Bryce Richter / UW Madison Communications
Arpaci-Dusseau: 'You don't need millions of dollars in infrastructure anymore' to start a software company.
So here's the deal: Coupon users are a huge market. Heavy coupon users - whether they're frugal adults or poor students - number an estimated 24 million Americans. So what if you had a mobile app, priced at $5, where these folks could scan coupons, organize them in a file and match them to the week's grocery list?
"My Coupon Manager" is the bright idea of Mitch Davenport and Shubham Singal, two UW-Madison computer science seniors. On Dec. 21, they found themselves pitching their software app as if they were trying to convince Silicon Valley venture capitalists to invest in their company. In reality they weren't angling for big money but for a high grade in UW-Madison's first computer science class in entrepreneurism.
Called plainly enough "Starting a Software Company," the class was taught by professors Remzi Arpaci-Dusseau, 41, and Paul Barford, 49. The duo spent the last few class days of the first semester vetting 24 business proposals from 50 or so students.
Over the course of the semester, the class had been light on theory and heavy on practical advice. Guest lecturers came from influential Madison tech companies - PerBlue, Bendyworks and Epic Systems - while university experts spoke on business planning, intellectual property and market analysis. On the other side of the country, UW alumni working in Silicon Valley (organized, of course, as the "Silicon Valley Badgers") served as mentors.
The class is another small but telling sign of how Madison's information technology scene is putting down roots to support a big future.
"These are really bright, really hardworking kids," says Barford. "We heard some wonderful pitches, everything from social networking, to gaming, to educational solutions. Some were a little bit out there, but others have real possibility for commercialization if they're given a little more guidance and the right environment to blossom."
Underline that last point. UW-Madison is one of the world's great research universities, and the computer science department, as one of the stars in the UW constellation, has its share of illustrious graduates. They include Epic's Judith Faulkner, John Morgridge of networking giant Cisco Systems, Ramu Sunkara of Qik video sharing, and Carol Bartz of Yahoo.
But the surprise is that UW-Madison, despite bringing in more than $1 billion a year in research grants, hasn't fared particularly well in spinning off businesses. A new report by the Association of University Technology Managers notes only four university-related startups in Wisconsin in 2011. In contrast, Illinois had 20, Michigan 11 and Minnesota nine.
This modest state of affairs has consequences for the shaky Madison and Wisconsin economies. The Capitol City hasn't added any new jobs over the past year, while the stagnant state economy isn't even close to recovering the jobs lost in the Great Recession.
Experts say that startup businesses are key to turning things around. But a 2011 report by the Federal Reserve Bank of Minneapolis had bad news on this front: All of the upper Midwest states have been hit with job losses in startup companies over the last 15 years and "none harder than Wisconsin, which has seen employment at startup establishments drop by almost 50% since 2000."
The good news is that the Madison campus has stepped up its game. The business school's Weinert Center for Entrepreneurship is taking a special interest in helping what executive director Jon Eckhardt calls "backpack entrepreneurs." The Wisconsin Institute for Discovery, which encourages cross-disciplinary collaboration, offers free business consulting and a workspace for the computer science entrepreneur students. And in the computer science department itself, Arpaci-Dusseau and Barford are trying to remedy what they see as a longstanding gap in department programming.
Computer science does a great job training students to work for faraway giants like Google, Microsoft and Facebook, as well as the much smaller cohort pursuing an advanced computer science degree, notes Arpaci-Dusseau. But serving those kids who want to launch their own business - to be the next Mark Zuckerberg or Steve Jobs? Well, not so good.
"We just don't have a culture or infrastructure [on campus] that supports entrepreneurship in general and entrepreneurism in computer science and software in particular," says Barford.
Both he and Arpaci-Dusseau are veterans of a dozen or so years on campus, and they took it upon themselves to change things. They're teaching the startup class, which will be offered again this spring, on top of their normal instructional load and - are you listening, Barry Alvarez? - at no additional pay.
The duo are also brainstorming the next step to encourage student entrepreneurs: establishing an incubator space in the west campus. Ideally, it would be something like Y Combinator, the Silicon Valley (and for a time Boston) incubator that gave birth to DropBox and other web wonders.
"You don't need millions of dollars in infrastructure anymore to [start a software company]," says Arpaci-Dussault. The plunging cost of computing and of business services has opened the door to those backpack dreamers.
"That's been a huge transformation," he notes. "It's enabled people to pay Amazon a few dollars to run a web server. And if the site becomes popular, it becomes easy to go from a few machines to thousands of machines to implement your website."
Mitch Davenport has that sort of ambition.
The Monona Grove High graduate has been toying with the coupon app for years and credits a computer science class in mobile app development for refining his thinking. A confident young man of 23, he came by his coupon interest honestly - as a penny-pinching student.
He'll graduate this spring and will immediately start job hunting. He says he'll continue to work on the app and expects someday to release it. But Davenport recognizes that he also has a more pressing need to face: "a ton of student loans."
This seems like a crushing burden for a young man just out of the gate, but Davenport sounds optimistic, noting he won't need very much capital to launch the app of his dreams.
"I'd launch it for free to get feedback from the users," he notes. "The people who use it will have a better idea of what they want than what I think they want. Then I'd do the paid version for $5 with scanning, syncing and a cloud connection."
And the profit margin on that five-buck fee? He figures $3.50.