Published in the San Diego Union-Tribune, August 29, 2016
Peter Thiel, co-founder of PayPal, offers young people fellowships of $100,000 who want to build new things instead of sitting in a classroom. (I am on record as saying that this seems idiotic, but I do not expect Pete to give me a call and debate the topic.)
But perhaps you can do both at the same time. The principles of starting a company apply to all entrepreneurs, regardless of age, and so we were excited to meet the Focus Four team, four Scripps Ranch High School rising seniors, who recently won the TiE South Coast and then the Global TiE Young Entrepreneurs Competition (TYE). How this group worked together on their successful project is a good model for all aspiring entrepreneurs.
TiE, which stands for The Indus Entrepreneurs, was started in 1992 in Silicon Valley by a group of successful entrepreneurs and corporate executives with roots in the Indus region. It currently has over 13,000 members in 61 chapters including TiE South Coast which encompasses San Diego and Orange Counties. The TYE participants attended a series of business classes conducted by Dr. Rob Fuller, Director, Entrepreneur Development Program at UCSD’s Rady School of Management, and each team was assigned a mentor.
The Focus Four team members– Michael Huang, Jim Zhan, Jonathan Lu and Avi Ganti—met because all were members of the Scripps Ranch High School Business & Entrepreneurship Club—which they have nicknamed “Falcon Tank,” a play on my favorite TV show Shark Tank, in honor of their school mascot.
Their first challenge was coming up with an idea. “No idea was off limits, and we came up with a wide array but none of them appealed to us,” said Huang. Then, he said, the group thought about the problems that they shared as hard working high school students taking multiple AP classes, studying for the SATs, and juggling extracurricular activities. “We recognized an issue that we all faced—a lack of focus and energy after our busy school days that would lead us to work extremely distractedly and ultimately cause us to lose sleep.” They had all tried energy supplements but either didn’t like the taste or the side effects. So their product became an all-natural candy-like fruit-flavored chew that would offer focus and energy. The name became Focus Four because “it normally takes us at most four hours to complete our school work or most standardized tests.” The lesson is that good ideas often come out of solving your own problems.
They actually developed the product and then tested it with control and placebo groups on a group of 100 high school students, college students and working adults. I love how they structured the experiment. For the baseline, all participants had 15 minutes to work on 300 simple math word problems in a distracting environment. Then half of the people got a Focus Four chew, and the other half got a placebo, and they took another test. The Focus Four chew group performed 20 percent better.
“Before this, I had no experience with business. I looked at people like Bill Gates and Warren Buffet and thought they’re awesome but I had no idea of marketing and finance until going through this program,” said Huang.
The team won $2,500 from the regional competition and received an all-expense paid trip to Portland, Oregon where they competed against 19 other teams from the U.S., India, Canada and Pakistan and won an additional $4,000.
Effective mentorship is extremely important for all entrepreneurs. The Focus Four team was fortunate to have Naresh Soni, currently the Chief Technology Officer at 5BARz International Inc. “The reason they won local, regional and global competition is because their teamwork was excellent, they listened to me and other mentors, they actually built a prototype of their product, they identified a product which is needed in the market, they provided a compelling product which is competitive in terms of price, taste and effectiveness and they backed up their need with actual survey data,” said Soni. The Focus Four team plans to turn their idea into a company while pursuing their education.
Here is the conundrum. I read their complete business plan, and it has some basic, simple flaws, but do you grade on the curve (what they did was amazing for where they were and what they knew) or do you hold them to the same standard as any other venture investment.?