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Muscling Its Way to Victory
MuscleMorph
Wins 2006 Wharton Business Plan Competition Grand Prize.
For the third year in a row, life-science companies dominated the Wharton Venture Finals, the culmination of the school's yearlong Business Plan Competition.
The 2006 winner, MuscleMorph, would build artificial muscles from polymers for artificial limbs. Its patent-pending "smart motion actuators" weigh less and perform better than competing technologies. The team combines the talents of two 2006 Wharton MBA candidates — Howard Katzenberg and Rahul Kothari — with those of a Stanford University doctoral student named Rodrigo Alvarez. Alvarez, who earned his master's at the University of Pennsylvania, invented the technology.
Second-place finisher IntelliStem Orthopaedic Innovations would improve artificial hip joints and other bone implants by applying a ceramic coating that would electrically stimulate bone growth. Both members of the team are undergraduates and thus also snagged the Frederick H. Gloeckner Award for the best business plan by a Wharton team.
Rounding out the top trio was Home-Base, which would take a novel approach to business-process outsourcing. The team would hire military spouses and let them work at home to staff virtual call-centers.
As winner, MuscleMorph received $20,000 in cash, in-kind contributions of legal and accounting services and an invitation to enroll in the Venture Initiation Program, an educational program created by Wharton Entrepreneurial Programs for students with growing businesses.
IntelliStem received $10,000 as the second-place finisher as well as another $5,000 for grabbing the Gloeckner Award. Team leader Jonathan Danoff is earning his bachelor's degree at the School of Engineering and Applied Science, while his teammate, Jared Bernheim, is pursuing dual degrees — a bachelor of science in economics from Wharton and a bachelor of science in engineering.
Home-Base teammates David Kreiger and Michael Likhov, both 2007 MBA candidates, took home $5,000. Like MuscleMorph, both IntelliStem and Home-Base also received in-kind services.
The other five finalists were Biometric Payment Solutions, Focus Therapeutics, iBroker, Leto Pharmaceuticals and OrthoLab Technologies.
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For more on the Wharton BPC read about cross-campus finalist Leto Pharmaceuticals' and their lifesaving business plan
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Judging the competition were Art Bilger (W75) of Shelter Capital, Clark Callander (WG86) of Savvian, Lawrence Lenihan (WG93) of Pequot Ventures, Carol Marino of Johnson & Johnson and Sherrill Neff of Quaker BioVentures.
The Venture Finals topped off a year of preparation and planning for about 400 students. They began by submitting briefs of business ideas and then refined those into more detailed business summaries. Judges selected 25 of the summaries as semi-finalists, and the semi-finalists handed in full-fledged business plans. That group was winnowed to the "Great Eight" finalists, who were invited to present at the Venture Finals before an audience of venture capitalists, faculty and students. The annual competition is open to any team that includes a University of Pennsylvania student and is sponsored and managed by Wharton Entrepreneurial Programs.
Kothari of MuscleMorph called his team's reaction to their win a cocktail of "shock and happiness," adding, "We accomplished more than we ever thought we would." He and his teammates have already incorporated as SmartMotion Technologies LLC and are pondering their next steps.
"I didn't think this was something that I was going to do post-school," he said. "Now it's become a once-in-a-lifetime opportunity. As the winner from two years ago told us, ‘Now the real work begins.'"
Meantime, the three students face at least one atypical obstacle. "I joke that we're the NAFTA team — a Canadian, a Mexican and an American," he added. "So we need to figure out some immigration issues." Kothari is from Toronto; Katzenberg, from New York; and Alvarez, from Mexico City.
Kothari and Katzenberg met Alvarez through the Wharton Entrepreneurship Club. Alvarez had sent an email seeking Wharton students willing to help him write a business plan and perhaps enter the Business Plan Competition.
"We get a lot of these emails, and 99 times out of 100, you just delete them," Kothari recalled. "But I read that one, and it sounded interesting. I probably didn't even fully understand it then. As soon as I met with Rodrigo, he hooked me."
Alvarez' actuators use an electroactive polymer to convert electricity into mechanical energy. They could replace cumbersome, costly electric motors in a number of applications in addition to prosthetic limbs.
Katzenberg said the competition, with its deadlines, deliverables and mentoring, complemented their Wharton educations, cementing the concepts and cases that they studied in class. Plus, it enabled them to develop a business plan and an investor pitch that they have already begun to use to approach venture investors. "Without the BPC framework, we wouldn't have those tools," Kothari added.
Like the MuscleMorph team, the students behind IntelliStem believe that they can improve the functioning of harmed human bodies. Team leader Danoff dreamed up their technology.
An aspiring orthopedic surgeon — he's headed to medical school this fall at Pennsylvania State University — he conceived the idea while taking his biomaterials and biomechanics classes at Penn.
"You learn about the femoral hip implant because it's a perfect example of the stresses passing through a device," he said. "You learn about problems like bone breaking down around implants and that there's was no real solution for that. And I was thinking about why would that be."
In a normal joint, bone electrically stimulates itself and thus regenerates when it's compressed through weight-bearing activities like walking or standing. But the bone surrounding an artificial implant weakens because the device absorbs much of that energy. As a result, implant recipients often have to undergo painful and costly replacement surgeries.
"I figured out a way to incorporate electrical stimulation into the implant," Danoff said. "I did that through piezoelectric ceramics. The stress transferring through the implant compresses the ceramic material, and that creates the voltage."
In theory, IntelliStem's technology could also be used on metal pins and plates that surgeons implant to stabilize badly fractured bones and thus speed healing. The first trials of the technology, using implants in dogs, are slated to begin soon at the Medical University of South Carolina in Charleston.
Danoff and Bernheim are roommates and met back in high school, while attending a camp in Israel. Once Danoff heads off to medical school, they'll try to run the company virtually. "We've brought in another individual to help us," Danoff added. "He's done this before. Jared will be at Penn for two more years. I'm only going to Hershey [Pa.], which is about two hours away." Danoff said he should be able to continue to develop IntelliStem's implants because Penn State requires that its medical students do research to graduate.
The problem that Home-Base aims to solve isn't physical, like MuscleMorph's or IntelliStem's, but at one level, psychological. Its creators, Kreiger and Likhov, realized as they researched "virtual call centers" that military spouses were often underemployed and psychologically isolated. Because being married to soldiers and sailors forced them to move often, these folks are typically unable to build rewarding careers. That, the two students thought, has made them an underutilized workforce.
But the Internet allows for the creation of virtual call centers, where the agents work from home, rather than in big, central "cube farms." JetBlue Airways, for example, employs its reservation agents in this way.
Kreiger and Likhov figured that combining a staff of military spouses with a virtual call center setup would provide a devoted workforce and public relations edge over call centers located abroad. What's more, many government agencies require that their contractors be located in the United States. So Home-Base would target government contracts as a key early market.
Like the other winners, Kreiger and Likhov are trying to decide how to maintain the momentum that they gained from the competition. Since both will return to Wharton in the fall to finish their MBAs, they figure that they'll continue to seek ways to integrate their class work and their entrepreneurial aspirations, as they did this year.
"Prof. Raffi Amit [co-director of Wharton Entrepreneurial Programs] said that the BPC is a perfect mix of theory and reality, and we saw that through the whole competition," Kreiger said.
"As we were developing our idea, Myk and I really leveraged a number of the classes we were taking. We had a meeting, for example, with our professor in our "Managing People at Work" class to talk about how you'd manage this type of workforce. And in our strategy class we talked a lot about how you create barriers to entry. That helped us with the military-spouse and government-contracts idea."
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