“This is the largest size offered by Victoria’s Secret. Most women will not fit into this size.”
Update on Texas Moot Corp Finals here.
What is it like for student teams to pitch a new venture at Texas Moot Corp? To see for myself I sat in on the semi-finals in division III, watching four student groups doing their best for 30 minutes to convince a panel of expert judges that their brilliant new idea should survive to the next level of competition. At stake is real opportunity, as Texas Moot Corp winners have an amazing record of obtaining actual funding dollars as opposed to getting a gold star and a pat on the back.
My focus was the last group on the agenda, Mentionables (photo), who shared with me some of their experiences getting ready for the pitch.
Here are my impressions from that day:
What are the Judges Looking For?
Sadowski is a managing partner at LGE Execs, Inc. He has served as a mentor with student teams, and before the competition he carefully reviews their business plan. “I’m always wary when I hear a team say that no one else does this, or they have no competition.” First and foremost, Sadowski looks for the market opportunity in a pitch. “Many teams fall in love with their technology,” he explained. “It may seem credible, and the problem they are solving is vast, but they spend 75% of their time romanticizing the problem and making hyperbolic statements about their solution. But without a market there is no business.”
How do Texas Moot Corp presentations compare, in terms of quality of the concept, preparation and market validation to other pitches he has heard?
“They are quite comparable,” he said. “In the real world I see everything from a corporate executive’s daydream-turned-into-a-business-plan to full blown investment-worthy startups. Generally speaking, the student pitches are more polished and complete than the random business plan, but not comparable to a pitch by a seasoned serial entrepreneur.”
Four Teams Looking to Fill Two Slots
The presentation site was a small conference room on the second floor of the CBA building at the McCombs School. Lighting was a bit dodgy, leaving the presentation teams standing in what could pass for a grotto at Carlsbad Caverns. Strangely enough, it was easier to see the judges than the presenters. Each team took the stage with some nervous loading of Powerpoint slides on the projector. Each knew that the judges had to pare the four teams down to two survivors for the next round.
- #1 Team TraWell described their business as a web portal enabling outbound medical tourism, in which U.S. residents would travel to India for surgeries. Some of the issues they raised are barriers such as the stigma of traveling overseas for a medical procedure, language issues and other intimidating factors. “As an average American, I may not even have a passport,” said Steiger. How to overcome these barriers? TraWell hopes to interact with patients early in the process, so customer concerns can be addressed. As the presentation continued the team was forthcoming about potential concerns, such as “Who do I sue if my surgery in India doesn’t work out?” Judges complimented them on their presentation, but Garza complained that their growth projections were vague. Barchas added, “I still don’t really understand how this business works.”
- #2 Team Navigate wants to increase access to fresh water resources by lowering the cost of water purification, based on technology developed at UT Austin. Garza greeted them with the jibe, “So you guys are the Holy Grail, right?” Team member Katey Gilligan smiled, “There is a problem, there is a scarcity, and we are here to present a solution.” The group’s presentation slides were slick, with animated motion graphics demonstrating the reverse osmosis desalination process. “We’re looking for a $550-thousand dollar investment, with $2-million in the next 4 1/2 years,” they stated. Barchas complimented the team on taking on a big challenge, but quickly turned to tough questions on the financial numbers. “I really don’t see how these numbers add up.”
- #3 Team Ordoro claimed to be a simple, web-based order management software for small online retailers. “We have spent hours studying what retailers need, and have designed our system for simplicity,” stated the presenter. “Now we will show how we will get to $45 million in revenue in five years.” Several slides later, it was time for questions. Garza began by telling the group they did a terrific job, the best presentation of the day so far. “Customer acquisition cost is the $64 million question. You will need a disruptive distribution approach. What will that be?” Answer: build relationships with the major shopping cart venues, which typically recommend solutions for order management software sources. Barchas added “I love your business plan, this feels like a real business.” As the group finished up it was clear that the panel of judges were impressed.
#4 Team Mentionables Takes the Stage
Unknowingly, Team Mentionables opened their presentation with a huge advantage over their predecessors. Groping around in the darkness one of the team members flipped a switch and suddenly the presentation area was bathed in soft light. They could be seen!
At the front of the room was a store mannequin and a poster of lacy cloth swatches. Team members Jennifer Minelli, Kate Duncan, Liz Wetterhahn and Megan Campe smiled broadly as Jenna Goldman began their pitch with a question. “Can anyone guess what size this undergarment is?” she said, holding up a lace negligee. “This is the largest size offered by Victoria’s Secret. Most women will not fit into this size, and our solution is Mentionables.”
“Using a direct sales approach, we intend to provide a comfortable, positive shopping experience where the average-sized American woman can purchase well-fitting and sexy undergarments,” she said. The group went on to talk about growing obesity in the United States. The average American woman is a size 14, approximately 162 pounds, and 48% have purchased plus-size clothing. “They are frustrated by the lingerie shopping experience, and the selection,” asserted Goldman.
Wetterhahn jumped in to talk about the marketing strategy, which includes trunk shows (beginning in Austin and Atlanta). Traditional advertising will be used to help build a community of consumers, with targeted social media. Future brand extensions include swim wear and athletic wear.
On the screen flashed a slide that I’m willing to bet has never before been seen in a Texas Moot Corp pitch, “$35 price point for bras, and $10 for panties.”
“And are there questions?”
Barchas began with compliments on the presentation, but asked “How do you build the sales force?” Answer: the trade shows and trunk shows, and also the direct-sales website that enables recruitment of multi-level sales forces. Mary Kay was one business model mentioned.
Garza pressured on the accuracy of the population figures the group presented. After some embarrassed looks at each other, the group admitted that their chart pulled up the wrong numbers. “That’s something we’ll correct.”
One of the judges joked about the appeal of this product line to Oprah. “There is a real PR story to be told,” said Sadowski.
Mercado, the only woman on the judging panel, gave the group high marks on the concept, “It is a market that isn’t served right now, but you have to be careful about words such as plus-size, which are not popular with women.”
Barchas asked about Walmart, and how prices will compare. Answer: Mentionables will be more expensive, but it isn’t so much about price, but availability. Barchas followed up by suggesting that perhaps their pricing is too low, and Mercado agreed with him.
A Sigh of Relief and a Pass to the Next Round
Walking down the hallway after their presentation, there was obvious relief on the faces of the Mentionables team members. The women are not just classmates, but are all close friends. Wetterhahn said that working with friends made the project special. “Some people may say it is a challenge, and perhaps that is true, but we always keep what is best for the business in mind when we’re making decisions.” The women formed their team in class last semester, and moved it forward taking the Advanced New Venture Practicum with professor Rob Adams. Since the class doesn’t meet weekly, it gives students the flexibility to work on their project whenever they can.
“The nerves that come with this project are real,” she continued. “It’s because we have something very real invested in this, our passion.” The group realizes they hit a few bumps in their presentation. “Presenting each round we get more feedback and we get more comfortable answering the tough questions.”
That comfort level will be important to Team Mentionables and Team Ordoro, both survivors for the next round. We’ll see them again at the Texas Moot Corp finals on February 17, 2010.
Update: Moot Corp is now the Texas Venture Labs Investment Competition.