May 14 2010
Judging by history, an MIT-student startup company called C-Crete Technologies, which won this week's finals of the annual student-run MIT $100K Business Plan Competition, stands a good chance of beating the odds to become a successful business. But history also suggests that some of the other finalists who didn't win the big prize might end up doing just as well, or even better.
C-Crete, started by MIT doctoral student in Civil and Environmental Engineering Rouzbeh Shasavari and MIT Sloan School of Management MBA candidate Natanel Barookhian, is based on discoveries made last year at MIT about the molecular structure of cement. The production of cement accounts for more than 10 percent of the world's greenhouse gas emissions, the team members say, and the new nano-engineered type of cement they developed could reduce that by half, could ultimately save as much energy as would be produced by 100 large nuclear power plants — and would be stronger as well.
“We believe our technology will make a significant impact on the world, and we look forward to growing a viable, sustainable business to meet these ends,” Barookhian said.
This year, the competition received about 200 submissions, which were winnowed down to 28 semifinalists and then six finalists, one in each of six separate tracks. In addition to $20,000 prizes for each finalist team, this year there was also a $10,000 “audience choice” award, selected by the crowd assembled for the competition finale on Wednesday evening at Kresge Auditorium. That award went to a venture called Aukera, which aims to develop a treatment for the disease ALS, based on recent research at Harvard.
The contest started off in 1989 as a way to promote interest in MIT's then newly formed Entrepreneurs Club, which collaborated with the Sloan School's New Ventures Association to organize the first contest. Initially planned for a $1,000 prize, the inaugural competition was quickly expanded to $10,000, and over the ensuing years grew to $50,000 and finally in 2004 to $100,000. Although it is still called the $100K — the amount of the top prize — this year's contest awarded a total of $350,000 in prizes.
As the prize amounts have grown, so, too, has the competition's reputation. The San Francisco Chronicle years ago referred to the MIT $100K as “the granddaddy” of business-plan contests, and Inc. magazine said that even as such contests have proliferated nationally and globally, MIT's remains “more equal than all the others.”
20 years later: ‘Quite a success'
In its two decades of existence, the competition has spawned more than 130 companies, which have raised more than $770 million in financing and had a cumulative market value of over $15 billion. Among its biggest success stories are Akamai Technologies, a company that provides speedy Internet connections for a significant fraction of the Web's worldwide traffic and had revenues of more than $850 million last year, and Silicon Spice, a semiconductor company that was sold for $1.2 billion just five years after entering the competition. (Interestingly, neither of these won the top prize: Akamai was a runner-up in 1998, and Silicon Spice was a finalist that year).
Peter Mui '82, one of the founders of both the competition and the Entrepreneurs Club, said that the idea originated from the realization that at MIT back in the 1980s, there were lots of people with interesting ideas, but few opportunities for people to meet to discuss them or to learn how to turn the ideas into companies, and there was little interaction between the people developing technologies in the School of Engineering and those with expertise in business at the Sloan School. The club was conceived as a way to meet that need, and soon club co-founder Richard Shyduroff, who has taught an MIT seminar on technology startups for the last 20 years, suggested holding a contest. The initial prize was going to be $1,000, but staff at the Technology Licensing Office suggested boosting that to $10,000, and Shyduroff spent months pounding on doors to raise the prize money. “From there, things just snowballed,” Shyduroff said.
“We never thought the competition would take on a life of its own,” Mui said. He left MIT after the first year (and is now a consultant working with small startup companies), but Shyduroff and the club's other co-founder, Douglas Ling SM '87, kept the contest going.
Joost Bonsen '90 SM '02, who is now the co-director of the MIT Media Lab's new Entrepreneurship Program, submitted eight entries in that first year's competition — a record number of entries that still stands. Bonsen took over the management of the competition in 1993 and 1994. Every year the competition has continued, he said, its student leaders have continued to build and expand on its scope and reach. “Alums from the competition have started business-plan competitions around the world, including Germany, Russia, Ghana and the Philippines,” he said.
MIT Professor of Applied Mathematics Tom Leighton, one of the co-founders of Akamai Technologies and now its chief scientist, said the competition made all the difference: “If there hadn't been a $50K competition, there wouldn't have been an Akamai,” he said. “We were a research project, and we had no intention of starting a company,” but the competition provided him and his colleagues with some experience and with introductions to a network of people who helped make the company possible — even though they were not even among the top three finishers in their year. This year, he said, the company expects to exceed $1 billion in revenues.
Over the 20 years of the contest, organizers estimate that some 5,000 students have competed. “I never imagined it would be as large a vehicle as it turned out to be,” Mui said. “It's been quite a success.”