None of us says the obvious: we would never invest in this, because we don't instinctually believe in the product. Yet here's this guy Albecker, who has been working on the design of the chair for eight years--eight years!--ready to wow us silly. He's got one good selling point: in a traditional recliner, your head is pointed at the ceiling. This chair angles your face straight out, so you can lean back and still see the TV. But he's also telling us how great it is to sit on the floor, as if that were our secret desire.
At question time we don't even really grill him. You can tell how much we don't want to tell this guy we don't see it. One judge finds a red-herring issue: "How much patent protection is there? What if I bought this and put little legs on it so that it's six inches off the floor?"
"You could do it," Albecker says, "but you won't be sitting on the floor." That's the point, bub.
10:40 A.M.
Waiting for the next team, I realize that the judges share a real mental link. We're all focused on the same basics: return on investment, product, management team, and whether the numbers make sense.
In comes Granos Inka, the corn growers from Peru. They struggle with a language barrier. A real disadvantage. Easy to see how cultural barriers are true barriers to investment. Nobody invests real money unless he or she feels right about it, and it's difficult to vet a foreign market.
Yet it's obvious that this team is deadly serious. After several governments have come and gone in Peru, it is now legal to buy back land that was given to the country's farmers, one tiny plot at a time. This team wants to consolidate the land, replace imported animal-feed corn with a domestic product, and in the process, replace the coca crop and wipe out the drug trade. Talk about ambition. The young woman who leads the presentation is personally-- personally--investing $5.2 million. Obviously has some resources of her own (family money?) but it seems bad form to ask.
11:15 A.M.
Enter team five: Vusion Inc., the home team from UT. Teams from UT have won in three of the last eight Moot Corp. competitions; it may help to have motivated faculty advisers versed in business-plan competitions, especially this one.
The team members have a new technology built by UT professors, a cartridge-based system to analyze chemical fluids in real time. Each cartridge has a silicon chip with a surface of polymer beads coated with sensitive chemical receptors. You stick the cartridge in a chemical flow and look for changes that indicate pollutants. They call it the Electronic Tongue. (There is already an Electronic Nose on the market, which explains the mildly revolting moniker.) They're targeting chemical producers like the pharmaceutical industry, which must usually shut down expensive processes to do a lot of testing because of government regulations. With this, those companies can test as they go.
The team leader is Jason Levin, who looks just like a taller George Costanza with more hair. The whole team is a smooth bunch. Another member, Richard Burgess, gets up, very practiced, and says Vusion is seeking $1.5 million now to build a prototype. (They don't have a prototype?) Eight million by 2001. Twelve mil in 2004.
Burgess: "I know what you're thinking. You're thinking, 'I love this product.' " (He gets laughs.) " 'But will it make me money?' "
One judge blurts out, "Show me the money!"
At question time we poke immediately at huge holes in the Vusion plan. The team had bad luck. It drew a pharmaceuticals expert on the panel: Bob Vukovich. "You've got a plan here with false revenues, false numbers, and the technology is not there," he says. He speaks for all of us. These guys have not been clear, but if you read between the lines, you can see that the technology is not yet fully developed and that they haven't locked in the rights! All red-alert signals for an investor.
Levin admits that the technology is now capable of reading only one part per million of contaminants in chemicals. It needs to get to one part per billion.
I don't buy the idea that pharmaceutical companies will jump all over this in a few months. "What about barriers to acceptance? They're not just going to take your word for it," I say.
And Rob Brough tells them, "I'm not convinced of the economics."
The Vusion boys lean in, eager to answer questions. They're very, very smooth and maybe are used to getting over on style alone. We can see already that this is a real contender for the team we will send to the finals. Not really going to be a pleasure, though, unless these guys learn some humility. Brough gives it to them straight: "Well, guys, if you get into the finals, it will be one late night tonight." He strongly suggests they spend the time redoing their financial assumptions. But we all suspect this team doesn't want to do what most teams would do, which is spend all available hours before tomorrow's finals revamping the proposal to make it bulletproof to the questions we raised. Later, Brough and I bet that if we see these guys on the boat cruise planned for that night, they won't win on Saturday.
12:10 P.M.
Presentations are over--time to make our decisions. Student helper Kai Olderog (Class of 2000, Wissenschaftliche Hochschule fĂ"r UnternehmensfĂ"hrung, Vallendar, Germany) delivers little box lunches: sandwiches, chips, soda. We start talking. Brough and I argue immediately about GetOutdoors.com. He thinks it's a good economic opportunity. I tell him my "Radical, dude" theory, and he will repeat that phrase all weekend, just to keep the argument alive. We'll be walking down the street, and he'll mutter, "Radical, dude!" and shake his head. But he still won't agree with me.
Vukovich is reluctant on Vusion: "They could never get a multimillion-dollar pharmaceutical manufacturer to adopt a new technology so quickly. And even Jason acknowledged that they made up the numbers."
Still, it's Vusion we send to the finals.
1:00 P.M.
Time to give feedback. Gary Cadenhead has been walking around the halls, telling the teams what all the judges have decided. The finalist team is up first--since presumably every minute counts when it comes to tweaking presentations for tomorrow.
