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This article by Barbara Fox was prepared for the February 25, 2004 issue of U.S. 1 Newspaper. All rights reserved.
Little Fanfare for a Big Prize
The stakes were high – $5,000 for first place, $3,000 for second place, $2,000 for third. Eleven would-be companies, some existing only on paper, were auditioning for nine judges in the annual business plan contest at Princeton University held on Saturday, November 21. The Final Four were to give presentations at 1:15 p.m., in a cramped basement classroom at the Friend Center.
You could tell the student contestants from the onlookers by their dark suits and ties. Some were nervous, some were polished as they waited to lay out impressive plans for their future businesses, complete with market predictions and potential risks, many honed in Ed Zschau’s High Tech Entrepreneurship class.
The students studiously adapted expressions of nonchalance as they waited for the finalists to be announced. The parents, in contrast, were visibly eager. Perhaps because it was an alumni weekend, a handful of parents had showed up for the finals.
With deliberate understatement, the student in charge announced four finalists, and the PowerPoint presentations began. One company, Proximities LLC, was clearly way ahead of the pack, partly because the core technology was so appealing, but also because one of the founders had dropped out of school to get it started. "EZ Pass for Beer," a U.S. 1 cover story on May 14, 2003, told how the company began in incubation space on Forrestal Drive. Now it is a going concern.
Joshua Girvin, the one who had dropped out of school for a year, substituted as a presenter for two students who were ill, and he was joined by John Norair, an engineer from the Class of 2004. They told about their radio frequency identification (RFID) "GO" bracelets that use wireless technology for admission security and purchasing at crowded venues.
Girvin basically blew everyone else out of the water – how could he not? Like the others, he had market projections, but his were based on experience. Like the others, he had interesting technology, but had gone beyond beta testing and is doing paid testing at the Sovereign Bank Arena with the Trenton Titans.
Like the others, he listed glamour potential clients, but his big client, the Homestead/Miami Speedway, is actually going to test the product the weekend of February 27 to 29 for the Toyota Indy 300, an Indy Racing League event. Girvin claims that racetracks will want to use the bracelets to smoothly control which patrons get admitted to the inner ring. And while he and CEO John Lerch are in Florida, Girvin says, they plan to drop by to talk to Disney.
What Proximities has that a big entertainment company might actually want is a secure "Go" bracelet that can tap into a debit card, a credit card, or a prepaid cash account. When you wave your bracelet-wearing-arm, the bartender points a remote wireless device at you, and you’ve ordered your beer. If the venue pays 50 cents or $1 per bracelet, depending on volume, it can expect to reap at least $3 extra in impulse sales, says Girvin.
In the 18 months that he has been in business Girvin has refined his pitch and talks twice as fast as he did before. He emphasizes the added value the bracelets offer:
Advertising on the bracelet itself is worth 10 cents per bracelet.
Decreasing the hassle for determining drinking age is worth another 10 cents.
The ability to track a particular customer’s purchases – frequency of visits, brands of beer or wine, all kinds of information for customer relationship management (CRM) –invaluable..
Competitors include SpeedPass, Omega, SafetyZone, and the credit card services that are going to begin using micropayment systems. An advantage that Girvin cites is that Proximities is making its own wireless RFID scanner that will survive even if it is dropped in a bucket of beer.
"We’re looking for $1 million and positioning ourselves for acquisition in the near term," says Girvin, "but we want the first mover’s advantage, and to be the de facto standard. RFID now is NOT secure, and we are secure." Once removed, a GO paper bracelet is useless.
Girvin wasn’t all polish. Undergraduate brashness showed through when he told of the company’s initial $30,000 funding, commonly referred to as "Friends and Family Funding," but he termed it "Dumb Money." One of the venture capitalist judges chided him for using the term but Girvin repeated it: "It was from my family – Dumb Money."
At nearly 4 p.m., at the end of a very long day, the winners were announced, and Proximities won the $5,000 first prize.
Once again, the prize money was donated by Howard Cox, a partner at Greylock Ventures and a 1964 Princeton graduate with a law degree from Columbia and a Harvard MBA.
Kef Kasdin, a Princeton alumna who is a venture capitalist at Carnegie Center-based Battelle Ventures, emphasized that this year’s crop of student presentations was more impressive than many of the pitches she hears at Battelle Ventures. The second woman on the panel was Geraldine Alias of Battery Ventures, a Princeton graduate, Class of 2000, who has chaired past contests.
Another judge, Kenneth Kay, former CEO of a company acquired by Microsoft, ebudgets.com, now chairman of Jumpstart New Angel Network, said that he hopes to bring some angel funding to some of these companies. Other judges included Warren Thaler, president of Gund Investment Corporation, and Greg Licholai MD, a venture capitalist at Domain Associates on Palmer Square, and two attorneys from Lowenstein Sandler in Roseland.
The second prize went to Amplife Technologies Inc. for power optimization tools for embedded systems software developed by a Princeton University faculty member. Seniors Mark Morales and Phil Inagaki have incorporated the firm and attracted seed funding, and they say they can do a one-day demonstration showing a 35 percent reduction in power use.
Third prize winner: Rough Path Technologies, with an attempt to leverage digital audio compression codecs developed by a Oxford University-based researcher, the father of Princeton University senior Barnaby Lyons. Whether the codec could cut into the market of MP3 provoked some lively arguments but Lyons held his ground.
The fourth finalist, SunSeeker Corp., winner of glory but no cash, demonstrated an electrical stair-climbing device for luggage. Engineers Michael Yang and David Follete demonstrated their initial prototype while CEO Dean Kamara, master of slick patter, demonstrated the determinedly optimistic projections that are typical of entrepreneurs.
Contestants also included two restaurant concepts (organic and omelette/carryout), an online fashion design firm with just-in-time manufacturing, a web-based used automobile certification service, a nonprofit for athletic underprivileged children, a nonprofit commodities market for trading opinions on science, and a design firm for cancer treatment facilities.
But everybody won, if you count the invaluable experience of getting no-holds-barred feedback from busy venture capitalists and attorneys who would not normally even return their calls. On a bright and sunny Saturday, after a day of being holed up in windowless rooms, the judges stayed for an extra half hour to speak with the would-be entrepreneurs.
The 2003 winner, Terracycle, landed a $1 million prize from a national contest and is successfully selling environmentally friendly plant food from its 15-person office at 20 Nassau Street (www.terracycle.ca). Proximities is already ensconced at the university’s Forrestal Campus, as is the winner from 2001, Princeton Power Systems. It’s cheap no-frills space for businesses on a pizza budget and that’s just what they need. That, and an optimistic outlook.
– Barbara Fox
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