The Divergent Stories of Peter and Liam
This chapter is a part of the book “How to Build Thriving Start-up Ecosystems: Five Information Patterns for Success.”
The Michigan Business Challenge is a yearly entrepreneurship competition at the University of Michigan. In Round One approximately 100 teams give a three-minute pitch to a panel of judges with four minutes of questions. Sixty teams advance to Round Two, where they are whittled down to 16 to 22 teams that enter the semi-finals. Semi-finalists then have seven minutes to present their company’s market need, market size, and financial assumptions to a panel of judges.
Twelve teams (four teams across three different tracks) advance to the finals. Finalists complete a full business plan and present their ideas for fifteen minutes to a new panel of judges. Three teams win across three different tracks to take home monetary prizes and the ability to boast that they are one of the top startups in the university community. The entire process from initial application to the finale takes several months.
The Michigan Business Competition offered an opportunity for me to see how different founders navigated the same requirements. I spoke with several founders as they progressed through the various stages to understand how influential their information maps were to their eventual success or failure within the competition.
The stories I share are of two entrepreneurs that seemed to start the competition at similar points in their start-up journeys in terms of the readiness of their product and the amount of customer discovery they had done prior to the competition. The names of both individuals and details about their companies have been changed to respect their privacy.
Liam was a solo founder and an MBA student who had worked on his company, PlantBites for several months. He had developed low sugar plant snacks that came in flavors such as Coconut Crunch, Berry Bites, and Chocolate Chip. He had succeeded in selling his product to a handful of coffee shops in Ann Arbor but was stuck scaling operations to sell to local grocery stores.
Peter was an Urban Planning student with his real estate license that set out to create Build Analytics. Large businesses like McDonalds, Starbucks, and Sweetgreen have teams of analysts to understand foot traffic and nearby demographics to help them choose where they should locate new stores for the greatest return on their investments. Build Analytics enabled small, local business owners to gain expert-level insight on where to locate their stores. Greater insight into store location for local businesses could provide a more even playing field to compete against large conglomerates. So far Peter had an initial website that was live and had several stores that had chosen their locations based on his suggestions but he was struggling to find repeatable revenue streams.
Both of these founders were charismatic and good at pitching, had a large addressable market, and had built relationships with potential customers. These attributes are likely factors that got both teams through Round Two of the competition.
Peter would not advance past the third round, while Liam would go on to win third place in the Impact Track Finals. The difference in these two founder’s outcomes seemed less about the strength of their ideas and more their ability to present their ideas in a way the competition’s judges understood. Speaking with each of them, it was easy to see how much weaker Peter’s information map of available resources was than Liams.
Peter’s Story
Peter lived in Detroit, and so he tried to schedule all of his classes and meetings on similar days to cut down on his commute. Since he was also an urban planning student, most of his classes were also on North Campus at the Taubman building. To help students with the Michigan Business Challenge several business school professors hosted workshops on such topics as customer development, how to develop financial projections, and how to design engaging pitch presentations. These presentations were hosted at the Ross School of Business. Peter missed all of them because he was not on campus. Peter said he watched several YouTube videos on how to present a compelling business plan pitch in preparation for the competition. However, what Peter missed in these in-person supplementary classes was important to understand what specifically judges wanted to see within this specific competition.
The Importance of Informal Networks
Since Peter was often not on campus, and when he was, was on the North Campus, he did not benefit from informal social networks that emerged in one of the university’s great collaborative spaces that could have given him a leg up in the competition. This collaborative space is the “Winter Garden.” The Winter Garden is not a collection of trees and plants, but rather rows of tables and couches. It has many attributes of a high quality collaborative space — -placed where many students go for classes, with comfortable seating, and large enough for many students to work at once and commingle.
The Winter Garden served as a natural place for students to study, to work on group projects, or to just hang out. Before and after presentations the Winter Garden acted as a natural spot for founders going through the MBC competition to congregate. Here conversations between two teammates might be heard by other current contestants, and would often start a brainstorming session where people would share advice or ask questions about supplementary materials. Older students would overhear and kindly pass down their Powerpoint presentations from previous years that helped younger students have more refined templates. The space was a hub of information transfer between students with different specialities, age ranges, and backgrounds. Between the fact that Peter missed the supplementary classes and did not spend time building an informal network of peer assessment and support, the business plan Peter submitted did not look as polished as Liam’s.
Lost in Translation
But perhaps the most pivotal problem was that in the presentation Peter gave he used slightly different language than what the judges (largely previous founders or investors) understood. Peter spoke about the potential for Build Analytics in terms of its ability to bring greater economic development to the City of Detroit. Business experts generally understand whether an investment is good or bad based on a concept known as return-on-investment (ROI). By stressing the positive impact Build Analytics could bring to communities, Peter presented his ideas in a way that was hard for potential investors to quickly understand how they would make their returns. There was a mismatch in terms of languages used because Peter came from an urban planning background so he was using language that urban planners would understand. If Peter had shared his idea more within the Winter Garden’s informal peer networks he might have better been able to translate his understanding of business into terms that the wider business community used.
Peter did not advance to the third round. With graduation then six months away, he decided to seek out employment. He wanted to continue with Build Analytics, but without a finished product and with no win to provide the funds to further develop the Build Analytics website, he felt he had no path forward. Peter got a great job doing what he cares about — helping economic development within the City of Detroit. Yet, I often wonder if he had support that met him where he was in his founder journey, how many tens of thousands of small businesses he could help support not simply in Detroit, but across the entire country.
Liam’s Journey
Arguably, Peter’s potential market had the potential to be much higher than Liam’s and his software could scale easier. But Liam was an MBA student. He could speak to the judges in a language they understood. Especially within the competition’s constraints where judges have only a few minutes to assess an idea, ease of understanding a business model is just as important as having a strong business. Language, and the mutual feeling of understanding and trust it can elicit between people in a short time frame created a subtle but impactful divide between these two men’s outcomes (Yow).
The Gift of Time
Liam also had a boyfriend who went through the MBA program and the Michigan Business Challenge the year before. This gave him another subtle but important advantage: more time to think. Time to think helps founders solve what I anecdotally refer to as the first-idea problem or the mom problem. When a student finds out about entrepreneurship, they often choose a simple idea to pursue that is based on problems they face every day. What this creates is university campuses where dozens of founders will start variations of meal kit or laundry service startups (essentially, a mom to help them). As founders have more time to think about their idea and experience more life — a family member’s decreased mobility, a cousin’s addiction crisis, doing their own taxes— -potential founders begin to ponder more complex problems. These second company ideas now come in the form of new ways to build mobility assistance into subways, new approaches to tele-health and mental wellness, or apps to streamline the process of tax write-offs for contractors throughout the year.
With the additional year Liam had to think about his potential idea he had more time to think of potential flaws in his strategy, to notice competitors, and to test his value proposition by talking with potential customers. Liam had seen places where his boyfriend had messed up during the competition and could better avert those same problems in his own company. He knew how important the supplementary classes were to get his business plan and pitch right. Liam’s pathway through the Michigan entrepreneurial ecosystem looked more like a second-time entrepreneur than a first-time entrepreneur, which statistically made him more likely to succeed (Macbride). He had a sort of narrative journey through the programs and competitions and because of this knew where to effectively spend his time and energy.
Connected Pathways
There was nothing unfair in Liam’s advantage. Perhaps instead of a boyfriend, it was a student whose parent was an entrepreneur. Maybe it was a student who went to the university for undergrad and grad school and so had more chances than others to compete. There are many ways that students can develop strong information maps. But the divergence in the success of Peter and Liam showed just how much advance knowledge can shift founder outcomes.
The good thing is that Community Information Designers (CIDs) can design more connected pathways so that first time founders can have information networks more similar to those of second-time founders. Connected pathways refer to connections between resources and programs that create a more coherent and navigable information map for founders.
The next three chapters outline the steps CIDs can take to create these connected pathways. The first step is to set up shared metrics and data between programs, outlined in “Shared Data, Aligned Goals.” The second step, detailed in “Resource Maps and Founder Journeys” is to organize this data in the form of paths so that founders can more easily understand what resources are available to them from the start, and have as much time as possible to prepare.
The third chapter looks at how CIDs can create a culture of No Last Steps in their community. The idea of No Last Steps is to create circular pathways for every founder. When a founder loses a competition, reorient their perception that they were simply not ready instead of that their was “bad.” Provide resources if they want to continue with their ideas — whether it is knowledge about a business class, grant opportunity, or internship. These people might prove to be exceptionally good judges, mentors, or future successful founders. Together the combination of shared data across programs, mapped out founder journeys, and an ethos of No Last Steps can help CIDs create an ecosystem where every student has the information maps of a second time founder and are more likely to succeed.
