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STUDENTS LAUNCH INTERNET START-UP
While most M.B.A. students expect a job to be waiting when they
graduate, Ray Krouse, ’99, had greater expectations: a company
of his own.
His expectations have been met. After Krouse graduated in June,
he headed to the San Francisco Bay area to join Connect Innovations
Inc., the Internet technology company he cofounded with fellow
student John Rodkin in 1997. Krouse, who was a CPA with Coopers
& Lybrand before coming to Chicago, is chief financial officer.
Rodkin, who has taken a leave of absence from school to launch
the company, is president and CEO.
Connect Innovations, d.b.a. flyswat.com, is just one success story
to come out of the Edward L. Kaplan New Venture Challenge, a business
plan competition now in its third year. To date, five companies
have emerged from the first two competitions. Connect Innovations
is among the most successful.
In less than a year, Krouse and Rodkin raised an initial $1 million
in seed money from Benjamin Rosen, chairman of Compaq, who invested
personal funds; Ronald C. Conway, who heads the Band of Angels
investment group; and Jim Brock, a former Internet partner at
Venture Law Group presently with Amicus L.L.C. “Obviously, having
those guys behind us gave us a new network of people to go to
for venture capital,” Krouse said. The pair found a willing investor
in U.S. Venture Partners, bringing the money raised to $4.3 million.
Both Krouse and Rodkin came to Chicago with a specific goal in
mind: to start their own company. The pair met at Admit Weekend
in April 1997 and decided to room together. When they arrived
in Hyde Park that September, they immediately began brainstorming;
less than two months later, they had a business under way.
The idea for their venture was inspired by law research Rodkin
was conducting on the Web as a student in the joint J.D./M.B.A.
program. “Both of us recognized that there were problems navigating
and finding information on the Internet,” Krouse said. “We started
thinking there must be a better way to link things together.”
The first product they developed was a program called ChicagoCite,
which recognizes law cases and statutes and links those items
to related references on the Web. They took the technology a step
further to create Flyswat, a free browser extension designed to
simplify Web navigation. Flyswat sits in a window to the side
of the browser and generates continuously updated links that relate
directly to the text that the user is viewing. The company plans
to release its product commercially this summer.
Before Krouse left Chicago in June to join Rodkin at their headquarters
in Pleasanton, California, the company was edging toward two dozen
employees and was bursting out of its office space. The partners
credit their successful launch to the talent they have hired–mostly
engineers from MIT, where Rodkin received his bachelor’s and master’s
degrees in computer science and engineering, respectively–and
their flexibility.
After their business plan placed fourth in the New Venture Challenge,
Krouse and Rodkin spent the following summer refining it and meeting
with potential investors. When the original business plan failed
to generate interest, they went to Plan B. “We had always had
a contingency plan for applying the technology in a different
way under a new business model, so that’s what we did,” Krouse
said.
Although both Krouse, 28, and Rodkin, 26, think they would have
eventually proceeded with their business idea with or without
the New Venture Challenge, both agree that it provided a crucial
element for their early success: a deadline.
“I think getting the business off the ground would have been much
harder to do without the New Venture Challenge. It took us through
a lot of different iterations of the business plan, and it gave
us a flavor of what to expect from investor meetings,” Krouse
said. “It made us focus on the things we needed to think about
and gave us a goal to work toward.”
Now they face two challenges, one of which is a race with the
unknown. It is essential to bring their product to market before
a start-up with a similar idea gets there first–if such competition
even exists.
“As far as we know, we’re the only ones creating this type of
product with this particular technology and method, and we think
our method is superior to all others,” Rodkin said. “But we think
since it is a good idea, it’s likely that someone else has had
it too.”
To beat the competition, the partners will keep working around
the clock and focusing on what they consider their biggest challenge:
increasing their top-notch staff with equally talented people.
“I think we’ve been incredibly successful in attracting people
to work for us,” Krouse said.
“The group of people we have so far is extraordinary. But moving
forward is our main challenge. We have things to do to implement
the plan and the key is finding good people,” including vice presidents
in marketing and business development.
Being a start-up has helped in attracting talent, especially engineers,
Krouse said. “Our goal has been to make Connect Innovations the
most attractive place anyone could work, not only because of the
compensation package but because of the type of work we’re doing.
We’re building something new that is going to change the way people
do business on the Internet.” –C.N.
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