While many startups don’t end up the way their founders planned, two Wharton graduates used strategies that got them off the ground.
In a market where the failure rate for startups is around 30 to 40 percent, “a successful startup depends on a myriad of factors,” Senior Associate Director of the Wharton Venture Initiation program Clare Leinweber said. “A good portion of success is luck and timing.”
There have been numerous startups to come out of Wharton, from Warby Parker to the pop-up store Kembrel and sites for automated rebates.
ZocDoc and SocialQ are two such successful startups by Wharton graduates. Founded in 2007, ZocDoc is a free service that helps patients find local doctors, see real-time appointment availability and instantly book an appointment online. The service now has over two million unique users per month and raised $95 million to date in funding.
SocialQ is a market research data collection service that uses the social web to collect important information about customer preferences. Instead of using surveys, the company uses social media methods like Facebook to collect data.
Both entrepreneurs attribute their success to the people they worked with to start the company.
“We made sure that the first 20 employees we hired were the best people we could find because this set the tone for the rest of the team we’ve built,” 1998 Wharton graduate Cyrus Massoumi, founder of ZocDoc, said. This decision was based on the advice of one of their investors, Vinod Khosla, he added.
“Coming from a non-technical background, it was important for me to find the right co-founder — he had to have the right skills as a data scientist, and is a brilliant engineer,” SocialQ founder and 2010 MBA recipient Troy Woolley said. Woolley started SocialQ with Joseph Misiti, an electrical engineering graduate from the University of Pittsburgh.
Besides the “quality of the team,” Leinweber said a “certain combination” of flexibility and commitment is important in launching a successful startup.
“The personality to [be able to] adapt quickly is important but an entrepreneur must also have a balance — to be strategic and smart about testing the idea,” Leinweber said.
As more startups fail than succeed, there are certain things entrepreneurs have to do to ensure they avoid failure.
Woolley said getting customer validation was important before starting to build anything from the idea.
“I reached out to potential customers early — it was really helpful for us because we already had an idea about product fit when we started building it,” he said.
Funding can be a problem for startups, Leinweber said, but there are many options for seed funding available. Funding can come from venture capitalists, angel investors or grants, as long as students are “smart about whether the business is venture-backable, and can make the case that this will be an attractive investment,” she added.
While certain students may consider dropping out of college to focus on their startup, it may not be the best decision in the long run.
“It is very rare that it’s better for [a] student to drop out of college and start a business,” Leinweber said.
Only if the idea were innovative and the “first mover advantage was crucial … and [the idea had] validation from many experts” would dropping out be advantageous, she added.
However, Leinweber said it was far more likely that students get more progress on their ventures as students, as they could use elective courses offered in Wharton to push their businesses forward.
“Alums have said that this is a useful resource, because instructor feedback is valuable and students have the opportunity to meet potential partners,” Leinweber said.
Ultimately, students need to be perseverant and committed when planning to start a business after graduation.
“You have to go all in and you have to be focused,” Massoumi said. “It’s easy to become distracted by the tangential opportunities posed by your business, but you have to make your core product work before you try to tackle other things.”Comments powered by Disqus
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