San Francisco's Tournament of Business-School Brilliance

A roomful of aspiring Wharton MBAs. A week spent in virtual isolation in San Francisco. Two dozen ideas for Internet startups. And enough ambition to fill a football stadium. Welcome to the Innovation Tournament seminar, a class taught by Karl Ulrich, a professor at the University of Pennsylvania's Wharton School, that has spun out a handful of venture-backed companies and is wildly popular among the MBA seekers at this prestigious Ivy League institution.This is no business plan bake-off. Ulrich, author of the recently published Innovation Tournaments, lays out a specific product development methodology that includes multiple rounds of voting, and elimination of weaker business ideas based on group consensus.

Ulrich is no stranger to innovation and the competitive entrepreneurial landscape. A prolific founder of companies, his launch credits include a high-end foldable-scooter company, a self-cleaning cat-litter box, and an Internet name-selection engine. Ulrich was kind enough to allow me to sit in on his class and to participate in the process of interacting with teams of Wharton students as they built out spanking-new online company concepts in a blistering four-day sprint to the finish line.

The Darwinator

I joined the tournament on its second day, when students presented revised business plans after getting their classmates' brutally honest feedback on their first concepts. In a roomful of whiteboards and risers, teams made five-minute PowerPoint presentations: a fashion site that tailors offerings to your measurements; a toy-exchange site for parents and schools; a site to let groups negotiate product discounts; a site focused on new pricing mechanisms for airline ticket purchases.

A number of the ideas had changed dramatically from the first day's 53 original concepts (which had been selected from more than 200 ideas, each punched into Ulrich's online program that he called "The Darwinator." By the time I sat down, only 24 ideas remained. Each team had two minutes to present their idea and sell the concept.

That's a key element to innovation tournaments, Ulrich says. "Ideas from the first day may not be any good, but when they are modified, they can become the best ideas." Which is why standard business-plan competitions may not be terribly effective as mechanisms for seeding successful businesses, because the best ideas result from iteration, not just head-to-head competition based on an original idea.

Sitting next to me was Brad Thomas, a strategic business development manager at Intel. Thomas's team was working on the group-product-discount site, a concept that's gained steam in recent months thanks to the growing popularity of Groupon, a site that drums up demand for special offers. Brad's presentation went relatively well, and his three cohorts were bullish that the product would make it through to the next round of the tournament. I suggested that they may want to change their focus to services rather than goods, because its easier to sell on a local basis, and logistics are less daunting. He took the advice graciously and said he'd huddle with his group to take the topic under advisement.

The Final Round

To vote for the 24 startup concepts, participants affixed green stickers to paper mockups taped to the wall. And each team tries to poach members from others, a tactic that encourages participants to vote with their feet. Thomas's group-buying concept got some interest, but a more powerful idea was a site matching interns with potential employers. Joe Croney, the idea's creator, is a persuasive presenter; he's worked in website development for years. And his concept, Spintern, garnered lots of green dots and a number of followers.

On Day Three, the students convened again for a vote, whittling the field down to 12 ideas, and then to six finalists. Each finalist will create a functional site and invite friends to use it, and then the students will analyze visitors' reactions, sifting through comments on their creations. The six teams' concepts are diverse, covering airfare pricing, wines, online filmmaking, and a tool that makes it easy to build iPhone applications.

Croney's Spintern site made the final round. Croney had not even liked the internship idea much after suggesting it, and he said he didn't plan on turning the high-intensity internship program into a standalone product. When the Innovation Tournament began, Croney had figured it would be interesting to see what happened to the concept, but several days into the competition, the site's strong positive feedback got him thinking that maybe it really was a viable product. "I may try to pitch to some VC friends of mine," he said. "Who knows?"

And that's exactly what the Innovation Tournament is supposed to do: winnow out bad business ideas, reward good ideas with encouragement, and let the budding entrepreneurs tweak the weak ideas to make them stronger.

The Deadline Approaches

As the day wore on, I sat with the team as it built its final offering. The members were lucky to count amongst their ranks several highly skilled technology managers who took the technical lead in building out the Web application. Other team members wrote copy for the site, selected its stock photos, hashed over flow-chart diagrams mapping how users would use the site, and other critical minutiae impacting user experience. The conversations could be colorful, as the team rushed to build its product using Adobe Dreamweaver, Microsoft PowerPoint, Getty Images, and even pens and paper. Searches for smiling, high-fiving potential interns yielded much merriment, as the coding part of the team muttered under their breath about useless software code.

That night, the team kept laboring to put out a credible site. Joe had a mini-meltdown when the Indonesia-based graphic designer assigned to the team missed a deadline for a key deliverable. Another bottleneck came up when some code for the site didn't turn out as they had wanted, and the team had to revert to a Plan B -- which meant Croney had to punch out PHP code until 4 a.m., as the tournament headed into the homestretch.

On the fourth and final day, the six teams rolled out their products and emailed friends and family to test-drive the sites. Behind the scenes, Ulrich and his co-leader of the seminar, fellow Wharton professor Thomas Lee, tracked users' comments on the sites, the time users spent on them, and where on each site they clicked.

The teams clustered around computers and chattered, eager to see which Innovation Tournament finalist would prevail in the war for eyeballs (a poor proxy for profits, admittedly, but one that still carries considerably currency in the Internet world, even all these years after the dot-com bust).

And the winner is...all of them. In past years, the six finalists each garnered fairly strong interest from testers. And after it was over, Croney discussed whether his idea was really worth becoming a real business. After all, a number of Wharton Innovation Tournament startups had launched actual startups.

Croney was enthusiastic that his idea had gotten so far, but he wasn't ready to quit school yet. "I want to get my degree," he said. "And I think there are a lot of other great ideas out there." No doubt about that.
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