussey, the former CEO of e-business consulting firm iXL and current president
and CEO of Silverpop Systems.
Wagonfeld and Nussey pitched their idea to HBS faculty members, including early
supporter William A. Sahlman, and passed it along to entrepreneurship club members
Jennifer Scott Fonstad, David M. Rosenblatt, and John N. Iannuccillo (all MBA
1997). We were really focused on spawning entrepreneurship on campus,
says Fonstad, now a managing director at Draper Fisher Jurvetson. While she recalls
the administration initially voicing concerns that the contest might distract
students from their studies, the trio persisted, offering solutions to concerns and
securing sponsorship from credible outside sources before eventually winning the
Schools approval. HBS has always been good at running experiments
reinforcing the ones that make progress and killing the ones that dont,
says HBS professor of management practice Joseph B. Lassiter, who, together with
Sahlman, worked with student organizers to make the contest a reality. All parties
agreed that the competition must be connected to the curriculum, that judging would
be conducted professionally, and that there would be a consistent faculty presence to
maintain an institutional memory and continuity for the event.
The organizers knew they were on to something when 37 teams submitted plans to the
first contest. The climate was ripe in 1997. Enrollment in courses like
Entrepreneurial Finance and Entrepreneurial Management was way up; the Internet
revolution with its low barriers to entry was in high gear; venture
capitalists were looking for big ideas; and the phrase dot-com was
gradually entering the vernacular. I wrote four business plans while in
school, says David P. Perry (MBA 1997), who was a finalist that first year
and went on to implement his plan upon graduation. Perrys start-up, Chemdex,
rode the dot-com roller coaster and quickly went public with shares reaching a high
of $243 amidst much media fanfare. But like many early dot-com success stories,
Perry, who has been called a founding father of the business-to-business online
marketplace, has experienced the effects of gravity lately. Chemdex is now defunct,
but Perry is successfully running its parent company, Ventro, which provides services
for online exchanges.
While the gold rush days of the late 1990s may be over, there is still a tremendous
amount of enthusiasm for entrepreneurship among HBS students, faculty, and alumni.
The change in the economic climate may have reduced the buzz on campus about
the Internet, but the students who are really passionate about their ideas and about
creating something themselves are still committed to the contest, says Bryn
Zeckhauser (HBS 01), one of seven student organizers of this years
contest. There is no putting the genie back in the bottle, adds HBS
executive director of Entrepreneurial Studies Michael J. Roberts, who, as the
contests faculty organizer, works closely with the student representatives.
The overall interest in entrepreneurship is solid. People have seen how much
fun it is and how rewarding and satisfying it can be.
Feet to the Fire
The road to those rewards can be a bumpy one, but the Business Plan Contest gives
participants a chance to test and hone their ideas. The founders of Bang Networks,
the plan that took last years first prize, saw the contest as an opportunity to
practice their pitch for the network technology company that they planned to start.
Having to submit the plan formally and knowing it would be scrutinized forced
us to spend a lot more time making sure all the details especially the
financials were perfect, says Bang Networks president Robert B. Rosin,
who spent spring break finalizing the plan with MIT collaborator Tim Tuttle and
fellow Class of 2000 teammates Sarah Boatman (now director of strategic marketing)
and Robert Dreyer (vice president of engineering). We probably wouldnt
have pulled any all-nighters if we werent entering the contest. It forced a
certain discipline at an early stage. Certainly were glad now that we spent all
that time focusing on the plan itself and on the basic economics of the
business. After graduation, the group headed to San Francisco to raise money
and launch Bang Networks, which went live this winter and now employs 45 people.
Chemdex founder David Perry echoes Rosins sentiments: If you are serious
about being an entrepreneur, the contest is a great experience because it will hold
your feet to the fire on deliverables. That said, Perry readily admits that
the plan we originally entered and the plan we ultimately came up with looked
almost nothing alike, and that, most participants agree, is an important
feature of the contest. Perrys research led him to disqualify his
initial idea and sent him down a different path.
While Anthony K. Tjan (MBA 1998) says the idea for Internet consulting company
ZEFER was first discussed in a pub in Toronto before he came to Soldiers Field, it
was fine-tuned during his second year at HBS. The contest and our field study
afforded us the opportunity to test ideas in a relatively risk-free
environment, remarks Tjan, a founder, director, and EVP who developed the plan
for ZEFER with Matthew P. Burkley and Alexandre Scherer (both MBA 1998). I
think you can do a lot as a student. Theres less formal pressure because you
havent taken in investment or signed on people. You are much more able to
experiment. We realized that this was the best time for us to really test a
concept. With their faculty advisors acting as healthy skeptics,
the team laid the groundwork for ZEFER, which has received more than $100 million in
venture funding, earned over $100 million in 2000 revenues, and boasts over seven
hundred employees in six cities.
Some contest participants have found that the experience has boosted their
confidence. During her second year at HBS, Kristin S. Rhyne (MBA 1999) set about
researching an idea she thought was a good one putting spa services in
airports. She solicited the support of teammates Kathleen G. Krueger and Roland K.
Wiley (both MBA 1999) and conducted customer research. We learned that we
needed to provide more than just services, explains Rhyne, who added prestige
cosmetics sales to the mix and wrote a solid business plan that was the only
nonInternet-related finalist in 1999. Rhyne founded Polished upon graduation and
opened the first location at Bostons Logan Airport last December. The
fundamentals of the company have not really changed, she says, adding that the
contest gave her the courage to take the entrepreneurial leap. Having a bunch
of smart people say that I had something that looked viable made me realize that this
was something I was meant to do.
People, People, People
After brainstorming restaurant concepts over pizza in Harvard Square, Paul D.
Conforti (MBA 1997) and some friends got the idea to open a dessert
establishment. When he and classmates Kimberly A. Moore and Kristen E. Krzyzewski
began to pursue their idea for Finale, an upscale dessert restaurant and bakery they
launched a year after graduation, they found their affiliation with HBS helped them
tremendously. There was not a door that did not open for us when we said,
Were students from HBS; would you be willing to talk to us?
observes Conforti, who is now Finales president. Their HBS credentials, recalls
Conforti, were also very helpful in convincing investors that we were going to
manage the inherent risk of running a restaurant better than others might.
The entrepreneurs version of the real estate mantra (location, location,
location) might be people, people, people. Everyone interviewed for
this article mentioned the importance of people both whom you know and whom
you pick to work with in getting and keeping a business going. As ZEFERs
Tjan puts it: People are crucial. Its what you hear at HBS that you
dont fully understand when youre there that all the OB and
leadership classes and the softer side of HBS are among the most important
lessons to remember.
Part of that softer side is the ability to make contacts, and contest
entrants now have a strong group of previous participants with whom they can network.
There is a critical mass of alumni who serve as judges, speakers, mentors,
funders, and partners, says Stig Leschly (MBA 97/JD 98), a former
contest participant and two-time judge. Leschly maintains a sense of humor about the
fact that contest judges panned his business plan for Exchange.com, an online
marketplace for rare and hard-to-find items he founded upon graduating and sold to
Amazon.com for a reported $200 million in stock seven months later. Leschly counts
himself among the new network of alumni who can help budding entrepreneurs. Kristin
Rhyne, whose plan for Polished captured the interest of angel investors, not the
big-ticket venture capitalists that some of her classmates enticed, reports,
Most of my contacts in some way, shape, or form were initiated at HBS,
especially in terms of fundraising and advisors.
There has always been a powerful set of voices on campus for more traditional
careers, but entrepreneurship didnt have such a strong, organized voice
previously, says Mike Roberts. Now that the contest has gained some
traction and several past participants have been successful and come back to the
School to discuss their experiences, there is even more credence given to the
Spotlight on Learning
The spotlight in any traditional contest usually shines brightest during its most
dramatic scenes the panel of judges, nail-biting moments of anticipation, and
the awards ceremony. For participants in the Business Plan Contest, however, these
highlights represent a fraction of the months of preparatory groundwork that go into
formulating the plan itself. The official timeline for the contest begins in the
fall, with organizational meetings and HELP (HBS Entrepreneurial Learning Program)
seminars student-sponsored talks given by venture capitalists and other
business professionals on topics such as market research and financing. Besides
providing practical information and support, these get-togethers serve as a catalyst
for students to form teams and articulate early versions of their concept. In the
course of conducting research, each team can apply for and receive a grant of $1,000
to defray expenses the telephone bills, plane tickets, and office supplies
incurred by any budding start-up.
Faculty advisors provide an early sounding board for business plans, and the contest
requires that the work underpinning the plan be conducted in conjunction with an MBA
course taken for academic credit. A student, for example, might enroll in a field
study course for which the final project is a business plan.
Mike Roberts notes that the contest allows students to get out of the classroom and
experience a different educational model. Cases cant always completely
capture the way the real world unfolds, says Roberts, explaining that
participants must source primary data and conduct in-depth analysis in their business
area. When students work on a project that they have a personal stake in, it
ratchets up the energy and enthusiasm they bring to it, he adds.
Sometimes, of course, that enthusiasm needs to be tempered by a more clear-eyed
perspective. For faculty, the balancing act is between being a cheerleader and
a realist, comments Finales Conforti. The professors we worked with
asked tough questions that made us think about the critical issues and figure out if
we had a viable business.
John Deighton was in a very positive way a healthy skeptic,
says ZEFERs Tjan of his faculty advisor. He helped us push and refine our
ideas so that we were iterating versions of our plan faster than we would have
By early spring, all plans are finalized. In March, weeks of fieldwork and late-night
strategizing lead to Super Saturday, a 1999 addition to the contest that
gives every team the opportunity to present its plan before a panel of judges
composed of venture capitalists and entrepreneurs. Each team gets feedback from the
experts, and ten semifinalists are selected for the second round of judging, at which
point the field is narrowed to four finalists.
Some of the judges (who are selected by the faculty involved rather than by students
to avoid any potential appearance of conflict of interest) are past contest
participants. Exchange.coms Stig Leschly comments on what he is looking for as
a judge: A teams résumé is important, but its relevant to just a
fraction of the problems that need to be solved. The qualities we look for are a
strong work ethic, people skills, judgment, maturity, and a sense of humor. In
terms of the plans presentation, he continues, you need a big, crisply
articulated idea, conveyed in a cogent presentation that is nondefensive and
straightforward and that acknowledges the risks involved. The conversation you have
about the business is the main way an investor figures out whether or not you have
the people skills to actually make a plan happen.
The judges rankings are unveiled at an awards ceremony in late April. Each of
the four teams makes a final presentation before the winner is announced and
presented with the $10,000 Dubilier Prize, which honors the late Martin Dubilier (MBA
1952), cofounder of the prominent LBO firm Clayton, Dubilier & Rice. (Each of the
three runners-up receives $5,000.) While the prize money (and $25,000 of in-kind
services shared among the finalists) is not insignificant, faculty and student
organizers emphasize that the contests value lies well beyond such monetary
rewards and services, which are donated by corporate sponsors and the HBS
The measure of success is not whether a team wins or loses, says Joe
Lassiter. What matters is whether or not the students can use this experience
to get to where they want to be in ten or fifteen years. In the end, the most
significant benefit any MBA experience can give students is a better idea of who they
are and what they want to do with their life.
The contest is a learning tool, concurs Myra Hart. As an educator,
my goal is not so much the immediate output as it is the long-term knowledge being
At press time, 59 teams had submitted entries for the 2001 contest, including 11 for
the Social Enterprise Track that was established this year to meet the increasing
student interest in nonprofit plans (see sidebar). While that number is down from
past years, it shows that even with a changing economic climate, HBS students are
interested in pursuing entrepreneurial endeavors. Contest organizer Bryn Zeckhauser,
noting that plans have been entered for low-cost eyeglasses and for software for
cardiologists, says she expects to see fewer Internet-related plans this year. Myra
Hart observes that while some students may not be as willing to take the risk of
implementing their plan right out of the MBA Program, they appreciate the value that
the contest has to offer. Whether students see the contest as an immediate
payoff or as a way to gain a credential in the future, I think they believe it is
something worth doing, says Hart.
In conversations with past contest participants, each stressed how much they learned
by participating. Such a foundation, they say, can help MBAs no matter what they end
up doing. Youve got to make sure that you understand the likelihood of
failure no matter how smart or how good the plan is, says Stig Leschly.
It takes a certain type of person to put up with this risk. If you define
success as learning, you are better off.
And Ventros David Perry emphasizes that the learning process has only just
begun once youve written a plan. Writing a business plan is extremely
important, but it is really just 1 or 2 percent of what it takes to build a
business, he remarks. There are huge unknowns. You invariably
underestimate the work in front of you. Its probably a good thing, otherwise
youd never do it. Entrepreneurs, he concludes, are almost by
definition optimists. If you took a cold, analytical look at what you are doing
the risk versus the reward and the chances of success youd
probably go work as a consultant.