Yishi Zuo has a philosophy about entrepreneurship.
“As an investor, the best returns are found in the most inefficient markets,” he says. “And the most inefficient markets of all are in markets where no companies exist yet — where there are opportunities to create something new.”
Zuo, a second-year student in the full-time MBA program at MIT’s Sloan School of Management, also knew a problem that had yet to be solved — a very immediate problem to him and his colleagues before they enrolled at Sloan. As a financial analyst first at Goldman Sachs and then for Solstein Capital, a boutique San Francisco-based hedge fund, Zuo often needed expert knowledge about industries and companies to make intelligent investments. Just as often, he didn’t have access — or even know where to find access — to industry experts. So Zuo and a team of fellow Sloanies and an MIT engineering student created a platform to do just that. DeepBench, the “micro-platform” Zuo and teammates created, matches “knowledge seekers” with “knowledge advisors” through “targeted engagements” allowing users — the seekers — to “derive insights quickly and effectively.”
Over the past year, while working on their degrees at MIT Sloan, the team has flexed the resources and network offered at MIT to generate more than $100,000 in revenue — and things are ramping up: DeepBench is currently in talks with angel investors for a seed round. The goal is to rev-up the business by the time the team graduates this spring and go full-time during the summer.
AN EARLY CAREER IN FINANCE
Zuo’s parents immigrated to the U.S. from China when he was 6 and settled in the San Francisco Bay Area. He stayed nearby for undergrad, enrolling at the University of California-Berkeley’s Haas School of Business, from which he graduated in 2011. In China, Zuo says, his family was mainly educators and teachers. When they moved to the Bay Area, Zuo’s father transitioned from education to work as a software engineer. His timing was poor, though, as the transition happened at the same time as the dotcom bust. Zuo watched his father get laid off multiple times and his mother work as a waitress late into her 30s, just so the family could make ends meet. “Growing up, it was difficult for us,” he recalls.
But watching the struggle and determination of his parents to create a good life set him down a certain path. “I wouldn’t say it made me entrepreneurial, but it built that innate drive in me,” he says.
When Zuo graduated from Haas, he went right to work as an analyst for Goldman Sachs before making the “next logical progression” into hedge funds to “generate a good salary,” he says. While the financial work was intellectually challenging, it wasn’t exactly what Zuo wanted to do. Around the same time, he says, he was hit by the “startup bug” and began work on a couple of side projects. (What happened? They fizzled out, he says, aren’t even worth mentioning.)
“I knew I wanted to transition from finance into entrepreneurship,” Zuo says. “So, I decided to apply to business school to make that transition.”
AN IDEA FORMED IN AN MIT SLOAN CLASSROOM
Zuo was particularly attracted to MIT Sloan because of its entrepreneurship ecosystem. “I knew I wanted to be in a place where I could find co-founders, be in a safe place to test ideas, and also build my own soft skills, leadership skills, and network,” he says. And he wasted little time, signing on for Sloan’s entrepreneurship and innovation track and connecting with his team in an entrepreneurship seminar course early on. “After a few weeks, you start talking to people and getting to know people and you get a sense of who is really serious about entrepreneurship,” he says.
Through the class, Zuo met Devin Basinger and Derek Hans. He first brought up the idea of DeepBench to Basinger. With a background in management consulting, Basinger understood firsthand the issues of finding specific knowledge experts, and he believed in the idea. The two brought the idea to Hans, who has an engineering background and also thought DeepBench could work. But they knew they’d need more technical help.
That help came in the form of Nikhil Punwaney, who is earning a master’s in engineering at MIT. Zuo credits the early coursework and “cross-pollenization” between Sloan and other departments on campus as being vital for finding the co-founders. “Because we had all of these group projects together, we really built some bonds of trust with our technical co-founders,” he says.
INTENTION AND SERENDIPITY LEAD TO EARLY CUSTOMERS
With an idea and eventually a product in place, the team was lacking one crucial piece: customers. So they used what was right in front of them. “We definitely used the MIT brand name and alumni network to great effect,” Zuo says. They blasted emails with their MIT school-issued email addresses and messaged the product as technology developed by MIT engineers. “It was a true statement that led to a lot of instant credibility and got our foot in the door,” Zuo says. According to a blog post he wrote earlier this year, even email blasts to non-MIT alumni “routinely received” a 30% response rate.
The blasts eventually worked. DeepBench’s first business stemmed from connecting an MIT alum to a current fellow MIT classmate. “Our first source of revenue was from connecting one MIT alum to one of our current MBA classmates,” Zuo says. Not long after came a bit of good fortune: Zuo hopped in an Uber pool near MIT Sloan’s campus, and the other passenger was a recent MIT Sloan alum who was working for a large consulting firm. After a brief conversation, Zuo got her business card and followed up the next day. Within a few months, the consulting firm was one of DeepBench’s clients — and could soon be one of their biggest. “All of that happened because of serendipity and the MIT network,” Zuo says.
DeepBench has since tapped into MIT-specific resources like programming through the Martin Trust Center for Entrepreneurship. A program called MIT Sandbox loaned them thousands in equity funding. Last summer, the team was able to work full-time in the MIT Summer Startup Studio in New York City. On top of the office space, MIT dished out a living stipend for each co-founder for the summer in New York. “Because of that, we were really able to accelerate our growth last summer,” Zuo says.
ALWAYS SOME ‘TRADEOFF’ WHEN LAUNCHING A VENTURE IN B-SCHOOL
As for launching and accelerating a venture while earning an MBA, Zuo says there are pros and cons.
“There is always going to be a tradeoff. There is never a perfect time to start a startup,” he says. When you’re younger, he reasons, you probably have more energy, versus being older and having more industry connections and financial resources. “Heading into the MBA, you’re kind of in the middle of that,” Zuo says. Another potential challenge is the “sticker price” of the MBA experience, he adds. His background in finance and having “some family help” with tuition have minimized student loans and given Zuo a bit of an advantage, he says.
Lastly, he says, it can be difficult mentally to struggle through the uncertainty of an early-stage startup while watching classmates take large offers from prestigious companies. “It takes a special kind of mentality to look at all of your classmates around you getting offers at great companies and being comfortable saying that path is not the right fit because of A, B, and C,” Zuo says.
The gamble seems to be paying off — but challenges remain. DeepBench is currently generating “a decent amount” of revenue, but not enough to cover all costs, Zuo says. For instance, they are able to pay their four employees, but the four co-founders are not taking salaries while in school. That may change if they secure seed round funding.
“Even if funding doesn’t come in for the next few months,” Zuo says, “we’re fortunate to be in a position where we can carry on and grow the company until the end of the summer.”