With little time left after a four-hour meeting with venture capital firm Monashees Capital, the prospective candidate, In Hsieh, agreed to drive the entrepreneurs back to the airport for his interview, braving the city’s notoriously congested roads as he answered their questions.
“Between my red-eye flights, I didn’t have time to study,” Smith said. “But I realized, the whole reason I went back to school was to build a business like this.”
Smith, who attends the Wharton School of the University of Pennsylvania, and Thomas, of Harvard Business School (HBS), are part of a growing number of B-school students rejecting traditional postgraduate paths such as investment banking, hedge funds and consulting. It’s a trend that is accelerating in the wake of the financial crisis as Wall Street loses its lustre and Silicon Valley shines with a new crop of multibillion-dollar start-ups.
At Harvard, some of Thomas’ classmates are applying their entrepreneurial ambitions to technology ventures. Kevin Nazemi, a former Microsoft Corp. product manager, started Done, a personal productivity service, last year. Daniel Gulati, a student who helped Thomas draft his early investor presentations, founded retail site Fashionstake.com with a fellow classmate, Vivian Weng. Graduates from the class of 2010 started 30-40 businesses last year, a 50% increase from the previous year, said William A. Sahlman, a professor of entrepreneurship at HBS.
“The level of entrepreneurship activity here, and I presume at other schools, is up dramatically over the last two years,” said Sahlman.
Smith got the idea for Baby.com.br after trying to find diapers for his son, Jack, during a family trip to Rio de Janeiro last year. He had to visit three stores to find a package of Pampers in the right size.
Struck by the lack of high-quality baby care goods, Thomas saw an opportunity in Brazil’s fast growing market, where more than three million babies are born every year, according to World Bank data.
The start-up follows a similar strategy to Quidsi, the owner of Diapers.com. That site, also co-founded by a Wharton graduate, has attracted more than one million parents in the US with free shipping on goods for their children. E-commerce giant Amazon.com snapped up Quidsi this year for $545 million.
“We actually see a lot more potential for e-commerce in Brazil,” said Thomas, Baby.com.br’s chief executive. “E-commerce there is so much more nascent.”
Even so, they face more challenges than with their previous site, including a different regulatory and tax regime than in the US. In Brazil, the payment processing is also more fragmented. The plan is to start the service in July, but Thomas said they may have to push it back.
Investors, inside the school and out, have taken notice. In late April, Baby.com.br was named one of the top three winners for Harvard’s annual “Business Plan Contest”, which came with a $25,000 cash prize. The award is on top of the $3 million that Thomas and Smith raised in February. That fund-raising effort, which valued the company at $5.6 million, included several well-known venture capitalists, including Monashees Capital and Ron Conway of SV Angel, who has stakes in Twitter and Zynga.
“Harvard carries some distinction; you can catch some people’s eyes,” said Thomas, referring to prospective investors. “On the margin, if they can, they get back to you.”
The contest is part of a broader effort by the school to foster innovation. Last year, budding entrepreneurs at Harvard formed the Startup Tribe, a student group. The organization, which has more than 150 members, persuaded Harvard to start the Minimum Viable Product Fund, a $50,000 fund for new start-ups. The programme distributes awards of roughly $5,000 apiece to promising teams, including the nine winners announced in March.
“We’re a scrappy, adaptive community” said Andrew Rosenthal, a member of the Startup Tribe. The group has been gaining traction, because of a confluence of factors. “We have a new dean, an active network of recent graduates who are providing mentorship, and there’s a strong demand for a student-run community,” he said.
The school is also planning to open in the fall the Harvard Innovation Lab, a student centre for start-ups, where founders can work with peers and Harvard’s entrepreneurs-in-residence.
Of course, a B-school can also be a significant hurdle for passionate founders. Thomas admits that his grades probably suffered last semester, as he struggled to juggle his classes with investor and client meetings in Brazil, San Francisco and New York.
For the moment, he’s catching his breath. Thomas, who is graduating this month, finished school on Friday. “I’m quite relieved that classes are over,” he said. “I have a trip to Brazil next week.”
©2011/THE NEW YORK TIMES
Baby.com.br was among the finalists of the NEN First Dot Student Startup Showcase
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