MBA Startups: From Carnegie Mellon To A Winning Idea

One of the things that attracted me to Carnegie Mellon was its top-ranked computer science program.  I knew that I wanted to do something in the technological space and that finding a technical co-founder would be critical to my ability to do that.

I met my first co-founder, BlackLocus’ COO Lukas Bouvrie at Tepper. When we met, we quickly discovered that we both had built companies in the past. We also discovered an instant chemistry that we felt could easily translate into a smooth working relationship. Later, we recruited Francisco Uribe, our technical co-founder, from outside of the business school. Francisco became BlackLocus’ CTO.

We initially interviewed about 20 candidates while looking to recruit a technical co-founder. Many of them were exceptionally bright. Francisco, however, was not only intelligent but very passionate about entrepreneurship and most importantly BlackLocus’ vision. He had also started previous companies of his own.

Starting a company is tough. There are a lot of ups and downs.  As an MBA graduate, we saw many of our friends getting high-paying jobs while we were living bare bones lifestyles. It was hard at times.  We saw that coming from the beginning; and we know we needed a team member who we could count on no matter what. We found that team member in Francisco.

BlackLocus was originally founded to provide a price comparison platform for small to medium-sized retailers. We wanted to empower these businesses to make smart pricing decisions based on where their prices fit into their entire landscape of competitors, per product.

What we didn’t realize, however, was that the solution that we had created for small to medium-sized businesses was also needed by large retailers such as Home Depot. We assumed that the larger-scaled retailers would already have such a solution working for them. We ultimately discovered that many did not.

When you consider the fact that a company such as Home Depot might have 500,000 or more products with constantly changing prices within a competitive landscape of 5-10 major competitors per item you’re literally talking about millions of data points. Making pricing decisions based on that amount of data is not scalable without a powerful back end tool like BlackLocus.

During our first semester at Tepper, we applied and were accepted into CMU’s Alpha Lab—the Carnegie Mellon incubator. Along with our acceptance came office space, $25,000 in seed money and mentorship for four months. We began the program during the second semester of our first year. After that, the Tepper School of Business gave us another $50,000 in seed money after we were chosen to participate in its accelerator, The Idea Foundry.

We got our first round of real angel funding toward the end of our MBA matriculation at Tepper when we entered and placed in the Rice Business Plan Competition. We raised $2.5 million. We also competed in business plan competitions at Carnegie Mellon, Wake Forest and The University of Texas.

Despite the fact that we won several cash awards, we were always conservative and judicious about whatever money was coming in, because we had no idea when the next influx might occur. In fact, when we got our series A funding award of $2.5 million we actually had several months of operating expenses in the bank that we could have depleted before we would have had to worry about bootstrapping the company.

I attended Tepper on a full scholarship, so I racked up only a minimal amount of debt while in school. My business partner, on the other hand, was on the hook for 100% of his expenses at Tepper.

It really boils down to what level of risk you are willing to take on. Some people are more conservative and risk averse while other are risk takers. Entrepreneurs tend to be risk takers. The thing is, you can always go and “get a job” with an MBA from a top school like Carnegie Mellon on your resume should your business venture flop; but what if it doesn’t flop? You just might end up a huge success.

I also believe that, contrary to popular belief, a prestigious MBA is a fantastic investment for an entrepreneur to make. You basically end up taking out a low interest loan for two years in exchange for getting to completely focus on your business during that time. It is much easier to be a successful entrepreneur while taking that route than trying to build something on the side of a full-time job. If you can get into a good MBA program and leverage all of their resources (classmates, professors, programs, network) then your experience will be more than worth the investment. There is nowhere else where you will have access to such a wealth of resources all at one time.

While at Tepper, we took advantage of everything that its ecosystem had to offer to build our business.  Carnegie Mellon has rich interdepartmental relationships. For instance, we were able to leverage a team of five graduate students from the Human-Computer Interaction Institute (HCI) to help us test our product; they basically worked on our interface for an entire semester.

We racked up several other experiences like that with other departments such as computer science. That kind of community engagement helps a lot when you don’t have cash but need to get things done. We actually ended up hiring one of the grad students from that group when she graduated. She still works with us today.