Davis Smith, 35, and his cousin Kimball Thomas, 34, were already successful entrepreneurs when they hatched a wild plan–why not go to B-school? “Everyone thought we were crazy,” Smith recalls. “Our entrepreneur friends were like, ‘What is wrong with you guys? You have built a business that the rest of us would love to have, and you guys are just walking away from it to go pay hundreds of thousands of dollars to go to school?'”
In 2004, the two started PoolTables.com and grew it into the nation’s largest independent retailer of pool tables. But the pool table market capped at $100 million. They faced a crossroads: continue the billiards business, or sell it and invest the money in themselves so they could “hopefully learn how to do things even better and bigger the next time around.”
They “rolled the dice” and hit the books. Smith enrolled at the University of Pennsylvania’s Wharton School in the prestigious Lauder Institute program, which combines an MBA with an MA in international studies. Thomas followed a lifelong dream to attend Harvard Business School. Within the first month of classes, the two knew they wanted to launch a new venture. They came up with a list of 60 startup ideas and flew out to Silicon Valley the summer after their first year where they carefully whittled the list down.
Smith, who has two daughters, was congratulating a Brazilian classmate on fatherhood when he landed on their No. 1 idea. His classmate mentioned that Brazilian women fly to Miami for baby products and ship them home. Smith sensed a golden set of circumstances-a booming economy, a nation just starting to embrace ecommerce, and moms eager to get their hands on baby products. “I was just like, ‘My gosh, this is a real opportunity,'” he says. Coincidentally, Thomas’ family vacation in the country a few months before confirmed this hunch. He’d scoured Rio de Janeiro for diapers for his own son. The cousins agreed that Brazil needed an ecommerce site for baby products. Baby.com.br was born.
Smith brought the idea to Wharton’s student incubator, the Venture Initiation Program, which awarded him some $12,500 in seed capital. Meanwhile, Thomas entered their pitch in Harvard’s 2011 Business Plan Contest where Baby.com.br tied for first place and netted $25,000. After graduating in May 2011, the two moved to Brazil to build their business. By October, Baby.com.br was live. Less than a year later, the cousins had raised a whopping $22.6 million and hit the million-diapers-sold mark. Today Baby.com.br is the country’s leading baby products ecommerce retailer and employs some 270 people.
Smith estimates that all of Baby.com.br’s first-round investors came through the cousins’ Harvard or Wharton networks. He also recalls taking a venture capital class and applying the knowledge directly to his first term sheet. “I knew exactly what I was looking for, I knew what points to negotiate,” he says.
But ultimately, connecting with other entrepreneurs proved to be the biggest B-school boon. Smith and a few friends created the Penn Founders’ Club for students running businesses during school. When he considered switching to a more traditional path, two members kept him on track. “Both of them just said, ‘Davis, don’t make a mistake. You’re an entrepreneur, continue being an entrepreneur.’ They definitely helped me not get sucked into that peer pressure of becoming a consultant,'” he says.
Smith has no regrets about going back to school. “It only helped us, it helped us with our network, it helped give us that credibility on top of the fact that we’d been entrepreneurs before. So it’s the best decision I think we could have made.”