TEACHING & LEARNING
Cheaper-Better-Faster
OUTREACH
A
Brand Called Donny
PLUS: Video Interview with Donny Deutsch
Faces of Wharton Entrepreneurship
RESEARCH
Risk-free
Reward?
Experimental Entrepreneurship: Removing the 'Tin Cup Dependencies'
Cheaper-Better-Faster
Entrepreneurial
Marketing Class Helps Students Focus on Market Realities.
Steve Woda jokes that he majored in BondMyAuction while earning his MBA at the Wharton School.
BondMyAuction was his concept for a company. He arrived at Wharton knowing that he wanted to launch an entrepreneurial venture when he graduated in 2001. And he structured his curriculum accordingly. "I took a business-plan course," he says. "I took the product-development class. I took the venture-capital class. I took anything that I thought would help me start the business."
Among
the most critical of his courses, he says, was Entrepreneurial Marketing,
created and taught then by Len
Lodish, a Wharton marketing professor. Lodish
also wrote
a book on the topic, also called Entrepreneurial Marketing, which was published
in 2001.
"Each week you had a deliverable in the class, and Len gave great feedback," Woda says. "By the time we finished the semester, I had a plan that's remarkably similar to our plan today."
The name of Woda's company has changed — today it's BuySAFE — but the concept that he developed at Wharton endures. BuySAFE, based in Arlington, Va., bonds e-commerce transactions. It grew out of an online purchase gone bad: Woda bought a personal digital assistant and the seller never delivered it.
Bonding,
which is a form of insurance, gives consumers the assurance that they'll
receive items that they buy, he explains. And it helps small- and medium-sized
businesses compete with outfits like L.L. Bean or Amazon. BuySAFE's
guarantee means that a consumer bears no more risk in dealing with them
than with a big
merchant.
Woda says BuySAFE reflects many of the lessons that he learned from
Lodish.
"Len's class was all about developing a rock-solid plan with an entrepreneurial mindset," Woda says. "As an entrepreneur, you have zero resources when you start out. The average marketer is used to spending $10 million on a big ad budget and then making some money for you. You can't do that as an entrepreneur."
Lodish agrees, saying that early-stage entrepreneurs' lack of resources was one of his inspirations for the class. "About 10 years ago, I got to thinking that we weren't teaching enough of what these people need," he recalls. "Ninety-nine percent of our business cases were about big companies.
"So I went through all of the marketing theories and methods and decided what worked and what didn't for companies with limited people, resources and time."
A startup's marketing strategy, for example, has to produce results fast. Startups don't have the luxury of waiting. "For most entrepreneurs, without a short-term cash flow, the longer term is impossible," write Lodish and his co-authors, Howard Lee Morgan and Amy Kallianpur, in their book.
In class, Lodish stressed nuts-and-bolts challenges like testing the concept for a new product or service and setting prices by, say, interviewing potential customers and asking what they'd be willing to pay.
"When you're a business-school student, that's boring stuff," Woda admits. "But as an entrepreneur, you're going to go to VCs and investors, and they're going to say, ‘Why should I waste my time on this?' You have to point to things that can give them real comfort. So concept testing and pricing analysis turn out to be essential."
Students may prefer to spend their days gabbing about guerrilla marketing or deconstructing Apple's latest iPod ad campaign. But marketing in a startup is typically far less sexy. It's about predicting simple, but essential, metrics like what sort of yield the entrepreneur can expect from sales contacts. "It's about building plans from the bottom up, about thinking, ‘There are X sales days, X hours in a day and X number of calls I can make an hour, and that equals Y potential sales," Woda says.
Lodish also critiqued his students' marketing plans, poking at weaknesses. "He was adamant that I needed a different revenue model," Woda recalls. "He said, ‘You want the merchant to pay you [for the bond], and I think you need the buyer to pay you.' At the end of the day, I disagreed. But his skepticism made me hone my rationale."
Being forced to defend and refine his business plan was an unexpected benefit of Woda's time at Wharton. Once he began to approach investors, he realized that he already knew how to answer their questions because he'd heard similar ones from Lodish, other professors and even his classmates.
"What's great about a place like Wharton is that you get a chance to trial-run stuff every day for two years," he points out. "Your fellow students are great critics. They're skeptics about everything, sometimes naively so, but that allows you to bulletproof your concept."
The year after he graduated, Woda teamed up with a student who was a year behind him and entered his company in the Wharton Business Plan Competition. They won a spot among the eight finalists. During the year and a half after graduation, he also rewrote the business and marketing plans and polished his pitch for potential investors.
The preparation paid off. In 2003, he raised $3 million and in 2004 $13 million more. Today, BuySAFE has about 40 employees, including fellow Wharton grad Jeff Grass, who joined the company in 2003. Grass formerly co-founded PayMyBills.com.
Woda is optimistic about BuySAFE's future: "We're not quite there yet," he says. "But I think we'll be successful."
Before deciding to enroll at Wharton, he sought the counsel of seasoned entrepreneurs about the value of business school. Several downplayed it, telling him he didn't need a special degree to be his own boss. They said experience would be his best teacher and encouraged him to dive in.
Woda, in contrast, says he'd advise any aspiring entrepreneur who was considering Wharton to enroll. "If you're smart about it, you'll come out of school with a great plan and a resume that'll catch investors' attention."
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wharton Entrepreneurial Programs