cc  >> Good afternoon, everybody.  Welcome back to  Entrepreneurialism in Society.  This is a course that's offered  through the University of  Wisconsin School of Human  Ecology.  As we begin, I'd like to extend  thanks to our partners in  supporting this course, the UW  Office of Corporate Relations,  the UW College of Engineering  for their technical support,  and financial support from  the Ewing Marion Kaufmann  Foundation, which is committed  to advancing academic education  in entrepreneurialism.  Additionally, we'd like to thank  our media partners, Wisconsin  Public Television and their  University Place crew, for  taping today's lecture.  I'm quite pleased to introduce a  relatively new graduate of the  University of Wisconsin,  Christopher Klundt, who is  co-founder of Study Blue.  Chris grew up in Elm Grove,  Wisconsin.  He attended Marquette University  High School, graduating in 2001  from that school.  And from there, attended the UW,  and was accepted into the  Medical Scholars program.  At UW, he developed what he  calls a small computer building  business. 

 He graduated in 2005 from the  University of Wisconsin, with  Biomedical Engineering and  Computer Science degrees.  After graduation, he spent a  year working as a securities  analyst before chasing the dream  of developing an Internet  start-up.  Chris co-founded the Class  Connection in 2006, along with  a fellow UW graduate,  Dave Sargent.  They have grown from two  employees to ten employees  today.  That company is now  incorporated and has  subsequently changed its name to  Study Blue.  Chris is a strong believer that  software should be built by  users for users.  And I've asked him to speak with  us today about  entrepreneurialism, particularly  given his very fresh perspective  as an entrepreneur, and talk  with us also about his business.  He may actually choose to use  you as a group that would be his  target market, to answer a few  questions about his product.  Please join me in welcoming  Christopher Klundt.  (applause)  >> Thanks, Jeanan. 

 Yes, I graduated in 2005,  so I sat in this room not nearly  five years ago for an  engineering course, I'm sure,  like many of you are here now.  Just out of curiosity, how many  of you have heard of Study Blue  at this point?  Cool.  That's exciting.  It's very cool to see that.  UW is our strongest campus.  We've got the most students  using Study Blue here.  It's where we started and where  we've got the most traction.  It's cool that a lot of you have  heard about it.  I'm just going to kind of share  with you how I got started with  the idea, and how we got to  where we are today, and kind of  throw out some of the things  I've learned along the way.  And hopefully, it's something  you can use in starting your own  business, if that's where you're  going some day, along those  lines. 

 So, just a little background  about myself.  As Jeanan already said, I went  here and graduated in 2005.  I started the UW Forensics Team  when I was here.  I was really into speech and  competitive speech, not  forensics-bodies, but forensics  speaking.  And the business we have is  Study Blue.  Let me back up here.  It started as Class Connection  in 2006.  I had a friend who was a year  behind me, actually, who I knew  from the speech team.  And he and I were sitting around  thinking one day, you know, why  do you guys use WebCT, or Learn  at UW.  I'm sure everyone's familiar  with that. 

 Why is that product so useless  to you if you don't have a  professor who really engages you  with the products.  So we said, wouldn't it be great  if we could use that without  your professor having to put  notes up there, or having to  organize the forums, or anything  like that.  So it was kind of a ground-up  idea, that we could have a site  for students by students.  Kind of cliché, but that's what  we were going for.  And we originally started, we  did some surveys on Library  Mall.  We ran around and handed out  free suckers and a survey that  said, you know, would you be  interested in created study  groups online, would you be  interested in interacting with  your fellow classmates online.  And we found a lot of people  said they would be interested in  that.  So we thought it would be a good  idea to go from there.  So I just wanted to touch with  you a little bit.  This is kind of a little chart  that I've used that kind of like  keeps the business plan flowing  and kind of describes my thought  process about where we've come  and where we're going,  and how to make things work  at Study Blue. 

 So in the middle,  you'll see Opportunity.  That's like the big thing that,  you know, you never know when  it's going to come along.  You never know where you're  going to find the opportunity,  or who's going to give you an  idea, or when it's going to come  to you.  But once you really nail that  down, then you kind of step  outside and have to move along a  path that is never ending.  And it's a cycle that keeps  going forever and ever, as long  as you can keep your opportunity  alive.  I'll touch on each of these a  little bit more here.  So opportunity.  What's your path?  Basically, you know, as Jeanan  said, I started out as an  engineer.  I was going to go to Med School.  I found an opportunity right  before I graduated to go work at  a hedge fund in Middleton. 

 And I wasn't in Business.  I'd never had any business  courses.  It wasn't my strength, by any  means.  But the hedge fund that I had  the opportunity to work with in  Middleton was a successful firm.  And I really respected the  business owner there.  And I thought it would be a  great opportunity to learn a new  skill set.  You never know what skill sets  are going to be most valuable to  you in the long run.  Chances are, it's the ones that  you never thought about in the  first place.  So I went to work as basically a  stock analyst, securities  analyst.  And I was there for a year. 

 And eventually, we got a call  one day at the office about the  idea to, someone was looking to  raise money for a different  business that was similar to the  one we've got, but more for  professionals, as opposed to  students.  And it kind of got my brain  racking.  That's when I talked with my  friend, as I mentioned.  And I approached the investor a  week later, after this idea had  come across the table.  And you know, I kind of pitched  the idea to him as something  that we could pursue maybe over  the summer, as a summer project,  and kind of go from there.  But the key message was, you  know, the idea is, where did it  come from?  Well, the idea just came out of  left field.  We got a call from a friend  looking to raise money for a  separate business.  It wasn't something I  brainstormed.    We weren't sitting in the room  trying to come up with a  business.  We weren't, you know, trying to  accomplish something in a  timeframe. 

 It just kind of came out of  nowhere.  And that's kind of the unique  thing.  You never know where your ideas  are going to come from.  But you just have to be open to  whether it's something that you  just have, or you know, as  opposed to sitting down and  saying we're going to come up  with a business in the next hour  and try to go with that.  Sometimes the better ideas just  come out of nowhere.  The market.  You know, that's another thing.  When we're looking at the  opportunity, when you get the  idea for a business, you have to  think, who is the market, where  is the market, are people  interested in that?  The three tenets that I like to  quote, and these aren't mine,  but I like to follow them are:  does the innovation target  customers who in the past  haven't been able to do it  themselves for a lack of money  or skills, you know, is your  market audience someone who  wants to do this, but doesn't  have the time, money or effort  to accomplish it.  Is the innovation aimed at  customers who welcome a simple  product.  The best ideas are the simplest  ones. 

 YouTube.  It's easy.  Facebook.  You know, it's a basic idea, a  site that you visit the most.  Look at the iPod.  You know, it's got four buttons  on it.  It's very simple, from the look  of it.  A lot of things you interact  with, and sometimes the simplest  ideas are the best ones.  And finally, will the innovation  help customers do more easily  and effectively what they're  already trying to do.  You know, that kind of goes into  my idea of felt need versus  create a need. 

 Do people know that they want to  do this, or are you creating a  need that they didn't know that  they had.  You know, we thought that  students wanted to make study  groups online.  I know I would've wanted to do  it and find easier ways to  interact with my classmates and  do studying online when I was  here several years ago.  So we thought that was a need  that students felt.  Versus creating a need, you  know, if it's a product that no  one ever thought was possible  before, and no one's ever  considered, then you're going to  have to do a lot of effort to  tell them, hey, you need this.  Or you know, like a sham sponge,  or whatever those things are  called.  You know, you never know if you  need this product, but they're  telling you that you need it, so  therefore, you must need it.  That's a different marketing  approach, depending on what your  product is.  And finally, risk versus reward.  You know, when you have the  idea, you think maybe there's a  market. 

 I'm interested in pursuing a  business around this idea,  whatever it is.  Part of being an entrepreneur  that I discovered is risk versus  reward.  The risk is high, the reward is  high.  I had to basically stop working  as a securities analyst to do  this business.  And you have to be passionate  about it.  I know you've heard that before  with other presenters.  You really need to have a  passion for what you're doing.  If you don't like what you're  doing, it's not going to work.  You're going to be doing it 9-9  every day, not 9-5.  So you really need to be  excited about that. 

 Okay, moving on.  So, once you decide, okay, I've  got this idea.  I think people are interested  in it.  I think I know the market.  You know, I'm excited about it.  What are the next steps.  How do you go about translating  this idea into a business that,  you know, that you can take to  the next level.  The first step you need to go  through, obviously, would be  planning.  Go through the basics of who,  what, where, when, why about  your business.  Looking at the who. 

 Who do I need at the minimum?  You better be able to do some  part of the business yourself,  whether it's you know, making a  furniture store or a Web  business, or whatever it is.  You better be able to contribute  a large portion, if not all of  the business portion of it  yourself.  In this case, I had a degree in  computer science, and I was able  to do web programming.  So that was a strength that I  had, that I knew I could apply  to the business.  If you're a fashion major and  doing a clothing line, or  something, then you obviously  better be able to make the  clothes.  But you obviously can't do  everything yourself.  And so, you're going to have to  realize you're going to have to  ask other people and find what  are the missing pieces.  I can do this.  Well, what are the other pieces  that this puzzle needs, and who  can accomplish them.  In the case of Class Connection,  we needed a database programmer. 

 I had no experience with storing  all the data.  I could do web design, but not  database, so we had to get a  database programmer.  I also didn't have any marketing  or business background in that  sense, so my buddy Dave, who we  co-founded with, he happened to  have a degree in business and  marketing.  So he was good at running user  focus groups, and getting  marketing to students, and that  kind of thing.  What.  What do I need to accomplish?  How much, you know, what do you  need to do to prove your  concept?  Just get a prototype out there;  do you need to have a complete  product.  When we first started, we didn't  have a complete site.  We spent the summer working on  trying to build it.    We realized we weren't going to  be done by the 2006 school year.  So we spent a couple weeks just  putting together a little tiny  web page that got students  excited about it. 

 We actually were at SOAR in  2006.  I don't know if anyone was a  freshman in 2007.  But we were at SOAR as Class  Connections.  We were trying to gauge  interest.  So we had a little welcome web  page, where all you did was fill  in your name and email, and tell  us you were interested.  Then we came back to you when we  had the product done.  But you need to determine what  you need to accomplish by when.  What are your goals.  When do you want to get them  done by.  Is this a one-month project, a  six-month project to get the  ball rolling. 

 Is it a year, two years.  You really need to kind of set  those goals and know when you're  going to accomplish them by, and  when you're going to take a step  back and review how far you've  come.  And where are you going to work.  Well, that was an interesting  one.  We started out in my basement,  which is here on the left.  And I worked down there for 12  months, with a card table and a  computer.  Then we eventually moved to an  old leather shop.  This was Too Hot to Handle, the  business that used to be in  there.  And it's on the corner right  behind State Street Brats.  There's a big blue house. 

 It's got a hair salon and STA  Travel on the first floor.  We were in the basement of that.  You can see our little gated  entrance down here.  It was one big room, and pretty  stingy and pretty gross.  But Chloe, one of our campus  reps here, and she's been in  there and can attest to its  disgustingness.  But you've got to make ends  meet.  And it was cheap enough.  That's why we chose it.  But now, we've actually moved to  a new office.  We took the suite above Urban  Outfitters, in between the  Towers there in State Street. 

 So it was a quick move across  the street.  But you know, now we have more  people, and everything, we need  to really have a full size  office that can accommodate more  people.  So that's just a little show  about where we've been and where  we are now.  So the next thing on the list,  money.  That's probably the biggest  factor in a failing business, or  not getting your idea off the  ground, is where are you going  to get the money to feed  yourself, feed the people who  are helping you get things off  the ground, get a storefront.  You know, get an office,  whatever your needs may be.  I know you've had a couple  people talk about raising money  and some ideas there.  Just to show a little bit about  what we did, like I said, we  started because an investor I  worked for agreed to back the  project for a summer.  So you know, he agreed to pay my  salary and the two other people  involved to do the work.  And you know, we worked in my  basement, so we didn't need a  place. 

 We worked on our computers, so  we didn't need any electronic  stuff.  So it was low cost to start,  which was good.  Any way you can cut costs and  trim costs, that's what you  definitely want to do.  Just to give you an idea about  a web businesses, just some  interesting things.  I've been looking up, Perez  Hilton, I'm sure a lot of you  read Perez Hilton.  His blog is just a blog, as you  know.  His blog costs $500,000 a year  in traffic, and with computer  costs.  But he's got three to four  million people who read that  every month.  It's costing him 20 cents a user  to run his site.  Anybody have any idea how much  Facebook spent last year?  Any idea?  $400 million, they spent on  computers and bandwidth, and  employees. 

 And 200 million people use  Facebook, so that's two bucks a  user, it costs them to run their  business.  They're still not making any  money, even though they get all  kinds of money for advertising  and Microsoft, and everybody  else is giving them money.  And finally, Google costs  $15 billion a year to operate.  So no one really knows how many  people use Google.  But if two billion people  in the world were to use Google,  it'd be $7.50 a user.  When it comes to web businesses,  you'd obviously like to be on  the shorter end of things, like  Perez Hilton.  He doesn't make quite as much as  the Google folks, but you know,  it's something to consider.  It's something we had to  consider, how much it was going  to cost to run, and where we  were going to raise that money.  So just a little exercise I was  thinking you guys could do, just  to kind of get a feel for  things.  I put down, let's see. 

 When we were first starting out,  when we realized how we were  going to take the business, we  said we needed to raise money,  and we needed to carry it for a  year.  And we needed to figure out, how  much money do we need to run, to  get the Class Connection off the  ground and keep it afloat for a  year, and keep it up and  running.  So the three categories.  We literally had this  conversation in my basement,  Dave and I, and talked about  what we were going to need.  The three categories we came up  with were technology costs,  marketing, and administrative.  So I'll give you guys a minute,  if you want to talk with the  person sitting next to you, or  come up with on your own.  But why don't you think about  what three things in each of  these categories would be, and  what you think it would cost if  you were going to try be  planning a web business in the  first year.  Just for curiosity, because I  definitely had to do this out of  thin air, and didn't have much  to go with.  It's interesting when you really  put your mind to it, about what  things you need to budget to do  for this.  Just give it a thought. 

 All right, cool.  So who's got, just throw them  out, whatever.  I'll just try to do the big  ticket items that are like the  three or four biggest items in  each of these for a budget.  What do we have for technology?  Domain name, sure.  What was that?  Computers, yep, absolutely.  Hardware.  Any other thoughts?  People.  You have to have people,  programmers.  And the last one I had in here  was software and bandwidth.  Software can kind of go  with computers. 

 But these are kind of ballpark  figures.  These aren't exactly  what we spent, or anything.  But certainly to get an idea.  The domain name,  funny stories about that.  Class Connection.  We didn't get Class Connection,  we got The Class Connection,  because Class Connection  was taken, and they wanted  like $20,000.  Class Connect, which was what we  really wanted, because that's  the shortest and simplest.  That was taken.  We couldn't buy it from them.  So we ended up with  The Class Connection. 

 I can't tell you how many times  people screwed that up.  It was Campus Connect,  The Campus Connection,  Class Connections.  So you're going to have to buy  all the different names,  get .bus, .gov, .org,  you know, whichever ones  are available, and so on.  So that was certainly a  nightmare in terms of that.  And we eventually got to the  point where we couldn't even  trademark our own domain name,  because some tutoring service in  California had  ClassConnection.com and they  trademarked that, so we  couldn't get too close to that.  So we couldn't even trademark  our own product.  So that was part of the reason  why we bailed out and switched  to Study Blue.  We needed to get a name  that we could trademark  and build a brand around.  and we paid $20 for Study Blue.  It was available. 

 We were thinking about  other ones, like Notebook.com  or something like that.  They wanted $100,000  so that was out.  But domain names  are pretty crazy.  Every four-letter domain name  is taken, and have been  for a long time.  And if you want a four-letter  domain name, you're definitely  paying six figures or more  to get that.  There's a business in town  that's starting up called  Alice.com and they paid six  figures for their domain name.  Some people think it's really  important.  And obviously, domain names are  key.  Facebook started out as The  Facebook.  I don't know if you ever used it  when it was The Facebook. 

 But they had to pay a lot of  money to get Facebook.  That was definitely a good  choice there.  But domain name, lucky for us,  was $20.  So that was good.  Hardware, computers.  It costs a lot of money to, you  know, laptops cost upwards of  $2,000 by the time you get  everything involved.  It certainly is expensive.  We had to build a whole  infrastructure.  I mean, we don't have a  storefront, right.  We had a web site. 

 So instead of having a  storefront and inventory, we've  got a set of computers in  warehouse, essentially,  somewhere.  So in order to get the whole  infrastructure, I'll just show  you a picture of that in a  second, of what our  infrastructure looked like.  It cost us upward of $15,000 to  get our infrastructure set up.  That's not too bad, considering  how many computers we really had  to buy.  Programmers, personnel.  That's always your big thing.  By the time you pay these  people.  I mean, it's great if you can  trade for services.  It's great if someone's going to  help you out as, you know, a  nighttime job or something  like that.  But in all reality, we found out  pretty quickly that we needed  full-time people doing full-time  work, doing more than full-time  work, to make things happen. 

 So we've got three programmers,  including myself, who helped  with everything.  But by the time you roll taxes  in there and payroll, and  everything else in there, you  know, we wanted to get some  people that were pretty  talented.  You know, you could expect, when  it's all said and done, that the  cost of an employee at that  level would be maybe $75,000 a  year.  And software and bandwidth.  Obviously, Microsoft charges a  ton of money for their software,  which is why Google is nice.  If you haven't tried Google docs  or anything like that, they do  just as good a job as Microsoft  Word, and it's free.  But certainly, we had to pay for  that because we're a business.  We can't cut the corners.  We can't get the illegal copy of  Windows XP, we had to buy the  legitimate thing.  So you know, that can cost as  much as $10,000. 

 So already where here at a  pretty expensive rate just for  technology.  Marketing.  What were some of the things  you put down in marketing?  Advertising, cool.  >> Do you have interns?  >> Interns.  We do have those.  We are hiring for the summer if  you're looking for a job.  Yeah, what else?  >> Research.  >> Research.  Something we can't really afford  at this point.  But definitely something  that's good. 

 Communications.  I would put down like PR firms.  Any types of communication that  they might do, as well as  travel, we had down here.  So advertising.  Who's seen a Study Blue  advertisement?  Where have you seen them?  T-shirts.  Facebook.  Anyone see our ad on Facebook?  We do some Facebook ads.  Yeah, I mean, advertising is--  Yeah?  (inaudible)  Jeanan's email, yeah, you gotta  leverage everybody you know.  But advertising is definitely  something that is moving in a  different way.  It's a web business, right?  We're using different mediums. 

 It's not television.  It's not newspapers.  We've been in the Herald.  We spent $600 to get a  quarter-page ad in the Herald.  But you know, it's just not as  effective as some of the other  means.  What are the web sites you  visit?  I don't know.  It's something we need to know.  Where should we advertise?  Facebook, obviously.  Where else?  Anybody use Digg.com?  Perez Hilton, is that worth  his $20,000 for a full day,  I think.  So you have your ad, it'll be  the only ad up on there for the  day. 

 >> Pandora.  >> Pandora, yeah,  that's a good one.  So yeah, advertising can be  expensive.  Facebook, you know, they do  advertising based on clicks.  So we can spend ten cents every  time someone clicks your ad, up  to a dollar or two dollars.  But that can get pretty quick.  You know, if you say you're  willing to spend 15 cents a  click.  They may show your ad ten  million times in a day.  They have so many people  visiting so many times that your  ad may go out ten million times.  And if a thousand people click  it, you just spend $500. 

 So advertising, it's definitely  smart to be good with that.  I'll just kind of group  advertising and PR, and that  type of thing, materials, all  together.  T-shirts.  You know, you've got to find a  good t-shirt guy.  Yeah?  >> Are you on Twitter?  >> Twitter, we do have a Twitter  account.  We just started with that.  That's another good idea.  Keep up with all those social  networking things.  Does anyone use Google Friend  Connect, or something like that?  No?  Obviously not, because I don't  even know the name.  But yeah, so definitely  something we looked into. 

 Advertising is expensive.  We could spend $150,000 doing  advertising to a whole country  of students.  There's 20 million college  students.  $150,000 it's surprising, it  doesn't get you as far as you'd  think.  But we'll include PR in there,  as well, and materials.  Interns, that's a cost.  Certainly a cost there.  Obviously, I forgot one key one.  I forgot our Personnel.  If you have a full-time person  working on advertising, there's  another full-time salary. 

 And travel.  So we have campus reps at all  major campuses.  Well, not all.  A couple dozen major campuses.  Chloe is our rep here.  She's in your class.  She does a great job.  Glad to have her.  They basically are in charge of  being our feet on the ground.  All of us, everyone on our team,  except for our new CEO is under  30. 

 And so, we're pretty well  connected to being students, as  we were all just students in the  last decade.  Things changed really, really  fast.  And you've got to keep up with  the trends.  I don't always know what web  sites you guys visit.  My sister is a junior at Eau  Claire, so I call her a lot and  see what she's up to.  But you know, you want to stay  on top of your market.  That's really what our campus  reps have done for us.  So we need to travel and pay  them, and visit them and make  sure they're doing a good job,  and that type of thing.  So a total here, I don't know if  this is still accurate, but  $290,000.  And also, what some of you have  probably noticed, is we do like  to pay for referrals and  content. 

 You know, we try to make sure  that we get a lot of good notes  and flashcards online.  We do a good job with seeding  the university and getting the  ball rolling.  So we do have to have some sort  of a budget for paying for note  takers.  People always ask me, are we  really paying kids for notes,  and without having to charge for  anything.  The answer is yeah, we do.  So that money's got to come from  somewhere.  And then lastly, just to move  along quicker, administration.  Actually, there's interns here,  we had, as well.  Any other thoughts here?  What's the obvious one?  Personnel, yep.  Rent. 

 Supplies, all these types of  things.  It gets expensive.  Rent is like a house.  You've got to rent a house.  You've got to rent your place.  I'll group all this together.  It's roughly that.  So we're looking here at  $640,000 to run a full fledged  Internet business.  It's pretty expensive.  Way more than I thought it was  going to take. 

 And I think if my investor had  known it was going to be that  much, we wouldn't be here today  either.  So he was kind of in for a  penny, in for a pound.  But what are some ways you can  cut back on that?  You know, going back to my  presentation, you know, how do  you cut back on that?  Where does the money come from,  $640,000 is a ton of money.  But you can cut back by trading  services, wearing lots of hats,  do things yourself.  You know, get people to help  you out for free.  Barter.  You know, find ways to cut  costs.  Don't get the best thing.  We started out in a basement and  then we went to another  basement.  You know, you have to pick and  choose what's essential and what  isn't when you're trying to  budget. 

 I can tell you that your people  are your most important thing.  Don't skimp on your people.  If you find the right person,  you know, and sometimes we've  had to pay more and bite the  bullet to get the right people.  But the people really are what  carry you along.  I'll talk about that a little  bit more in a little bit.  So where does it come from?  You guys have had a whole  discussion about this stuff.  But family, friends, that's  where you've got to start first.  You know, do you have a little  bit of money you want to put  into this.  Maybe you're the one who works  for free for a month because you  are the idea generator.  Family, friends, grants,  bootstrapping. 

 Does anybody know what  bootstrapping means?  Bootstrapping means you are  generating revenue while you are  trying to run the business.  So you're not making money,  you're not in the black.  You're in the red, but you are  generating revenue.  We're not making any revenue  right now.  Study Blue is free.  We have some advertising on the  site, but we're all in the red.  We're sending money out the door  every day, and not making any  money.  Which makes it really tough.  We're not selling anything.  If we were selling widgets or  chairs, or clothes, or t-shirts,  you know, we could be  bootstrapping, because we'd have  money coming in to pay some of  the bills that you have going  out month. 

 So it definitely puts you in a  good position if you're selling  something, if you're going to be  making money right away.  And angel investments.  I know someone just talked to  you about the angel networks and  different kind of venture  capital, and that type of thing.  But definitely all good places  to look.  Grants are something we haven't  done as much of as we should  have.  But there's definitely a lot of  money out there, especially  connected with UW.  There's a lot of money here for  new businesses and that type of  thing.  Just real quick.  This is just a picture of what  our computer infrastructure  looks like.  When I was saying we had to  spend all that money on hardware  and stuff. 

 Basically, we started out with  just one little computer here,  and one little computer here.  And we've grown to include a lot  more, which can get expensive  quickly.  That's why Facebook  spent $400 million.  They spent $250 million on  computers.  They've got a building the size  of this whole hall stuffed with  computers holding all your  pictures.  And just a quick look at  start-up financing cycle.  We're down here.  We're in the valley of death  right now.  We're not doing too hot in terms  of raising money, or in terms of  generating revenue.  But hopefully, I think if the  product continues to be as  successful, and people find  useful, and students continue to  want to use it to share and  communicate, then we'll find a  way to get up here. 

 But the goal is to get to break  even, you know, that's where  most businesses fail.  If you can't break even, you run  out of money, you close up shop.  You know, chances are, that's  where you stop.  You've got to feed yourself.  If you've got a family, you've  got to take care of them.  So, certainly that's the hardest  part.  That's where we're at right now.  We're trying to get there and  get past that.  So, don't spend too much time on  that.  Team. 

 Like I was saying, team is  absolutely key.  The people you hire are the most  important.  Now, why is that?  They transcend your ideas into  reality.  You're doing a lot of the work.  You can't do it all yourself.  These people make it happen.  The whole web site, Study Blue,  is built by three programmers.  So everything that happens had  to be done by somebody.  And if someone dropped the ball,  that doesn't work.  When it goes down, it's  somebody's fault. 

 And if nobody's there to fix it,  then the web site is down.  You know, when we go down for  five minutes, you don't want to  see my inbox with the hate mail  I get.  You guys are ruthless.  But you know, we don't like to  be down.  So it's important to us to keep  a good team.  Wearing many hats.  Everybody, you're doing lots of  things.  You know, maybe you're  programming.  Maybe you're marketing.  You're doing budget work, like  we were just doing. 

 You're doing customer service.  I answer customer service  emails, you know, a couple hours  a day, just getting back to  people who have questions about  stuff.  You know, everyone is doing lots  of different things.  And just because you're not an  expert at it doesn't mean you're  not going to be asked to do it,  because you will.  And you're just going to have to  bite the bullet and probably do  a lot of things that you're not  good at, or you don't like, but  you're willing to get good at  them.  And you know, a cliché.  You're only as strong as your  weakest link, like I said.  Where do you find people?  Friends.  Friends can help.  Why did I put a question mark  there, though?  Friends can also be problematic. 

 That's the easiest way to get  into an argument with somebody.  Like I said, my co-founder was  my best friend in college.  We've been pretty lucky to not  have very many disagreements.  But it's the same thing when  you're going to be a freshman in  the dorms, right?  People warn you, don't room with  your best friend from high    school, 'cause it may be a  problem.  The same thing can happen here.  You never know.  When it comes to business and  your career, and your life path,  sometimes friendships don't go  as deep as you think.  And sometimes, it can get in the  way and cause problems.  So I say that with a bit of  caution.  References. 

 Always be talking to people and  finding people.  You know, you never know where  you're going to find stuff.  We found a lot of our  programmers on CraigsList, you  know, free posting there.  Talk to people.  You never know.  We live in a world with Facebook  and LinkedIn and MySpace, and  all this.  You're plugged in to a huge  network of anything you could  want.  You probably have 800 friends on  Facebook.  Chances are one of them is good  at something that you need.  And you can't be afraid to ask  them, hey, I'm looking for this,  or I'm trying to do this. 

 Do you have someone I could talk  to?  Do you have experience with  this?  Can you help me out?  Would you be interested in  working with me?  That kind of stuff.  That's where references-- Push  people to give you the  references.  Sometimes you just have to flat  out do a job search, like go on  Monster or CraigsList, that type  of thing.  So execution.  This is the part, so you've  raised the money, you get  somehow through the grant,  through bootstrapping, whatever  it is.  You had the plan.  You got some money that you  think will carry you for a  couple of months while you get  the business off the ground.  You've got a team.  You've got some people helping  you, people giving you advice,  people working with you, people  willing to work, you know, for  food or whatever, however you  can do it.  But now the fact is you have to  execute. 

 You have to get the work done on  your desk every day.  Like, I don't know what things  are going to be like in a month.  All I know is that I've got  three things that I have to do  by Tuesday.  So I get in and do them every  day.  I'm a tick list person, and  that's what works for me.  But big picture, you sometimes  have to just ignore it for a  while.  Once you've already planned, go  in and do the small picture.  Answer emails, and return your  phone calls, and fill out the  paperwork on your desk, or make  the product, program, whatever  it is that you've got to do, is  something we've got to do.  Don't be afraid to change  directions.  We started out, we were going to  do study groups. 

 We thought study groups was the  way to go.  And we found out very quickly  that students cared more about  doing and sharing notes and  flashcards and study materials  than they cared about sharing  study groups and collaborating  with each other.  So we quickly switched gears to  be more content focused than we  were about collaboration.  So we have tutoring.  We have messaging.  We have study groups online.  But those are not our most  popular features.  It's notes and flashcards that  everybody wants to use.  So you don't want to be stuck in  a pigeon hole and be resistant  to change.  Because your customers are going  to tell you where they want to  go. 

 Flickr used to be, I'm pretty  sure, Flickr used to be a game  web site.  It used to be like a massive  multi player online game.  And people used to create  avatars, and share little  avatars.  And all of a sudden, it became  picture sharing.  They said, oh, it seems like  everyone just wants to share  their animated graphics on our  game and no one wants to play  our game, so we're going to  change gears.  And you know, they did.  And now they're one of the  largest photos sites on the web.  It came out of nowhere.  Don't get distracted.  You're going to get a phone  call. 

 You're going to get all kinds of  ideas.  People are going to come to you,  do this, you should do that, or  what about this, that kind of  thing.  You just don't want to get  distracted.  It's really easy to waste a lot  of time doing other things that  really aren't important.  So you really just want to stay  focused and stick to your plan.  And whatever you came up with  originally, that's good.  Execute the small picture.  I said that.  Customer comes first.  We're always talking to  students. 

 We're always asking our campus  reps what's going on.  You know, if students want  something, that's what we're  going to do.  And ultimately, your customer  matters.  If a customer wants one thing,  then you should pay attention  and go with that.  And come up for air, is one  thing I like to say.  You know, we get so embedded,  we're making a new  functionality, we're doing  marketing, we're doing  everything we can with the  business.  And eventually, you've got to  take a step back and say, okay,  what is the big picture, are we  doing what we should be doing,  kind of come up for air and take  a look around and make sure  you're on the right ideas.  This one is the most important.  I touched on it kind of a couple  of times.  Always be networking. 

 I'm not a networker.  I'm not much of a connecter.  I heard someone talking the  other day that one in ten people  you know are connecters.  And those are the people you  want to hold onto tight, because  they're going to connect you.  Chances are, you know somebody  that just knows everybody.  Every time you bring up a name,  they're like, oh, yeah, I know  that person.  So hang onto them, because  they're going to connect you to  a lot of people that you'll  need.  I just cannot stress always be  networking.  You have to be talking to people  all the time.  Because you never know who's  going to be of help for you. 

 And when someone comes to  approach you for help, that  means they respect your opinion,  so you should do the favor and  help them out, because you never  know when it'll come back.  Then finally, I've got  validation.  You know, our goal, originally  with The Class Connection was we  wanted to see how well it worked  here.  We started at UW.  We finally got the site ready by  2007, a year late.  And we wanted to see how things  would take off here.  So that was our goal, to get it  out the door in 2007.  And by the end of the semester,  that fall semester, to kind of  say, do people like it, are  people using it, did we miss our  mark, did people not tell us the  right things, did we miss  something?  So that was kind of our three  month plan.  Then our goal was, if that  worked out, let's try other Big  Ten universities, or other  schools similar to Wisconsin.  And we thought if we could get  that to work, then maybe we'd be  onto something. 

 So we checked our milestones.  At the end of December 2007, I  think 4,500 people had signed up  from UW.  Not that many, 2,500 maybe.  So we thought, okay, that's a  fair amount of people that are  using it, ten percent, maybe.  We seemed to get positive feed  back.  So we said, all right, we'll  roll this out across other  schools.  So we went to Michigan, Ohio  State, Penn State, Purdue, Iowa,  you know, Big Ten schools  basically, and tried to do the  same thing, roll out the same  model.  We got a campus rep on the  ground there, someone who was  plugged into the school, and did  some simple advertising, and  some campaigns with email,  Facebook and such, and tried to  roll the concept out again.  That was our one-year goal.  We ended that spring semester of  '08, we wanted to say, you know,  were people using this, were  they excited, you know, how many  users?  There's an easy metric for us to  track how many users we had and  how often they were logging in,  and the feedback we got there. 

 So that was a good milestone.  Then it was last fall, 2008,  where we decided, okay, it's  been a year.  We spent that money that we were  talking about.  We need to figure out now if  it's going to be a real business  that can last.  And so we went to networking.  We started talking with our  contacts.  We need to find a CEO.  I'm only 25, so I don't really  have a lot of experience with  running a major business or  anything like that.  So we recognized that as a weak  point and we wanted to find  somebody who did have  experience.  So we talked with some people  from Viron Energy Systems. 

 They're a big company in town.  They're working on the biofuel  thing.  But their CEO is leaving.  And he was friends with our  investor.  And they connected.  And he agreed to come on board  and help us out and help us try  to raise some money, and help us  stay connected to people in the  industry.  Our new CEO, who we just hired  in January, her name is Becky,  she came from Microsoft.  She actually helped roll out  Hotmail.  She was director of MSN  International about seven years  ago at Microsoft.  So has sat in meetings with Bill  Gates and Steve Ballmer many a  times. 

 And she moved back to town  because she went here in the  '80s.  And we got connected with her.  She came on board in January.  So, we kept networking and found  people who had experience, who  wanted to be involved.  That helped validate that we  were onto something, and meeting  our milestones, that other  people wanted to join us.  So it got to the point where we  started turning a revenue.  We, like I said, we're in the  valley of death.  We need to make money.  And it's like we're at the point  now where we really need to  figure out what the plans are.  And we've got a couple of ideas. 

 You know, we think we're going  to introduce some premium  services in the fall.  We've got some really cool stuff  coming down the pipeline for  some tools and features that  students have said they'd like.  You know, we'll offer for an  additional premium account as  well.  It's called a freemium model.  You have free things, but you  can pay a little extra if you  want a premium account.  I think LinkedIn does something  similar.  And advertising.  Obviously advertising is key  as well.  And then staying connected  with industry leaders.  It's important to find out who's  in our space, who's in  education, who's big there, and  who's big on the Internet and  the web. 

 We were actually invited to  attend the Google IO conference  in San Francisco in May, which  is Google's big conference for  up and coming applications that  are using Google products.  So we're excited about that.  But it's important to stay  plugged in with people who are  in your field.  Even if you're running a small,  local business, you know, what  are the other local businesses  in town that you can stay  connected with, and those  people.  So that's pretty much it.  It's basically, keep the cycle  going, you know.  Once you have your opportunity,  keep flowing around this chain  here.  And once you get to validation.  I would say we're on the third  time through this thing.  We planned for summer, got some  work done, and then we realized  okay, this is going to take  another year. 

 So we planned for another year.  And we raised a little more  money, got some more people,  executed the web site, found out  it was working.  We're at more schools now.  And now we're in the third  planning stage.  What are we going to do in the  fall?  How are we going to take this to  hundreds of colleges instead of  just a couple dozen?  Where are we going to get the  money to do that, how many  people do that?  Can we get it done on time?  And that whole type of thing.  Eventually, you want to be in  the lower left.  I'd rather spend most of my time  down here with execution and  validation than trying to figure  out money and hiring people,  because these two things are  tough and time consuming.  So if you can get out of there  quickly and have the right team  and get cash flow positive,  you'll enjoy spending more time  here, it's probably what you  care about anyways.  That is pretty much it for what  I had to say.  >> So we can open it up to  questions for the students at  this point. 

 You know that I'll hand off the  mic to you as you have questions  for Chris.  It's a pretty inspiring story,  in the fact that it's happened  pretty quickly, really, in the  scheme of things.  I asked this question of some of  the other entrepreneurs that  have come and talked with us.  And I think that your  perspective might be a little  different from theirs, just  because your start-up has  happened so quickly that at this  point, what do you consider to  have been your greatest risk?  >> That's a good question.  I think the greatest risk for me  personally was that I eventually  realized that if this is going  to work, it's going to need  full-time attention, which means  I had to stop working at the  hedge fund where I was working.  I had to shift gears and pursue  something that basically I  didn't really know anything  about.  I had made a small, personal web  page, but it's not like I've  ever made a massive web  application.  So I was learning, and learning  every day more than I was really  applying.  And it's scary to think that you  just don't know.  It's easy to know, okay, I'm  getting up at 9:00 and I go to  work till 5:00, and go home. 

 But once I made that leap, I was  like, it was no set hours  anymore.  It's try to get this work done.  And the risk for certainly other  people is funding the business.  Our investor has been really  kind to carry us pretty far.  And certainly that was a  monetary risk.  If you have put-in money of your  own, that's certainly a risk,  too.  >> Chris, how important was it  for you to have that other work  experience before you jumped  into really owning and managing  and growing your own business?  >> It was definitely good to a  year out of school, from the  standpoint of learning about the  business world.  I mean, I wasn't exactly a model  student here at UW.  I certainly slept through all my  8:50s, and you know, certainly  enjoyed going to the Plaza on  Thursday, Friday, Saturday and  Sunday.  But you know, when you get into  the real world and the business  scene, it's a bit of change. 

 You'll be prepared because you  went to a great institution like  UW, but it helps to have a  little bit of business etiquette  and business sense about you,  and make a few connections to  kind of get the ball rolling and  know what the rest of the real  world is doing every day, as  opposed to enjoying college.  >> Chris, I'm Alex.  I was wondering, if you don't  factor in you graduating from  the University of Wisconsin, do  you think there's any strategy  in the size of the school that  you begin with?  Do you think it might have been  easier if you started at a  smaller school and worked your  way into the Big Tens?  >> No, in hindsight, I would  have done it the same way,  gone for a big school.  And the reason is the volume  of students is really helpful.  It's hard to find people  to start.  Early adopters--  Wikipedia is a good example.  I'll digress a little bit.  But Wikipedia is a good example  of you know, everyone uses  Wikipedia.  But who put the article there?  Who wrote that?  Somebody had to do it.  And somebody was in love with  the topic, maybe, and that's why  they chose to do it. 

 Similarly, at large schools,  it's easier to find more  students who will be the early  adopter of your products, who  will put up the first lecture  notes, who will share the  flashcards, who will tell their  friends about it, who are in a  big enough class that when one  person starts engaging in the  class and tells 130 other  students.  We pick up a lot of traction  that way, whereas if you were at  a small school, class size of  ten or 20 every class, it's  harder to find enough students  to be the early adopters and the  early contributors.  Then even when they do--  Our best classes are the biggest  ones, Chem 103 and Econ 100,  those are the classes that we  have the most traction from  because they're huge.  A lot of people willing are  willing to participate.  And that's what made it easy.  >> What were some of the topics  that you and your partner  disagreed on when you were going  through the process?  >> Well, it was always a battle  of budget on technology versus  marketing.  I was tech.  He was marketing.  And I think I commanded most of  the budget, because we needed it  to get the product done.  But I think he felt like he had  his hand tied behind his back,  because we didn't have a lot of  money left over for flyers on  campuses, or advertising, or  hosting study breaks, or  anything like that. 

 It was a lot of disagreements on  spending, how you're going to  spend the limited amount of  money you do have, as well as  some disagreements about the  tactics, you know, what's our  message.  We've had disagreements on,  currently our slogan is right  now is "Binge Thinking," which I  particularly like.  But certainly we've had  disagreements on what's the  message we want to send, and  what's the theme we want to  cover, and that type of thing  has certainly been an area of  disagreement.  >> I'm going to take a little  different tact back here at the  back of the room, and ask Chloe,  who's working with you.  You've referenced her a couple  of times.  What she's learning by observing  a couple of, not to be ageist,  but young entrepreneurs who are  just getting started.  Want to share?  >> I don't know exactly what to  say.  But I think working with young  entrepreneurs is actually  interesting, because I grew up  in a family with my parents  being entrepreneurs, and being  able to see the younger side of  it, seeing them grow and trying  to figure out what their  audience wants.  They're always asking me  questions, like where should we  post advertisings, like you were  saying before, and like what  kind of audience should we cater  to, and stuff like that.  I think that you and they  understand really, that reaching  the right audience is what it's  all about. 

  You and I talk about this all  the time.  You're asking me, all the time,  where should we post  advertising, who should we reach  out to.  And I think it's just  interesting to see you feed off  of someone who's almost your  same age, but still kind of  within the college scene more  than you are.  >> Chloe keeps telling me that  more students have Blackberries  than iPhones.  Is that true?  I'll do a quick poll.  Who's got an iPhone?  Blackberry?  All right, you're right, Chloe.  >> What do the rest of you have?  Just a regular cell phone?  That's interesting.  I would have expected that more  people have iPhones, too.  I'm curious here.  You mention the importance of  networking, Chris. 

 And I think that some of the  other people that we've had an  opportunity to connect with have  also mentioned that.  But as I talk with students,  and, not to be ageist, but some  folks have a bit of a challenge  thinking about, well, how am I  going to do that.  I don't know who to go meet  with.  I don't know how to even get  involved in what meeting.  Tell us a little bit about the  importance of networking and how  you even got out there and got  to know people.  How did you do it?  >> You know, it's kind of a  domino effect, I think.  The first network I made was the  investor I went to work for, who  was a family friend, actually.  So I had a nice in there.  Your parents know people.  They obviously are mature and  have been out in the real world  a long time. 

 You never know who they know.  They certainly spend time  talking about you to their  friends, I'm sure, and the  successes you've had.  And so, their contemporaries are  interested in what you're doing,  chances are.  That's a good place to start, a  family friend.  But from there, I don't know how  many times I've had to pick up a  phone call and call somebody,  way out of my league, if you  will, who's way older than me  and had been in the scene, and  to try and talk with them as a  peer, as opposed to you know,  below them.  It's just something you've got  to work with.  And when you find that lead, or  even if it's a cold call, if you  can find one little in, my mom's  friend's brother, you know,  recommended I talk to you.  If you just have that one little  connection, sometimes that's  enough to spark a conversation  with people.  >> When you think about your  vision for the organization, two  questions in regard to this.  Do you think about what it's  going to be in five or ten  years, or do you only go out  two?  And then, in addition to that,  what is your vision?  What do you want it to become?  >> Five years seems like an  eternity right now. 

 Two years is much more  realistic, I think.  We'd like, you know, we started  out with the idea.  A lot of people try to pigeon  hole us as a Facebook  replacement.  That's not what we're really  about.  We're not trying to be a social  networking site.  We're more about using the  Internet and the computer to  make studying easier, and  providing tools for students.  A long vision would be it would  be the place to go for all  students, college, high school,  distance learners, e-learners,  whatever, to make studying  easier, and use the tools.  Known as like as study site, as  opposed to a social network  site, which is more just fun and  socializing.  I don't know.  It could get there someday. 

 We certainly have a long ways to  go.  But like you said, it moves  quick.  In four semesters, we are  already a lot further along than  I could have thought.  >> Any other questions?  Oh, I see a hand over there.  I'll bring that over.  >> Hi, my name is Monica.  I was actually looking at your  site today and I'm seeing things  about legal and illegal on the  use of sharing notes and things  like that.  Have you gotten any negative  feedback from like professors or  other administrators who may  think it's almost cheating to  help other students out.  And if you did, what type of  negative feedback and how did  you handle it.  >> It's a good question. 

 There are a lot of different  mind sets in academia.  The UW is pretty forward  thinking, and not to use the  state slogan, but you know,  Stanford, UW, there are a  handful of schools that are very  open to the Internet.  MIT has got a whole thing called  open courseware, where they'll  just put their entire course  online for anybody in the world  to use at any time.  And you know, they certainly  support this open education  thing.  But you're always going to find  a handful of people.  And not to be ageist in the  reverse way, but you know,  sometimes the oldest professors  who have been around the  longest don't want to adopt the  change, and sometimes put up an  argument, if you will, about it.  But I think when you really get  down to it and explain to them  what we're all about, and we're  helping students study smarter.  We're helping your students  learn the material.  That's what every educator  should want to do.  So we do get a handful of  people who misinterpret what  we're about. 

 We try to deal with them one on  one, you know, as they come  along.  It's not been overwhelming yet.  That's what we try to explain to  them.  And I think they're pretty  receptive to it.  >> It's certainly a new world  and a new way of communicating.  I think we've been discussing  that over the course of the  semester.  Yours is a great example of  that.  So thank you very much.  Thanks to Chris Klundt for his  talk today.  (applause)