This is the third in a four-part series on getting the most out of competing in a business plan competition... or deciding not to enter in the first place. The first two entries were on the Pros and Cons of entering and the second described 6 Questions to Ask Yourself before entering. This introspection was inspired by a conversation with Babson College president, Len Schlesinger during a free ranging discussion about innovation in learning and fueled by my own extensive history in business plan competitions, including having co-founded and chaired one (Ignite Clean Energy), helped it merge with another (Cleantech Open), been a judge in a few (MIT Clean Energy Prize, ICE, CTO) and a competitor in one (MassChallenge),
In this post, I'm going to recommend that you use successful competitions as case studies for creating, launching, funding and growing a startup - since that's what most of them are, in my experience. You can learn a lot of lessons by watching their usually very public progress.
Business Lessons from Business Plan Competitions
If you think of a business plan competition as a startup, you'll see that they face very similar challenges to the ones you face starting your own company even if they differ in the details. They have a product that requires a lot of development and resources to bring to the market, they must raise funding to be last beyond the idea stage, they have to find ways to differentiate themselves in a crowded marketplace and they have to convince legions of un(der)paid staff to devote time, energy and passion to the success of a new and unproven organization. Once they've gotten their first product out, they have to find ways to keep it new and fresh as well as to find evergreen sources of funding, all the while dealing with the fact that their direct customers, entrepreneurs, are almost by definition short on cash. Plus, as nonprofit organizations (as most of them are), there's the problem of convincing people that it is appropriate to charge enough to put on quality programming.
If I'd known then about all these challenges, I'm not sure I'd ever have had the courage to help run the ICE Competition... which is a sentiment you often hear from successful (and unsuccessful) entrepreneurs. But I didn't, so I went ahead and now I'd like to share some of my lessons learned with you in some key business areas.
For instance, if you want a brilliant example of how to market a new organization and raise its profile, study the MassChallenge competition. This competition was founded during a down economy by a trio of young men who went from nothing but an idea to a funded competition in the space of months. Not only that, they've been able to grow it, raising money for a second year and attracting top quality mentors, judges and sponsors. As someone who struggled for years to raise the profile of the ICE Competition, I have nothing but admiration for the job they did, and you can bet your life that next time I need to create a high profile organization that I will be studying how they did it.
Most competitions depend heavily on volunteers, so successful ones also require great leadership. They get people to spend a lot of time and effort on something from which they have no immediate financial gain (sound familiar??). They do it by communicating a vision for success that is engaging, and then delivering on it to competitors, sponsors, and the volunteers. They do it by empowering the volunteers to do great work and innovate in what they do. And they do it by providing an amazing network of people that can lead to new opportunities not only for the competitors but for the volunteers themselves. You can do the same thing with your company: communicate a big vision; give your people direction and support but don't stand in the way of their innovations, and be sure they are receiving benefits in terms of the opportunity for future financial or other personal gain in the process.
No matter how many volunteers a competition has, in order to be sustainable, it must have funding. The single most important committee at the ICE Competition while I was running it was the Sponsorship Committee. Don't get me wrong - many of the others were critical in terms of creating and managing a quality product, including Judging, Mentoring, Contestant Recruiting, Volunteer Recruiting, Events Management and PR, among others - but without sponsoring funds, there's no way to have prizes, or to hold the events in substantial venues or provide the food that everyone expects at the events, etc., etc., etc. Recruiting of sponsors is most successful when it's a year-round activity. It's often especially successful after you've landed a major sponsor - although you have to be cautious: if you've recruited one law or accounting firm, they are not going to want to share the limelight with any competitors. So you need a strategy for who your best targets are, what you're going to offer them, and how you're going to approach and then pitch them. Just like when you're out pitching to investors.
Time to Market
You can't spend two years trying to build interest in a business plan competition and expect to succeed. Sponsors need to see results for their sponsorship dollars, which they're not going to get while you're in the planning stages. Volunteers want to know that they are building something real, not just kicking around a cool idea. Mentors and judges won't get involved when there are no competitors, and so on. It's best to get that sucker out the door quickly, warts and all, to the customers and the community. You're not going to get it all right the first time (or any time). You have to be aware that because there are going to be a lot of unexpected rough spots, you're going to have to spend a lot of time and energy on customer service.
Ironically, given how devoted I was to the success of the ICE Competition when I was its chair, I was strongly opposed to launching it when we did. Jim Walker, its creator, got approval from the MIT Enterprise Forum Board just after Thanksgiving in 2004 and the plan was to launch at the beginning of February 2005. I was adamant that we were setting ourselves up for failure; we were a new organization (the Energy Special Interest Group at MITEF), we didn't have critical mass in volunteers, we had no money to speak of and, if we failed, we were going to sink into irrelevance and never get another chance. But most of my comrades-in-arms were a lot bolder than me and we decided to go ahead anyway, recruiting 41 teams in two months and putting together first class judging and mentoring programs. Of course, Jim had already gotten seed funding from the Massachusetts Renewable Energy Trust (precursor to the current primary sponsor in the Northeast, the Massachusetts Clean Energy Center), which made it all possible.
The competition was an enormous success that year. In the following years, we grew it into the amazing organization that continues today as the Northeast Cleantech Open. If we'd taken my advice to spend a year planning and organizing, I doubt we would ever have gotten it off the ground. The same is true of your startup: if you spend years perfecting your code or your hardware or your service, the market will have long passed you by the time you launch. Get the product out there, do your best to make the launch great and take in all the feedback and make the next version better. Perfection isn't possible and, in any event, you don't know what your customers will consider perfection until they're actually using it!
There are more lessons to be learned from successful business plan competitions, I'm sure. What have you learned?
Next time: Part 4: Don't Despair... and Don't Get Cocky!
(Originally published on 4/13/2011.)