Vusion comes in, and Bob Vukovich leads off. Only right, since he's the guy with the pharmaceuticals background. "The big picture?" he tells them. "You're undercapitalized and too optimistic."
We're giving the Vusion guys the bad news as we also give them the good news that we're sending them to the finals. We expect them to take it seriously and listen hard to the advice. Instead, they're a little defensive and off-putting, and they clam up. Brough: "As you gentlemen know, business plans are never fixed in stone. This is where you can maybe win. My advice is that you stay up late tonight and rerun your financials. The finalist judges will tear you apart if you don't."
The team resists. Levin: "Every panel of judges has its own questions. We don't want to revise our whole presentation."
Brough whispers to me, "I'll be interested to see how our comments are reflected in the presentation they give tomorrow."
1:50 P.M.
The other teams get more cursory advice. After all, we're not sending them off for further competition. But we try to give them some constructive comments.
Albecker, the chair guy, takes the results particularly badly. We guess by his expression that he considers us a bunch of nincompoops for not seeing the brilliance of his product. Maybe he's right, but we have other concerns as well. One judge tries to tell him he made the very common mistake of not asking for enough capital: "The overall amount of money you're looking for is really small. This is the deal you're offering: put in $275,000 and get back $750,000. But in venture capital, investors are looking for a home run, not a base hit. It should have been bigger. If you want a real success, you have to think big."
"I would disagree," Albecker says. Still stubborn. A real turnoff for investors. Interestingly, we still don't tell him what's really on our minds, which is that the chair looks uncomfortable and we don't believe there's a huge unsatisfied market for furniture that seats you on the floor.
3:30 P.M.
We finish and go out into the hall. There's a release of tension. The game has been on from early this morning until now, and we're all tired. It's hot in Austin.
5:30 P.M.
Rob Brough and I find the dock and board the boat, a large ferry. Teams and judges mingle. Nachos and chips are set out, a countrified rock band starts playing oldies covers (this is Austin, after all), and we pull away for the cruise. An hour plus one way, a stop at a landing for some barbecue, and an hour plus back.
I spend most of the boat ride gossiping and talking with Steve Spinelli, the faculty adviser for the team from Babson College. He's the first to say to me what I learn in time is the mantra for teams that do not make it to the finals or do not win: "The judges just didn't get it."
At one point I'm leaning against the rail talking to him and he says, "You really ought to be looking at this." I turn around and see that the riverbank is lined with one incredible mansion after another. Most, some of the others tell us, belong to Dell millionaires, and a lot are not even their primary residences. Something to think about for the teams pitching all these different businesses, seeking their fortunes.
SATURDAY, 1:00 P.M.
The finals. I'm just an observer this time. Before it starts I'm eager to grab a few words with finals judge Joe Aragona, whom Cadenhead calls "my chief justice." Younger than I expect, he looks like Rick Pitino--forties, a handsome guy with coiffed black hair and a gravelly New Yawk voice whose edge has not been dulled by his years in Austin. He's been judging Moot Corp. for 15 years and is always in the finals. He's a general partner in Austin Ventures. Portfolio of three-quarters of a billion dollars. Has funded more than 100 companies.
I tell him that I hear he's tough on the teams. "Imagine how tough I would be if this was for real," he says. "The criteria is simple: Where would I write a check? And that's how it should be. In real life, the first business plan is never the company we fund."
I haven't seen any of these finalist teams except Vusion, the one we sent up. The first is JetFan Technology, from Queensland University of Technology in Australia. It has a cooling device for computers and other electronics, the small black-plastic fans you see inside computers. Except this one is better.
I think this is a very impressive, simple, competent presentation. The company has already raised $1.8 million. It has a good-looking product it plans to sell to OEMs, not consumers. Brough is sitting next to me, and I whisper to him, "They're better than our guys." "Yeah," he says. But we don't know as much as the finalist judges do about the teams--except Vusion--because we haven't seen the plans.
1:45 P.M.
Next team: Regents Park Healthcare, London Business School--two British doctors of Indian extraction who want to run cardiothoracic centers for hospitals. But the judges are of one mind and blunt. Aragona: "Why would a hospital transfer management to you?" The team is cooked.
2:20 P.M.
Before the next team, I head for the bathroom and run into the JetFan team members. They tell me my Vusion boys were drinking on the boat last night.
Now Vusion is up. Brough and I are both curious to see how the presentation has changed. Very quickly, we get our answer: it hasn't. Not one word.
Levin starts. Same speech as last time. Burgess even does the same joke: "I know what you're thinking. You're thinking, 'I love this product....' "
Their smooth presentation gives the impression that they're much closer to having a licensing agreement than they are. In the Q&A, Aragona busts them right away: "Tell me a little about the license with UT."
Levin: "We've been talking to them."
Aragona: "So you have about two years to go?" (Laughs.)
Levin: "We need the financing to prove ourselves and to get the licensing."
Aragona: "You expect to raise this money, and you don't have the license or patents?"
Burgess: "We need to bring in the financing first."
Aragona: "What do you think it will take to break this chicken-and-egg question? It's a $1.5-million question I'm asking." There's no good answer.
