PLAYING THE “MBA STUDENT” CARD
Better still, Maria Margarita Womack’s startup became the source for four different group projects at Georgetown University. In the process, she reinforced what she’d been learning and gained insight from the best minds in her class. “We tackled market/product fit, value-based pricing, marketing strategy, and improved operations as part of our classes. Having my MBA peers take a close look at M’panadas and apply recently acquired knowledge to improve my venture was extremely useful.”
The value of different constituencies analyzing a startup cannot be understated. Margarita Womack compares incubating a startup in business school to raising a child – something she asserts “takes a village” to do. “Professors, classmates, and entrepreneurs-in-residence have introduced me to key people who have been essential to the progress of my company,” she adds. For example, I am particularly proud of achieving regional distribution for my food service line. This was in part the result of an introduction by a fellow Hoya whom I met at a pitching competition on campus.”
Many times, the Class of 2019 gained more from their excursions outside the classroom. For Jose Alonso, his MBA student status actually opened doors for him with entrepreneurs and investors alike. “The “I’m an MBA student” line works like a secret password and people are surprisingly open to teach you,” he claims.
A STARTUP AS A “SECOND DIPLOMA”
In theory, you could claim that starting a venture might distract students, taking time away from their studies, extracurricular activities, and networking. Certainly, Lia Winograd made tradeoffs while building Pepper at New York University. At the same time, she counters, she had access to a wealth of resources, and faculty advice – while being able to apply what she learned in real time. In other words, business school served as a safety net that kept the pressure at bay. Even more, she leveraged her alumni connections to amass early seed funding.
“When I entered business school, Pepper was a pre-launch, pre-product, Kickstarter-backed company with as much uncertainty as potential,” she reminisces. “By the time I graduated, my co-founder and I were able to pay ourselves full-time salaries, hire a team of contractors and freelancers, and operate our own warehouse. None of those achievements show up on my MBA transcript, but together, they represent to me personally a kind of second diploma.”
This ‘second diploma’ wasn’t easy for Winograd to earn. The pressure ratcheted up four months before her MBA program even started at NYU. She launched a Kickstarter campaign for a prototype that still required heavy refinement. Underestimating Pepper’s appeal, Winograd and her partner raised over $100,000 in preorders from 950 backers – a far cry from their original $10,000 goal. That success meant spending the summer refining the product and the fall manufacturing and shipping it – all while Winograd was navigating NYU’s daunting MBA core curriculum.
TOUGHEST CHALLENGE: SUSTAINING GROWTH
“It was really exciting that we met that goal but it was also pretty scary because we did not have a finalized product,” she tells P&Q in a September interview. “Now, we had real customers that we had to respond to and there was that moment of doubt whether we would get there with the product. So we spent the next six months in a rush to be able to deliver this product to all these customers that we had promised.”
First world problems? That’s an easy argument to make. Since fulfilling their first orders, Pepper has exploded into a name brand with $400,000 in pre-seed investment. Winograd attributes such results to being “creative and scrappy.” With growth comes higher expectations – and greater risk. As Pepper matures, Winograd now faces an entirely new set of issues.
“With entrepreneurship, you reach a certain level and it’s really exciting but it’s also really scary because there’s never an end point,” she tells P&Q. “Getting through each hurdle, for example, we set milestones for ourselves. In 2017, our milestone was to fulfill all the Kickstarter orders. Once we had done that, the next thing keeping me up at night was how we’d continue to grow on a month-over-month basis. There really is never a break. Now, we have managed to grow the business to a $2 million revenue run rate. We’ve managed to grow every month a little bit more. What keeps me up at night is how do we continue to do that?”
HITTING THE “INFLECTION POINT”
The answer, Winograd says, requires taking the company into the great unknown. “It’s becoming easier-and-easier for people to kickstart a business and get to one million dollars,” she notes. “But it’s becoming harder-and-harder to get it into the $5 or $10 million dollar market. I see us scaling, but we’re also at an interesting Inflection point at Pepper. So far, we’ve been able to do everything with myself and my co-founder without full-time employees. Now, we’re at a point where we need to hire people on the team. I think it is a different kind of monster to be a manager of other people (and all the responsibilities that come with that).”
That means expanding in marketing and operations to drive Pepper’s growth. In addition, Winograd is also investing in R&D to develop new styles and designs to keep the market engaged. Although the instinct to spend big now is tempting, Winograd has learned from her business cases that it’s best to be judicious at this point.
“We don’t want to go crazy,” she adds. “A lot of founders make the mistake of hiring 20 people at once without needing to do that. We want to grow the team in a lean way.”
MISREADING THE MARKET…AND LIVING TO TELL ABOUT IT
Ryan Underdahl helped develop his Civic Champs platform to automate clerical tasks for nonprofit leaders. Freed from paperwork, they could then devote more time to their missions and communities. While the Indiana-based startup now boasts 22 clients, it nearly missed the mark entirely. Starting out, Underdahl’s team wanted to gamify volunteerism to produce social impact. For example, users could earn badges for reporting issues like clogged drains or taking action to fix them. However, the approach turned out to be a solution in search of a problem.
“The idea was that people are using mobile games is extremely ubiquitous,” Underdahl concedes in a September interview with P&Q. “However, nothing good ever comes from it. We wanted a way for people to do good while still playing a mobile game. I guess that might be more tangential to volunteering.”
However, this miscalculation planted the seed for a real solution. Although local nonprofits were cool to the idea, Underdahl’s team chose to probe instead of doubling down. Ultimately, they realized that technology could address more fundamental needs and bridge gaps between non-profits, volunteers, and donors. In response, the venture pivoted from consumer gaming to business solutions – and Civic Champs was born.
SHARE YOUR IDEAS AND DON’T DEMAND PERFECTION
For example, local feedback has inspired Underdahl to roll out a new service that enables non-profits to turn volunteers into donors. “We discovered they didn’t have a platform that differentiated their traditional donors from volunteer donors,” Underdahl observes. “So we developed microdonations. You can thank volunteers for their contributions and then ask them to support their fund-raising campaign by donating a dollar for every hour they volunteered that day. You are not only cultivating a donor base and a pipeline for a development team, but it also allows them to reach out to their volunteer donors in a different way.”
To read over two dozen in-depth profiles of the most innovative MBA startups, go to page 4.