The

Entrepreneurial

Code

Lessons from an

Ivy League Entrepreneur

Chapter Five

While Johnny approached merchants, Joe was getting very positive feedback from students and parents about the idea.  Maverock became ecstatic and it was as if they already owned a successful business in his mind.  He was the first to verbalize interest in actually starting the company.  Maverock became adamant about changing his role, so he could co-develop the marketing plan with Joe. 

Joe’s research consisted of lots of surveys, interviews with students, as well as telephone interviews with parents.  Joe was careful to sample an adequate number of data points, and he tabulated the results and coded them.  He concluded that “convenience” and “variety” drove interest in the Bullfrog Card, and students and parents would prefer a meal plan that didn’t penalize them for missed meals.  In addition, 91% of the parents surveyed said they preferred that students use debit cards instead of cash for “safety” reasons.  Joe explored people’s main reasons for being on a meal plan, asked them to rate their experiences with the school cafeteria, and gauged their level of interest.  Students and parents practically told Joe what they needed and how to market the plan to them.

Maverock took a different approach to the market research task and explored whether or not other off-campus meal plans existed at colleges across the country.  He was already thinking a few steps ahead and wanted to get a sense of the broader market opportunity beyond their school’s campus.  At that time, there were no similar programs like what they were contemplating.  A few schools had off-campus debit card features on the back of their school ID cards, but these were just bank accounts that could be used to withdraw cash or make generic purchases.  They weren’t restricted to food purchases, and they weren’t offered as meal plans.  Maverock also researched how other school cafeteria plans marketed themselves.

Since Maverock switched his role to marketing, Abe and Johnny began to research the technology.  They just walked into the school cafeteria, looked at the card terminals the school used, and copied down the phone number of the manufacturer, Campus Meter Corporation (CMC).  They reasoned that having a compatible system with the school was a benefit if they ever merged with the University’s cafeteria.  CMC sent them information and estimated the cost of the equipment needed to run an off-campus meal plan with 40 restaurants. 

CMC pledged that all hardware would come complete with necessary software.  The entire system was estimated to cost $120,000, and could be leased over five years (about $25,000 per year), and purchased after the last year for 15% of the initial price ($18,000).  The supplier would provide full service and support for the system for an annual fee of 10% of the total cost ($12,000).  Bottom line, for $37,000 per year they could have the technology up and running.  CMC even agreed to send an engineer to campus to set the entire system up. 

At the time, Abe was spending most of his time on the phone with CMC engineers, working out the logistics of the network.  That’s why they weren’t shocked when he got a call from a senior VP at CMC.  She was very candid with him.  She knew from talking with her engineers that they were students, and she told Abe she didn’t mind working with him, so long as he wasn’t wasting her time.  Basically, she requested that if this were a class project, she needed her engineers to be free to work on real business opportunities.

It was awkward, because if Abe had introduced himself as a student doing a class project, he never would have gotten the information they needed to evaluate the idea.  Abe did what he could to maintain the relationship with CMC, and reassured the manager that his team was evaluating the opportunity. He suggested that any determination would hinge upon the completion of their business plan before the summer. Assuming the results were favorable, he would be in touch.  It was an uncomfortable situation, but Abe had no idea if there would ever really be a Bullfrog Card.

 

Copyright  2005 by Chris Cononico
All rights reserved. No part of this manuscript may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the author, except by a reviewer who may quote brief passages in a review.