The benefits of due diligence
Last night I helped out with the Chicagoland Entrepreneurship Center’s Fast Pitch Competition. The event was co-sponsored by The GSB, Kellogg, and De Paul and a bunch of my GSB classmates entered with hopes of winning the $5,000 prize. Each entrant in the contest had 3 minutes to pitch to a panel of 4 judges. I was the timekeeper in for the Web-Based Technologies group where one of the judges was Matt McCall of DFJ Portage Ventures and author of VC Confidential, a blog that I subscribe to. It was cool to meet him. It was also great to see GSB entry ParkWhiz win the Web-Based group and go on to win the whole competition. ParkWhiz wants to create a marketplace for buyers and sellers of parking spaces in urban areas where parking spaces can be hard to find.
I think the idea behind ParkWhiz has potential. However, ParkWhiz’ victory illuminates the flaws in these quick pitch types of contest, as well as the benefits of due diligence. This idea is not a new one – there is company out of MIT called SpotScout that is trying to tackle the same problem and has a mobile application that has substantial momentum. There is also a group called Spark Parking out of Northwestern that is taking a high tech approach to the same problem. There is likely room for multiple players in this marketplace, especially considering intensely regional nature of their products and services, however if the judges had not known about the other players (and they likely didn’t), the idea behind ParkWhiz probably seemed much more novel than it actually was. This reminded me of the coverage I saw of the CRV Entrepreneur Idol fast pitch contest held at Stanford GSB earlier this year where the winner pitched battery-less LED flashlights, a product that is already mass produced.
I’m not saying that these ideas wouldn’t have won if there was a diligence period, but as the New Venture Challenge is on the horizon here at The GSB, I am starting to realize the macro flaws inherent in business plan competitions, and lack of time for judges to research ideas is definitely one of them.
