UChicago nurtures city’s Internet start-up scene
By Rachel Cromidas
Photo by Sally Ryan
If you’re in a class like this, it’s hard not to come away with a bunch of ideas on how you can be a more successful tech entrepreneur.””
—Jeb Ory, MBA’11
Students felt the temperature rise in the Chicago Booth School of Business lecture hall on the first day of Winter Quarter classes. The heat probably came from the 200-plus students who packed the room to hear Groupon co-founders Brad Keywell and Eric Lefkofsky’s first lecture on “Building Internet Start-ups.”
The intense interest of UChicago students also is helping to heat up the city’s growing digital entrepreneurship scene. Companies such as Groupon, one of the decade’s most successful Internet start-ups, have spurred on many students. The University has become a proving ground for digital ventures, with a growing number of students developing ideas here before taking them out into the market.
The list of former UChicago students who have recently founded tech start-ups includes Groupon CEO Andrew Mason, and Sue Khim, who started the company EduLender while still an undergraduate in the College. The new ventures are drawing energy from an increasingly tech-savvy Chicago investment community. Keywell and Lefkofsky’s investment fund, Lightbank, helped launch the educational app company Watermelon Express, which Ashish Rangnekar, a Chicago Booth student, co-founded.
Some of the funding for such start-ups comes from Hyde Park Angels, a group of early-stage investors that was formed in 2006 by a group of Chicago Booth Executive MBA classmates. The group was among the many local and national investment funds that recently helped Khim’s EduLender start-up raise $1 million in seed funding.
Chicago’s newly thriving tech ecosystem is exciting to students like Jeb Ory, MBA’11, who scored a coveted spot in the start-up class that Keywell and Lefkofsky taught as adjunct professors.
“If you’re in a class like this, it’s hard not to come away with a bunch of ideas on how you can be a more successful tech entrepreneur,” says Ory, who runs The App House, a mobile application development and publishing business. “They’re sharing with us what they think is hot, which is a very powerful thing.”
Mason’s ideas about how to organize collective action online started to bear fruit just as he enrolled as a graduate student at the University’s Harris School of Public Policy Studies. While there, Mason was approached by Lefkofsky, his former employer, about a business idea that he originally called The Point. Lefkofsky was so impressed with Mason’s idea that he offered Mason $1 million to start the venture.
Sue Khim, X’09, also took a chance on putting her business concept into the digital world. She was a third-year undergraduate in 2008 when she founded EduLender, a website that aims to simplify the college financial aid process. Khim said knowing that faculty mentors around the University community supported her was essential to her decision to build her business full-time.
EduLender originated from an idea she had when she realized the typical student loan process was overly costly and complicated.
Khim, who experienced the typical start-up growing pains, including a refinement of her idea, said she didn’t set out to start a business, but to solve a problem for students like her who struggle with the student-loan process.
“I didn’t need to start a company,” she says, “I just saw a very large, unaddressed issue that had a solution.” EduLender now allows users to shop for, compare, and consolidate student loans, and will soon expand into other parts of the financial aid process.
Having expert input is particularly useful to students with compelling ideas who don’t come from a technical background, says Keywell, who taught the Chicago Booth students data analysis, marketing, and about using social media.
“Whether people from school get jobs or start their own businesses and create their own jobs,” Keywell says, “they’re going to be faced with digital, mobile, social, viral, gaming, and the reality of entrepreneurship. Having an active curriculum around digital entrepreneurship to me is perfectly logical for a school of this caliber.”
The willingness of successful start-up leaders like Lefkofsky and Keywell to mentor new entrepreneurs is a key part of the tech scenes in the Bay Area and Boston, says Jeff Carter, an independent commodity trader and co-founder of the Hyde Park Angels.
“Once we get more mentoring, we’ll start getting another cadre of entrepreneurs who are successful, and the cycle keeps going,” Carter said.
Lefkofsky and Keywell co-taught the course and invited guest speakers such as Mark Johnson, the chief data officer for Groupon, who described how companies like Netflix and Pandora collect and use data.
One midterm assignment aimed to foster resourcefulness, a trait Keywell says is particularly important for the 80 percent of students in the class who said they want to start their own businesses. For the assignment, students were asked to create the most value possible out of a toy they purchased with $5, and many opted to use the Internet and social networks to make that happen.
Many students and recent alumni with successful start-ups say the digital realm is compelling because one needs little more than a great idea and an Internet connection to start a business online.
Steven Kaplan, the Neubauer Family Professor of Entrepreneurship and Finance, says the University’s extensive entrepreneurship curriculum primes students to turn their ideas into businesses.
He said many of those students and alumni also seek help from the Polsky Center for Entrepreneurship, an on-campus incubator for student-run start-ups and the purveyors of the New Venture Challenge. Founded in 1996, the New Venture Challenge is an annual, yearlong business competition in which students’ start-up business plans are judged and their projects are matched with professors, and sometimes investors, who help make their businesses viable.
This past year, the business plan competition helped raise $31 million for GrubHub.com, a network of more than 13,000 delivery restaurants that simplifies online food ordering. The New Venture Challenge also helped raise $15 million for Bump Technologies Inc., a successful maker of Smartphone apps, started by former Chicago Booth students Jake Mintz, David Lieb, Andy Huibers, and Dominic Hofstetter.
“I think Booth has the most successful entrepreneurship program,” Kaplan says, “and the list of businesses that come out of that program reads like a ‘who’s who’ of Chicago’s technology industry. These companies were all run by students at Booth when they started.”
Ashish Rangnekar came to Chicago Booth in 2009 with a start-up already under way but found essential guidance from the entrepreneurship program. Along with Ujjwal Gupta, Rangnekar had co-founded Watermelon Express, a company that builds educational Web applications. While here, he made a valuable connection to Keywell and Lefkofsky, which led to Lightbank’s investment in Watermelon Express shortly after it won the New Venture Challenge last year.
“Even though I started Watermelon Express in the spring of 2009, the business really began here at Booth,” says Rangnekar.
Carter of the Hyde Park Angels would like to see the Chicago tech scene spawn many more such stories.
“Groupon justifiably gets the lion’s share of the press, but I hope someday we can steal the spotlight from them,” Carter said. “And I think they hope that too, because the more good firms there are the better it is for everybody."