A Dinner Serves as the Hatchery For Some High-Tech Start-Ups
By JOSHUA HARRIS PRAGER, THE WALL STREET JOURNAL
October 20, 1999
Copyright © 1999 Dow Jones & Company, Inc.
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CAMBRIDGE, Mass. -- At 6:30 p.m. on a recent Tuesday, 100-plus Massachusetts
Institute of Technology students descended on a stack of pizza boxes.
Jonathan Monsarrat, a business student with a brown sticker on his tan shirt
raised his arm and bellowed, "Are there any computer scientists here?
Techies?" A few students wearing blue stickers grabbed a slice of pizza and
scurried over. The occasion: the celebrated MIT "team-building dinner," the
first step in the university's annual $50,000 entrepreneurship competition
and one of the nation's hottest seedbeds of high-tech entrepreneurial
success. Contestants in 1998 went on to become Akamai Technologies Inc., an
Internet content-delivery company recently valued at $1.5 billion, and
Direct Hit, a promising new player in the search-engine market.
In 1996, the dinner drew Firdaus Bhathena, an electrical-engineering
student, and Pasha Roberts, studying business. Mr. Bhathena was expert at
using computer-based visual-interaction systems, while Mr. Roberts had used
computers to control telephone systems. They hooked up and went on to start
Webline Communications. Cisco Systems Inc. bought it for $325 million.
Another company born at the MIT competition, Firefly Network Inc., was
snapped up by Microsoft Corp. Other universities around the country have
similar competitions, but MIT's is particularly fruitful and idiosyncratic.
It's a cross between a singles dance and a commodities-futures pit. Held in
the third-floor lounge of a stone building that is as nondescript as its
name -- E-51 -- the 1999 dinner attracts a crowd that is 90% male but
otherwise a bouillabaisse of accents and ethnicities, computer wonks and
would-be investment bankers. Nearly everyone sports color-coded stickers --
blue for those already with a team looking to fill a final slot, brown for
those who may have an idea but are unhitched. The aim is to scare up a team
and get cracking on developing a business model in time for the May award.
As the networking begins, it's clear that for many, the dance just doesn't
come naturally. "It's a peculiar dysfunctionality of technical institutions
that students tend not to communicate too much," says MIT alumnus Joost
Bonsen, who as a student launched the team-building dinner six years ago
with a friend who was studying economics at Harvard.
'Blue in the Morning'
The stickers help break the ice. Gokul Rajaram, a business student wearing a
brown sticker, confides that "I was blue this morning until I changed to
brown. It's better to meet the blue guys." The blues, Mr. Rajaram figures,
are further along. "GPS is my interest," reads the blue sticker affixed to
the shirt of Ken Wainer, a student at MIT's business school. His sticker
quickly catches the attention of two brown stickers, Jose Hurtado and Arthur
White, both students at MIT's School of Earth, Atmospheric and Planetary
Sciences who are well-versed in GPS -- the global-positioning system.
"Basically, I want to track small mobile assets," Mr. Wainer tells the pair.
But he worries that the Department of Defense purposely limits GPS's
commercial applications by confining its ability to pinpoint location. Mr.
Hurtado is reassuring. "There's a way to get around that dithering," he
says. The threesome exchange numbers. Nearby, Paul Henderson, wearing a
brown sticker that reads bioengineering, is searching for someone to help
him market an idea that involves isolating certain enzymes from bacteria and
selling them to medical researchers.
"Have you actually isolated the enzymes?" asks Dan Johansson, who owns a
small Web firm in Sweden and is stickerless. He's in town visiting start-ups
and learned of the gathering from an acquaintance. Assured, he begins to
discuss marketing. "We're like moths going from one bulb to another," says
Mr. Rajaram. Adds Charles Sestok, a graduate student in electrical
engineering who organized the evening, "This is kind of like our one
free-for-all of the semester."
Teams in the competition must have at least one principal member who is an
MIT student, but outsiders are welcome to participate. On this night, David
Rabinovitz, the 39-year-old vice president of a local equipment-financing
firm, is scanning the room for a computer whiz to help him bring equipment
financing online. "If you're going to go shopping for something, you might
as well go to the best store," says Mr. Rabinovitz, who learned of the event
on MIT's Web site.
'Academics Is an Afterthought'
The students agree, and for many the contest supersedes their education.
"This makes the material from class come alive," Mr. Sestok says. Mr.
Rajaram puts it more bluntly. "Academics is an afterthought," he says.
That's hard to dispute. Prowling through the crowd is Anthony Cirurgiao, a
former contest winner turned venture capitalist. He, too, wears a sticker.
It reads "Mentor?" Mr. Cirurgiao, 31, looks dapper in a jacket and tie and
is glad he came. "I think they may have something," he says quietly to a man
beside him, motioning across the room. The source of his excitement is Yuval
Raviv, a tall, rail-thin business student at MIT who wears a blue sticker on
his gray fleece. Mr. Raviv has an idea to distribute software over the
Internet and is looking for someone grounded in marketing. Mr. Cirurgiao,
impressed by the idea, has asked Mr. Raviv to see a business plan. Mr.
Cirurgiao doesn't invest personally in the teams he mentors, but he says,
"I'll be more than happy to open my Rolodex." The prospect of being
introduced to some venture capitalists is exciting to Mr. Raviv. He says,
"In terms of selling for a few hundred million dollars to Cisco, who
wouldn't want that?"