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A Real Test for Young EntrepreneursTechnology Feasibility course, students strive for a viable business plan and a launchJanuary 12, 2012 • by News at Marshall
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In just 12 weeks, Jennifer Chang MBA ’12 and her team found a viable commercial application for laser technology developed by a Jet Propulsion Laboratory scientist for NASA’s latest Mars mission. Atif Siddiqi MBA ’13 and his group came up with an online platform that uses existing social data to build reputability ratings that take the worry out of such peer-to-peer transactions as finding a trustworthy house sitter on the Internet. Both of these ventures are ready to launch.
To design and test a business model for a startup and prepare an investor pitch in only three months may sound like an incredible feat, but graduate students do it every year in a Technology Feasibility course taught in USC Marshall Marshall’s Lloyd Greif Center for Entrepreneurial Studies.
"None of these were just class projects," said Kathleen Allen, a professor of clinical entrepreneurship who teaches the class. "We told the students, 'We don’t want you to do an academic exercise. This has to be real.'
"We are giving students the opportunity to do real-world projects that could end up being companies that they start upon graduating," added Allen, who also directs the USC Marshall Center for Technology Commercialization. "Some of those companies involve technologies that were developed at USC."
Offered as an elective, but required for the Certificate in Technology Commercialization, BAEP 556 attracts not only Marshall MBAs, but also graduate students in engineering and science. Allen, an entrepreneur and the author of more than 15 books on entrepreneurship and technology commercialization, taught the course this fall along with a venture capitalist (Scott Lenet, co-founder and managing director of DFJ Frontier) and an entrepreneur/investor (Jon Bassett, associate at DFJ Frontier). Each week, lectures covered everything from value propositions and distribution channels to partnerships and financials, and students provided updates on their progress, while getting expert advice and even fielding the occasional curveball from the teaching team.
Progress can be slow, as Chang learned early on. Her team, which included an MBA focused on finance and two graduate engineering students, chose to work with a USC Viterbi School of Engineering alumnus and JPL scientist interested in finding a commercial application on Earth for laser technology he worked on for the Mars Science Laboratory. David Scott had miniaturized the laser to a handheld device and imagined 20 or more uses for the product, many in the medical field, and Chang’s team spent the majority of the semester talking with potential customers — and crossing off nearly all of them. They eventually discovered the ideal target market was the one they least expected: the U.S. Department of Homeland Security.
"That was a good lesson for entrepreneurs because they can get hung up on a specific concept for their product," said Chang, whose background is in marketing and who developed a startup previously. "That was the first lesson in the class: you have to find the customer with the biggest pain, the customer that is willing to invest in new technology."
Through Erroll Southers, associate director of research transition at the CREATE Homeland Security Center at USC (National Center for Risk and Economic Analysis of Terrorism Events), Chang’s team met with members of the Transportation Security Administration at Los Angeles International Airport and learned that they needed help speeding up security checks but didn’t have room for bulky equipment. The laser spectrometer, which can detect explosives, seemed like a perfect solution for their problems.
Chang called the course one of the most valuable, and most intense, in the MBA program. "It’s a lot like being in an incubator," she said. "In addition to the support from Professor Allen, listening to a venture capitalist all semester, we really were able to get into the mind of a VC and understand what he’s looking for and where entrepreneurs make a lot of mistakes. How often do you get to do that?"
Siddiqi and his team, including students with mechanical engineering and finance backgrounds, identified a pain point common in peer-to-peer e-commerce. "The initial concept came when I got some fraudulent tickets off of Craigslist for one of my favorite bands and there was really no recourse. I didn’t know who was on the other side of that transaction," he said.
Siddiqi’s team found the pain point was strongest in peer-to-peer lending on collaborative consumption Web sites, where people can rent their cars or homes to strangers, for example. They created an online platform to rate the integrity of users in those transactions.
"We're using all identities online and leveraging all networks by supplying our API [application programming interface] to create the most accurate and trustworthy peer-to-peer transaction rating system with our proprietary algorithm,” he explained. “Our algorithm is what really makes us unique since we can set weights to different interactions by analyzing social connections and goods exchanged."
Siddiqi, who worked with an incubator firm and sold an equity stake in another platform he created a year ago, thought the biggest challenge was working within the time constraints of the course. "Every week there was a specific exercise," he said. "I feel like what it led you to do was map out the entrepreneurial journey. You are going from a prototype within 12 weeks, so it’s pretty challenging in that respect. Most businesses take years before they figure out the right model."
Of course, just like in the real world, some business ideas fail — but the students don’t. "We had nine teams this fall, and of those four proved feasible such that the student teams will pursue them," Allen said. "Some of them had ideas that weren’t going to fly, but that’s a good thing, too. Sometimes the ones that found out it wasn’t feasible learned even more. They have new respect now for business."
About the USC Marshall School of Business
Consistently ranked among the nation's premier schools, USC Marshall is internationally recognized for its emphasis on entrepreneurship and innovation, social responsibility and path-breaking research. Located in the heart of Los Angeles, one of the world's leading business centers and the U.S. gateway to the Pacific Rim, Marshall offers its 5,700-plus undergraduate and graduate students a unique world view and impressive global experiential opportunities. With an alumni community spanning 123 countries, USC Marshall students join a worldwide community of thought leaders who are redefining the way business works.