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In the System
Wharton Venture Initiation Program helps student entrepreneurs plan and execute.
If ever an entrepreneur needed a reality check, they might want to knock on the door of Therese Flaherty and Leslie Mitts, who oversee a Wharton-based educational program called the Venture Initiation Program or VIP. Mitts, VIP's Lead Advisor and Flaherty, director of the Wharton Small Business Development Center, like to recall how reality has changed for entrepreneurs over the years.
"A few years ago, people were getting funded based just on PowerPoint presentations," Flaherty recalls. "It was a challenge to talk with students about building the foundation of their business systematically" in the midst of such a funding frenzy.
In the post-dotcom world entrepreneurs face now, the VIP system advocated by Flaherty and Mitts, has proven itself to students, even though it requires commitment and work.
Founded by Wharton Entrepreneurial Programs' co-directors, Profs. Raffi Amit and Ian MacMillan, VIP takes as its keystone "discovery-driven planning," a process for managing innovation developed by Prof. MacMillan.
Planning, process and execution are what Flaherty and VIP Lead Advisor Mitts stress to University of Pennsylvania students applying for acceptance. Far from the image of an "incubator" many might conjure, aspiring entrepreneurs selected to VIP must reach milestones and, in effect, re-apply every three to four months to remain. If they're not making progress, they leave. VIP participants also can apply for funding via the Snider Seed Fund. Wharton takes no equity in the businesses
This past fall one VIP firm, Natpal.com, garnered its co-founder, Nathaniel Stevens, acclaim from Business Week which named him "One of the best entrepreneurs under 25."
Three other recent VIP enrollees are also showing the benefits of the program's mentoring and milestones:
Varial Surfing
Technology has a goal that's
as daring as a surfer on a 30-foot wave. It wants to upend the surfboard
industry by introducing a new kind
of board that's more durable and environmentally friendly.
Its founder, Edison Conner, who earned his bachelor's degree in
engineering at Penn in 2005, has surfed since seventh grade and knows
well the main limitation
of traditional boards, which are built around a plastic-foam core.
They break in big surf. "And they're not cheap," he
adds. "They
can cost $500.00."
Atop that, their manufacture requires toxic chemicals. The process is so messy and closely regulated that, in December, the leading maker of so-called surfboard blanks, California-based Clark Foam, unexpectedly closed. The owner, Gordon "Grubby" Clark, announced that he was weary of the costs and hassles of complying with increasingly tough environmental rules.
Though unexpected, Clark's exit was the type of opportunity for which VIP had taught Conner to plan. Suddenly, the market for blanks is wide open. And Conner's technology doesn't have the environmental shortcomings that foam does. He uses aluminum honeycomb to make his blanks; not only is aluminum manufacturing more environmentally friendly, but the cores can be recycled.
It's as if Conner has the perfect wave. Now he has to ride it.
Conner says VIP, where he enrolled in November 2004, has helped to prepare him to do that. He received two Snider awards, which enabled him up to buy and test competing boards.
Just as important, VIP assigned him an advisor named Dan Gomez, a consultant who works with early-stage firms. "Dan hasn't been trying to pull the strings as an investor might," Conner says. "Instead, he's been just offering advice and letting me run the company. But he's also preventing me from making the mistakes that a typical novice would make."
Autra Capital: Like Conner, Chi Lee, a second-year Wharton MBA candidate, had plenty of experience in his field — in his case, hedge-fund management — when he arrived at Penn. While working in Hong Kong, he participated in the creation of an Asia-focused fund of hedge funds.
And as with Conner, what he knew convinced him that he could offer something better.
Specifically, Lee has created a hedge fund that invests in Asian equities using a mathematical technique called statistical arbitrage. "The last two or three years have been good for hedge funds focused in Asia," he says. "But I felt that there wasn't much statistical arbitrage in the market."
Lee, who studied computer science at Cambridge University in England, has built a computer model and buys and sells shares according to its recommendations. "I'm trading personal money at the moment and generating a track record," he says. "I need a couple of years of that at least. That'll put me in pretty good stead to launch into a full fund."
The
hedge-fund business, of course, is hot at the moment,
and barriers to entering it are low; aspiring
fund
managers need
little more
than investment expertise
and a few wealthy acquaintances willing to seed
their fund. Lee could have started Autra without enrolling
in VIP.
But he saw the program as "the perfect way to wrap up my whole
Wharton experience," he says. Like Conner, he lauds the advising
calling Mitts and his fellow VIP entrepreneurs "very active sounding
boards." He
adds, "You explain what your problems and
plans are, and anyone who's
nearby will offer suggestions."
Critical, too, has been the credibility conferred by the Wharton name. In a crowded market like money management, Wharton's imprimatur can distinguish a new company, he says. "VIP gives you the Wharton wrapper."
Advanced Welding Technologies. For Blair Linville and Mikhail (Mike) Maiorov, VIP has been like the U.S. Marine Corps' famous boot camp at Parris Island, S.C. It has been worthwhile because it's tough; its value is its rigor. "You have deliverables and milestones that you have to beat," Linville says.
Linville, an executive at General Electric, and Maiorov, a physicist, met while enrolled in the executive masters program in technology management, a Penn engineering school program with Wharton sponsorship.
They are developing
eye-safe lasers for use in welding and sorting of materials like
plastics, particularly
for the
defense industry.
They
have already
sold two of their prototypes to defense
contractors.
In addition to VIP's rigor, they, too, say they've benefited
from relationships with their mentors, whom Linville calls "hugely
knowledgeable folks."
Mentors pushed them to identify the most promising initial applications for their technology and the best ways to access those industry niches, Maiorov says. "It's a nonbiased perspective."
One of Flaherty and Mitts' goals is to ensure that each VIP company spends adequate time and effort in each stage. Shortchanging one is like driving a car without fully inflating its tires — possible but also perilous.
Adds Advanced Welding Technologies' Linville, "VIP gave us access to people and tools for thinking about our business. It's what you make of it. You can go as deep as you need to go."
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Wharton Entrepreneurial Programs