Massachusetts natives Kevin Tully and Dave Barry were in search of the right place to realize their dream of starting a custom guitar company. “To be honest, we just Googled ‘best city to start a business’ and Austin was the place that kept coming up,” Tully says.
Tully and Barry launched Moniker Guitars in Austin in 2012. One year later they found themselves in the heart of UT’s entrepreneurial engine: Moniker was accepted, along with 10 other startups, into the McCombs School‘s Jon Brumley Texas Venture Labs accelerator (TVL) where they discovered that being the subject of a student project at UT may just result in a total business transformation.
TVL provides hands-on learning experiences for graduate students from McCombs, the School of Law, the Cockrell School of Engineering and the College of Natural Sciences. And while TVL may be better known for the Texas Venture Labs Investment Competition (formerly, Moot Corp) and the bigger Global Venture Labs Investment Competition, the heart of TVL is the semester-long TVL Practicum class in which students and startups work together.
[Read more about this year’s Global Venture Labs Investment Competition winner.]
The Ladder of Entrepreneurship
In the TVL Practicum, the process of learning entrepreneurship works as a ladder when a student moves up a rung on the ladder, he or she is mentored and coached by the faculty, students and teachers on the rung above. At each rung students cement what they’ve learned by sharing and learning alongside their rung-mates, and mentoring and coaching the students behind them.
TVL practicum students work directly with Austin-area startups, such as Moniker Guitars. When the class begins each semester, the startups selected by TVL staff members make a presentation to the class about their companies and what they need help with. Each student team (usually five students plus a leader) chooses a company to work with. Then the team and the company founders together decide on a plan of action.
That’s a critical point, says Rob Adams, TVL director. The students don’t merely implement a plan conceived by the startup; they also pitch their ideas about what the company needs. Startup founders are notorious for “not knowing what they don’t know,” Adams says. Many are following a passion or have extensive subject matter knowledge but not much general business experience.
A common and crucial step the students complete is a “market validation,” or sizing the potential market and quantifying its value. It’s something many startups fail to do or don’t know how to do.
Jaime Sutton, MBA ’13, the principal of a team that assisted Moniker Guitars this semester, explains the students’ approach. “We ask, ‘Where is this company in its life cycle, what is the company’s team good at, and what are they lacking?'” she says. “The Moniker team didn’t have a lot of business background. They didn’t know who their target customer was, and their price point had come from nowhere.”
Tully concurs. “Working with the team made me wish I’d gone to business school instead of law school,” he says.
Making a Startup ‘Investor-Ready’
In the class, “our teams take the point of view of an investor,” says Sutton. “We ask, ‘What will a potential investor need to know?’ and ‘What’s missing that would need to go in a pitch?'” Startup founders, she adds, often “don’t see the need” for information such as market validations. (Sutton was a returning TVL Practicum student, a common practice in the program. About 20 percent of students each semester have taken the class at least once before, giving them even deeper knowledge.)
The Moniker team met with the company’s founders biweekly at the ATandT Executive Education and Conference Center, the practicum’s home base. Over the spring semester, the team performed a market validation and straightened up the company’s financial information so it would be more visible to investors.
Tully says he was particularly impressed by some Excel wizardry from the students, who created a spreadsheet showing the comparisons among three different guitar-neck vendors. The spreadsheet’s formulas allow Moniker to calculate their margins at different price levels using each vendor and even allow Moniker to determine the ideal number of guitar necks to purchase from each vendor to get the best price.
The spreadsheet tool wasn’t part of the initial plan, but students saw a need and an opportunity. “They finished a milestone early, came to us and said, ‘Why don’t we run this analysis for you?'” Tully says. Moniker now has better financial organization and clarity around issues such as target market, pricing and sourcing materials. Says Tully, “We’re ready for the next step.”
One next step: Moniker Guitars raised just more than $61,000 (well over their $50,000 goal) in an April Kickstarter campaign meant to raise funds needed to start selling semi-hollow-body guitars (previously Moniker sold only solid-body guitars).
As for Sutton, she received her MBA this month but is staying on at McCombs for another year as an Accenture Venture Partner, a one-year, post-graduate fellowship. The fellows will work with the current Venture Partners on the competitions and the practicum, providing hands-on assistance to those behind them on the ladder.
The 10 startups besides Moniker with which the TVL Practicum students worked in Spring 2013 included several biotech firms; an online platform for employee status reports; a company with a new technology for data storage; a company devoted to ending “vampire” energy loss in chargers, external power supplies and microprocessor cores; a microchip design company; and a family-oriented social network.
As each company explained the students’ contributions at the spring 2013 Venture Expo, it painted a picture of TVL as a thriving ecosystem for entrepreneurism in which everyone involved works hard to get a little further up the ladder or a little further down the road.
A version of this story originally appeared on McCombs Today.