I'm an Entrepreneur; Get Me Out of Here! Today's episode: How to turn a class project into a multimillion-dollar business. (No degree required.)
By Joel Holland
Opinions expressed by Entrepreneur contributors are their own.
Aaron Levie and Dylan Smith didn't know exactly what they wanted to do--it was 2005 and they were, after all, just sophomores in college. But they knew this much: They were ready to be out of the classroom and into their own business.
So Levie, a student at University of Southern California, and Smith, an old friend attending Duke University, began bouncing entrepreneurial ideas off each other. For a long time, nothing stuck. Then Levie was assigned a marketing project: Choose a market and conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
"I chose digital storage because it was something that was interesting to me," says Levie, now 25. "And through the process, I realized that there were very few meaningful services out there providing this technology."
With money saved from Smith's online poker winnings and a few previous small ventures, they hired engineers to develop the technology and marketers to begin spreading the word to bloggers. And when they needed more money? They cold-called a couple of billionaires, Mark Cuban, owner of the Dallas Mavericks, and Paul Allen, Microsoft co-founder and owner of the Seattle Seahawks.
Extra credit Aaron Levie's advice for making the most of an assignment:1) Don't pick a generic research project. Choose a specific market or opportunity that could really turn into a business. 2) If you don't have a business idea, start with a market that interests you and set out to address a problem. 3) Learn the industry inside out. This gives investors confidence in you. 4) Analyze competitors to get an idea of what you'll be up against and what you'll potentially earn. 5) Take the project seriously. |
"We were going through our list of billionaires, and Paul Allen was geographically the closest," says Smith, now 24. "So we actually delivered our prospectus through his doorman. It's not clear that it ever arrived to him directly."
Their luck was better with Cuban. Not only did he respond to their unsolicited e-mail, he ultimately also gave them $350,000 in startup capital. How did they pull that off?
"It's as important to sell yourselves as much as the service," Smith says. "The business model's going to change 50 times, and the market's going to change, but you need to convince that investor that you are smart enough and excited enough about the opportunity that you'll figure it out."
Within months, they had officially launched their business, Box.net, a cloud content management system that helps businesses share information and collaborate on projects online. The basic platform is free and is monetized by upselling advanced features, increased storage and additional security.
In just a few short years, Box.net has grown tremendously. The Palo Alto, Calif., company now has more than 4 million users, has raised $29.5 million in funding and employs 90 people.
Oh, and the marketing class that started it all? Levie earned an A-minus.
