Young entrepreneurs on the clock
In just 12 weeks, USC Marshall School of Business graduate student Jennifer Chang and her team found a viable commercial application for laser technology developed by a Jet Propulsion Laboratory (JPL) scientist for NASA’s latest Mars mission.
Over the same period, fellow student Atif Siddiqi and his group came up with an online platform that uses existing social data to build reputability ratings that take the worry out of peer-to-peer transactions, such as finding a trustworthy house sitter on the Internet. Both 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 at USC Marshall’s Lloyd Greif Center for Entrepreneurial Studies.
“None of these were just class projects,” said Kathleen Allen, professor of clinical entrepreneurship, who taught 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 Center for Technology Commercialization at USC Marshall. “Some of those companies involve technologies that were developed at USC.”
Offered as an elective but required for the Certificate in Technology Commercialization, the course also attracts 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 last fall along with venture capitalist Scott Lenet, co-founder and managing director of the investment firm DFJ Frontier, and entrepreneur Jon Bassett, an associate at the firm.
Each week, lectures covered everything from value propositions and distribution channels to partnerships and financials. Students provided updates on their progress while getting expert advice and even fielding the occasional curveball from the teaching team.
Progress occasionally was slow, as Chang learned early on. Her team, which included an MBA student and two graduate engineering students, chose to work with David Allen Scott MS ’72, a JPL scientist interested in finding a commercial application on Earth for laser technology he worked on for the Mars Science Laboratory.
Scott 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 – 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 previously developed a startup. “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 the USC National Center for Risk and Economic Analysis of Terrorism Events (CREATE), Chang’s team met with members of the U.S. government’s Transportation Security Administration at Los Angeles International Airport and learned that they needed help speeding up security checks. The laser spectrometer, which can detect explosives, seemed like a perfect solution for their problems.
Chang called the course one of the most valuable 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 were able to get into the mind of a venture capitalist 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 electronic 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 websites, where, for example, people can rent their cars or homes to strangers. 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 felt like what it led you to do was map out the entrepreneurial journey. You were going from a prototype within 12 weeks, so it was pretty challenging in that respect. Most businesses take years before they figure out the right model.”