The 2001 HBS Business Plan Contest
by Judith A. Ross
While the stock market continues to gyrate and though it may no longer be a dot-com world, there are still plenty of people who want to create new businesses. Nowhere was this more apparent than at last spring's fifth annual HBS Business Plan Contest. The plans presented reflected the kind of ingenuity and business savvy needed to attract funding in today's more restrained entrepreneurial environment. In all, 41 plans were submitted, 11 of them part of the newly established social enterprise track, which created a venue for students interested in social-purpose ventures.
Whether profit-based or mission-driven, this year's plans represented a wide variety of industries ranging from software and wireless solutions to technology that prevents tractor-trailers from jackknifing and a service that matches working parents with high quality in-home childcare. Several teams tackled education issues, presenting, for example, a plan for a Web-based company connecting English as a Second Language students with native-speaking English teachers and an initiative to improve learning in urban schools. This year's contestants also targeted various health-care issues. Some of these included plans for cell replacement therapy, a national network of free-standing clinics to detect early stage heart disease and cancer, and developing neighborhood wellness centers. In fact, the winning teams in both the traditional track and the new
social enterprise track addressed human health problems.
A New Way to Combat Disease
Winner of the traditional track, Potentia Pharmaceuticals hopes to help drug developers make the most of what team member Alec Machiels (MBA '01) characterizes as one of the most extraordinary events ever: the sequencing of the human genome. For the last 100 years, pharmaceutical companies have developed drugs against approximately 500 protein targets—the part of the cell where the action is in terms of the disease process. When a pharmaceutical company develops a drug, it places roughly ten drugs into clinical trials. Only one of those ten will make it to market. The sequencing of the human genome increases this already high attrition rate because thousands more of these proteins are now being discovered.
"On the one hand, the identification of all these new proteins has greatly enhanced the opportunity to solve the problems of large patient populations," says Machiels. "On the other hand, it also increases the chance for failure—if you develop a drug against the wrong target, you've wasted $100 million."
It's as if drug companies are angling for a particular species of fish in a well-stocked ocean—with no method for deciding where to cast their line. That's where the business concept for Potentia Pharmaceuticals comes in. It plans to help drug companies figure out which seas to troll first. "We're using a proprietary nanotechnology platform to put together a chemical toolbox that should allow us to unravel some of those disease pathways and help the drug companies prioritize which proteins to go after in their drug development efforts," explains Machiels. Nanotechnology involves manipulating structures on an atomic or molecular scale.
So how does an MBA candidate at HBS maneuver in a technological realm where units are measured in one-billionth of a meter? He connects with a group of scientists across the river from the School, of course. In fact, the idea for Potentia originated with scientists working in labs both at Harvard and at MIT. The group included Angie You and Scott Sternson, who recently earned Ph.D.'s from Harvard in molecular biology and chemistry, respectively; Paul Ashby, a Harvard Ph.D. candidate in nanotechnology; chemist Jason Hong, also affiliated with Harvard; and Martin Szummer, a specialist in artificial intelligence applied to bioinformatics from MIT.
Sensing that their idea might have a commercial application, the scientists entered MIT's $1K business plan competition and won in the life sciences category. At the competition, they met David Darst, now a freshman at Harvard College. "David is a very bright 19-year-old with a real entrepreneurial streak who actually brought us together," says Machiels. Upon learning that the scientists were looking for a businessperson with a finance background, Darst introduced them to his then housemate Machiels. "David and I were already developing a biotech idea, and we were looking to hire some scientists. But the opposite happened. We ended up working on their idea," Machiels recalls. And thus the diverse team of seven was formed.
With start-up money from angel investors, some members of the team are now making their proposed tool a reality. Their advisor, HBS professor Gary Pisano, is pleased to have had an impact on a team that is clearly on the cutting edge. "What's going on in the life sciences is likened to another industrial revolution," says Pisano. "A whole constellation of technologies is changing the way drugs are getting discovered." Potentia founder Alec Machiels couldn't agree more. "This can have a real impact on human health," he states. "We think we have a proprietary tool that will help us get there faster and do it on a much bigger scale than is currently in place."
The Eyes Have It
While Potentia Pharmaceuticals aims to solve some of humankind's most complex health problems, the goal driving Low Cost Eyeglasses, winner of the social enterprise track, is simplicity itself. When Neil Houghton (MBA '01) first pitched his idea in Associate Professor Stefan Thomke's Managing Product Development class, his presentation involved showing a photograph of a large group of people in a developing country and asking, "What's wrong with this picture?" The answer was that while a significant proportion of the general population has vision problems, none of the individuals pictured were wearing glasses. "It was a simple proposition based upon an obvious and unfilled need," says Thomke.
Low Cost Eyeglasses' mission is to provide affordable, reasonably stylish, easy-to-purchase eyewear for an estimated one billion people in the developing world who need eyeglasses. Eyeglasses are an expensive item in the United States because of the handling and distribution channels and the marketing of extra coatings and high-tech features, notes Houghton, and an optometrist adds to the cost. "When you think about glasses as a product, it's essentially a little bit of plastic and a little bit of metal. So they shouldn't be all that complicated or expensive to produce and get to people," he says.
Joined by classmates Marcel Acosta (a Loeb Fellow at Harvard's Graduate School of Design), Rahul Shendure, and Jamal Carty (both MBA '01), and with help from the design firm Design Continuum, Houghton used his time in Thomke's class to develop a way to solve this worldwide problem. "At that time, we devised a prototype for making glasses easily and inexpensively," says Houghton. After completing the class, Acosta and Houghton began working on the business plan with Ashley Magargee and Naomi Weinberg (both MBA '01) and with Saul Griffith, an MIT Media Lab Ph.D. candidate. Houghton later hired Rachel Ross to help with market research.
One of the approaches the team is exploring centers on delivering their low cost eyeglasses through local businesspeople. For example, a shop owner in Peru could provide the local population with eyeglasses. "The testing and provisioning of glasses can be done with relatively little education," Houghton explains. "We are investigating training microentrepreneurs how to test people's eyesight and to fit them with the right prescription. We could also provide them with a kit that includes the necessary equipment to make the lenses."
They're also evaluating several ways to reduce the cost of the eyeglasses. While most people will only require a single lens plus frames, for those whose prescription is a bit more complex, there is what Houghton calls the "double lens approach," which combines two lens for additional power. A second approach, developed by Griffith, includes a device that would produce any form of prescription lens needed. "That device should cost less than $500 and eliminate all the distribution complexity," Houghton adds.
As participants in the HBS Social Enterprise Summer Fellowship Program last summer, Houghton and Weinberg continued to work on Low Cost Eyeglasses. Both agree that once a reality, this business could make a significant impact on the world. "One reason for child labor is that the adults can't see well enough to do the work that children can do," notes Weinberg. "Being able to see better will not only increase productivity and educational achievement across the globe, it will improve the quality of life in general."
Like all good entrepreneurs, this year's HBS Business Plan contestants and winners have adapted well to a fluctuating economy. And their plans provide an indicator of business trends to come.
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Judith A. Ross is a Lexington, MA-based freelance writer.
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The HBS Business Plan Contest not only affords would-be entrepreneurs the chance to strut their stuff in front of some of the sharpest business minds in the country, it also provides a gratifying means for HBS alumni to give back to their alma mater. With past participants now sitting at the judges' table, speaking at the event's panel discussions, and even putting up prize money, the contest epitomizes the HBS network in action.
 Asif Satchu and Jon Burgstone (both MBA '99), cofounders of Suppliermarket.com, an online marketplace for industrial buyers and suppliers, have done all of the above. This year, the two established the Satchu-Burgstone Entrepreneurship Award for runners-up in the annual HBS Business Plan Contest. (The contest's first prize, the Dubilier Prize, was established in honor of Martin Dubilier, MBA '52.) Their goal was to expand access to financial resources beyond the first-place winners. "If you are a finalist in the Business Plan Contest, you probably have a really good idea, are very committed, and have done a lot of hard work," says Satchu.
He should know. Suppliermarket.com—a runner-up in the 1999 Business Plan Contest—was sold to Ariba for $1 billion 362 days after it was launched. Satchu and Burgstone credit the HBS network for much of their company's success. "We had 180 employees, 12,000 customers, and an annual run rate of $100 million in revenue. Things were really hopping. But we were only able to build such a company by drawing upon our ties to HBS," notes Burgstone.
Professor William A. Sahlman, cochair of the Entrepreneurial and Service Management unit, concurs. "Everyone who attends this School benefits from being part of a powerful and helpful network. Jon and Asif were able to call up alums in various industries and ask about their purchasing processes. Before they wrote their business plan, they interviewed many potential customers—most with HBS connections. When Suppliermarket.com raised capital, it came from people with strong HBS ties. They recruited from the HBS community. And they sold the company to another one with two key HBS-trained executives," he notes. "The network extends to all the participants in the Business Plan Contest. People communicate with each other frequently, and the power of the network improves exponentially with the passage of time."
Exponentially indeed—because of their extraordinary success with Suppliermarket.com, Satchu and Burgstone are now able to reach beyond HBS into the worldwide community, contributing both time and money to charitable causes. For example, they are sponsoring educational initiatives for disadvantaged children in the United States, Canada, and Thailand. "Never forget where you came from," advises Satchu. "We hope that by reinvesting in the HBS Business Plan Contest, someone else will be able to leverage that success as we did, change their own lives, and in turn change the lives of others."
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