MIT Sloan 50K Competition 1998 Finals & Keynote Address by Bill Porter SM ‘67

BOB ANDERSON: Thank you all for coming tonight. I'm Bob Anderson. And on behalf of the MIT Enterprise Forum of Cambridge, I want to welcome you all to this evening's presentation of the 50K Competition final event. The MIT Enterprise Forum of Cambridge has been hosting the 50K final event since it started in 1990. We are thrilled to highlight the extraordinary talent, ideas, and enthusiasm for entrepreneurship that exist within the MIT student body.

The Forum's mission-- to help entrepreneurs build successful companies-- fits well with the student run activity. And the forum will be a resource for these teams once they've graduated and begun the serious business of building a company. Our jumpstart clinics, startup clinics, [? 10250s, ?] spring and fall workshops, and technology briefing series all help entrepreneurs.

The MIT Enterprise Forum of Cambridge is celebrating its 20th anniversary this year. Begun as an educational service to MIT alumni, the forum has broadened its reach to include not only the MIT community, but the entire entrepreneurial community of New England. There are also 18 enterprise forum chapters worldwide, all dedicated to promoting the growth of technology oriented companies. And in fact, they're often linked.

On May 21, Professor Bob Langer will be giving a satellite broadcast out of [? Crusky. ?] More information on that is in the brochures at the entrance. Here in the Boston area, these teams also find a great infrastructure of resources to help them build their companies. One example are the volunteers and the sponsors of the MIT Enterprise Forum. I want to thank tonight's sponsor, Goodwin, Procter, and Hoar, for their long-term support, both of the forum and entrepreneurs in general. You should all have a fun time tonight I extend my congratulations to all the 50K entrepreneurs, especially tonight's finalists. Thank you.

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Welcome everybody to the ninth annual MIT 50K Entrepreneurship Competition. So what's on tap for tonight?

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PRESENTER: What is on tap for tonight? First we want to talk for a moment about what is the MIT 50K for some of you who haven't run into the competition before. Then we're really excited to have Bill Porter, founder and chairman of E*Trade [? Group ?] [? Inc. ?] coming to share some words of advice with these teams who are launching their ventures.

Next we'd like to introduce the organizing team that will be running the competition next year. And finally, the part that we're all here for tonight, each of the finalists teams will be presenting their business ideas for you, and you can be the judge. And at the end of the evening, we'll find out who are judging panel chose this year's 50K grand prize and runner up winners.

First, before we continue, we'd like to thank our sponsors. Our sponsors give us the money that it takes to run the competition every year in addition to the $50,000 worth of money we give out as prizes each year. We also take about 50 to $60,000 to put on each of the programs. We have several events sponsors. Motorola New Ventures sponsors our team building dinners each month. Testa, Hurwitz, and Thibeault sponsors the Intellectual Property Seminar. Polaroid sponsors our Ideas and Innovation Seminar. And McKinsey and Company sponsored our first ever Global Startup Workshop for organizers of business plan competitions.

We also have many other sponsors who provide the services, the money that it takes to keep our lights running and our office going and our faxes going out every year. And we have sponsorship from alumni who have given back to the competition Silicon Space, our inclined sponsors who provide services to the teams coming out of the competition, and very importantly, our sponsors within MIT, including all the groups here and MIT Resource Development.

So what are the steps of the 50K we start in the fall. We had 1K warm-up round. We had 120 entries in that. The judges selected 10 teams to identify and honor as teams showing great promise. We came back in the spring with our kickoff, the executive summaries and semifinalist plans due. And tonight, we're here at the 50K final awards.

So we've seen the process. But what are the results of this network, process, and resources? In the past nine years, over 30 companies have come out of the competition. They've created over 500 jobs and have an aggregate market value of over $180 million. And it's not just these large aggregate numbers. It's stories like Virtual Ink, a 1997 winner of the competition just received $1 million worth of seed investment.

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They've recently moved into office space with one of our sponsors, Polaroid, and will be launching their product in Q4 in '98. Right? Stylus Innovations sold their company that won the competition in 1991 for $12.8 million in 1995. Web Line, a 1996 winner, received $7 million worth of venture capital last year. And most interestingly, two of our alumni, Flash Communications and Firefly, were both purchased by Microsoft.

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You be the judge. The finalists that you see here tonight are tremendous. But they are not the only ones going forward to launch their ventures. And tonight's is a celebration, a commencement of the ventures for all the teams that have participated in the 50K. I'd like to take a moment and have each of these teams stand up so that you can identify them, seek them out afterwards, and say hello.

Beacon Software. Can you turn on the lights? Beacon Software, Exotech, Biomedical Modeling, Frictionless Commerce, Catalyst Software, [? Net ?] [? Pecker, ?] Connected Care, [? Netican, ?] Cortical Technologies, Past Technologies, Ethos Technologies, and [? Vert ?] [? Med. ?]

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Just have to get my notes so I don't forget anything really important here. Now I'm very pleased to introduce to you Bill Porter. He's the founder and chairman of E*Trade Group as we mentioned earlier and near and dear to the heart of MIT since he's class of '67. He founded the E*Trade company, formerly known as E*Trade Plus in 1982. Prior to founding E*Trade, Mr. Porter held research management positions at General Electric and Textron. He received a BA in mathematics from Adams State College, an MA in physics from Kansas State College, and an MBA in management from the MIT Sloan School.

Mr. Porter retired as chief executive officer in April 1996. In May 1996, Mr. Porter was named Silicon Valley's emerging company entrepreneur of the year by San Jose Business Journal. And most excitingly, Mr. Porter has just founded a company, which is operating in stealth mode, that promises to be very, very exciting. Bill Porter.

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BILL PORTER: Thank you. Well, I feel pretty humbled to be here at MIT. You know, the intellectual stimulation at MIT is not surpassed any place that I know. There are so many bright people on the staff or on the faculty. And the students here are just absolutely outstanding. And so all I can do is tell it like I see it, and I will do just that.

What I'm going to do is talk just a little bit about E*Trade. And then I have some other things that I would just like to pass on as ideas about entrepreneurship. We originated online brokerage in 1982. We were the very first ones to do that. And I started with another fellow. And we spent 10 years getting it going. And so it takes a lot of perseverance to make things happen. And finally, we founded E*Trade the beginning of this decade.

And during the '80s, we actually serviced Schwab, Fidelity, Quick & Reilly, and a number of other broker dealers where we were basically a service bureau. And we formed E*Trade as such in 1992, which was only-- what-- five years ago or six years ago, I guess it was. And we basically have led the market in terms of price decrease. I established the strategy early on to decrease the price as a function of our volumes to maintain profitability and with a total objective of obtaining essentially market recognition and be the brand leader, which we have achieved.

And there's our six years growth. The overall growth-- I forget in the first couple of months, which was infinite, of course-- the overall growth month to month averages today for the whole six years 8% a month. And you'll see a little dip there at the tail end of last year and the beginning of this year. As you may remember toward the end of last year, there was a dump in the market. And sure enough, our market decreased accordingly. But people come right back after-- they forget those things very quickly, thank goodness. And of course, we're in a very hot market as well.

Well, we have arrived at a point where we have very competitive prices. There are some people that are lower than we are. But we're satisfied with where we're at for right now. And it's a very competitive situation. And people do a lot of trading when it's this inexpensive to trade. Now, as an aside, just one of those little gems of knowledge if you ever want to pass it on, one of the things, you'll notice that the prices that you see for online brokerage is all like, you know, 14.95 or 19.95, or 7.95, et cetera, et cetera. Where the $0.05 come from?

Well, as I mentioned, you know, I price decreased over the years. In fact, I cut prices seven times since, I think it was about four years. And in doing that, we were let's say $30 or $35. And so then I'd bounce it down to 30 from 35. And so at one transition of that type, one of my stockholders of the company said let's have our annual meeting. Let's just get together for lunch. So OK fine, so Steve came over, and we went out to lunch. And I said, Steve, guess what, on Monday, I'm announcing the fact that we're going to go from $35 to $30.

He said, no, no Bill. He says go to 29.95. So I said, OK, that's a good idea. Mind you this guy was from car parts business, very successful. He knew how to do the merchandising. So I adopted the 29.95. And the whole industry has followed. Now, you might be interested to know that I have calculated that that $0.05 per trade amounts to about $400,000 a year to the industry. That's a lot of nickels.

Anyway, the customer acceptance, we have about 450,000 accounts, $10 billion in customers. But do we do about 45,000 trades a day currently. We have cracked the $50,000 mark. I'm sorry, 50,000 trademark, which is a lot of trading. And we've done over 10 million trades to date without any real serious problems. We have 9% to 10% or pardon me 8% to 9% per month growth. And we were ranked as the fastest growing company in Silicon Valley.

And on top of that, we have about 200-- this is from the last quarter, so we're a little higher than this now. Shouldn't say that, but I will. 204 million annualized revenues and 20% pre-tax 200 million in cash. And we're saving that cash, because there's a lot of new entrants. They're not all going to make it. And come a drop in the market, they'll be hurting. And our plan is acquisition. And that's the reason we built this work chest of cash.

And we have over a billion dollars in assets, no debt whatsoever, about 750 employees. But again, we're growing at 8% a month. So that number is very dynamic. And we had an IPO a year and a half ago at about $10, and our stock price today is about $25 with a P/E of about 60.

Now I want to turn to a totally different story, because I want to make a point with it for the entrepreneurs in the room. I had an idea. And while I was in college, I didn't have any money, so I had to work on the railroad at night on the D&RG out in Colorado. And I noticed that the roundhouse workers, the fellows that worked in the roundhouse, they understood steam engines, but they didn't know what a diesel electric locomotive was.

And on top of that, they were very highly unionized. They had an attitude of, well, very highly unionized. I'll leave it at that. OK. Then in about 1965 when I was working as an R&D manager at Textron, I found that as a company, we were producing automotive-- or pardon me, checkout equipment for aircraft. And it struck me, why not see if maybe there's some application here on diesel electric locomotives? And so I took that idea.

And I took it to the Southern Pacific Railroad. And there was a fellow there who was actually the finance VP. And he and I got together at MIT and proceeded with the concept. And so we started a development program to produce some automatic checkout equipment for diesel electric locomotives. And GM did not like the idea. You can't touch my diesel engine, et cetera, et cetera. So we had a few battles to fight, which we won.

And the program was highly successful. And the Southern Pacific's data at that time showed that about 20% of their locomotives, including locomotives on the road were not working. In other words, they were not pulling as they should. And they estimated, also, that the Textron-- that's where I was working at the time-- automatic checkout system would cut the losses in half. And of course, we were looking for shorts, opens, and so forth. We put a harness into the locomotive, the electric locker, and had a plug-in piece of equipment sitting beside the track and so forth.

And so we sold the system. I sold the system to a number of different railroads, about a half a dozen major roads. And at the time, there were 33,000 locomotives in operation in the US. And therefore, I really feel that I was instrumental. And somebody else would have done it if I hadn't, but I did it. And I put 3,000 locomotives on the road. And that's a-- you know, I'm kind of proud of this.

And really, I was making, I think, about $25,000 a year at that point in time, which was more money than is today, it seems like, but not a lot. And really, why did I tell you this story? Well, really for two reasons. And I'm really directing this to the folks that are entrepreneurially inclined and leaving here and so forth. And you know, it's the achievement. To me, it's the achievement. It's the accomplishment of doing it that really counts. And--

[APPLAUSE]

I mean, don't get me wrong. The money is nice, but it isn't where it's at, you know. Don't pay attention how much money you're making. Get the job done. That's what really counts. And the other thing is that there's all kinds of opportunities for entrepreneurially inclined individuals, who can just look at things in everyday life and see things to be done and go do them. So there's just no shortage of things to be done in our society for the benefit of society.

Well, speaking of opportunities just a little bit, as I see it in the coming century and borrowing on the idea of plate tectonics and so forth, sources of energy. I mean, you know, we're going to run out of coal and oil and so forth. And what are we going to do to replace it? And that is a real problem I see coming in the future. I remember when I first left, got my masters and went to work for the Bureau of Standards in Washington. I met a fellow who was working in the Interior Department, and he said, we're going to be out of oil in 1975, I think it's what he said.

And I don't know what the estimate is today is probably the year 2030, and by 2030 maybe. But someday, we'll run out. And it's really important to pursue that. And unfortunately, I don't think our government does enough in that dimension. But I think there's some real opportunities there. And worldwide commerce, there's no question about it. We are expanding E*Trade, for example, on a worldwide basis. And there's all kinds of opportunities all over the world, particularly in the underdeveloped countries to help them kick start.

And you don't necessarily make money there. But I think there's a lot to be said for the achievement of making mankind's position better. Environmental protection, no question about it. I think this past century has really been one of wars. And I don't think we're going to have any more significant wars. I hope to heck and I'm sure everybody else does, that that is true. But the coming century has just got to bear down on the whole subject of the environment, no question about it.

I was in Manila recently. And it's just almost deplorable the situation there from an environmental point of view. And something has to be done. A lot of things have to be done. And there's opportunity there. The information age, I hardly have to say anything about that. What I see the other day that the amount of content online is doubling every 100 days. And of course, that makes it doubly difficult for some of the internet starts that you hear about and so forth. But the sorting of that and the use of that and so forth provides all kinds of opportunities.

And actually, you've heard of disintermediation and all of the things that brings about in terms of opportunity. But also there's a whole subject of partnership and joint venturing between various organizations on the internet. So it just creates all kinds of opportunity. But you know, if I could ask the good Lord to give me 100 years to watch one science evolve, it would be this one, the life science, engineering, because I really think that what will happen in terms of our ability to change life as we know it today, both people and their plants and foods and everything else, is just absolutely going to explode over the lives of you young folks that are graduating today.

And I just think it's a terrific area to pursue, particularly when you couple it with the information age. I really think it's going to change the whole fabric of our society. And so just the combination of those two, I think is one of the most exciting areas to pursue. Well, just as one of those areas, and I'll just flip through this quickly, is excess trash. You know, my wife and I, our kids are all grown and gone.

We fill one to two trash cans a week. It's absolutely ridiculous. And most of it comes from packaging. And there's all kinds of things that could be done in the packaging domain that are not being done, I believe, and still maintain good marketability of the product. And catalogs, we probably get two or three catalogs every day. It's absolutely ridiculous. And what can be done? There's opportunities in recycling, produce electricity or fertilizer with them, combine with the internet to reduce the number of pages or whatever, thinner paper, paper substitute, pass new laws.

There's opportunities actually in Congress and so forth to do things of an entrepreneurial nature that need to be done. There really just are a multitude of opportunities. I just illustrate this with just one dimension. Well, the essential characteristics, as I see it of an entrepreneur, are the key ingredients. I don't know what you want to call it exactly is first of all basic integrity. And there are so many people who seem to lose that in the business environment once they get into it. And they kind of manipulate things a little bit and so forth.

And I just don't think that's the way to believe. You know, in the long haul, the only person you have to report to is yourself. And when you do that, you want to be able to stand up and say, I did it right. And too many people just go litigious and crazy. And just don't ever do that. That would be rule number one in my book. And look for the opportunities. You know, they're all over the place of things to change and new markets, new products, and services. And they're very good for society. And you know, most of them are pretty obvious things to do.

And do your homework. When you have an idea, really dig into it, see what the competition is, what the market is, what your product is, what it's going to cost, et cetera, et cetera. You really got to do your homework to be absolutely convinced you're right, even though you may be partially wrong. And when you are certain, there is no question, go for it. Don't stand back and say, well, geez, you know, somebody could do to thus and so. Go do it.

This is America. It's OK to go belly up and start again. You know, you can't do that every place in the world. But here, you can. And all it really costs you is maybe you have to go out and get a job for someplace else for a little while. And it's OK to do that. And stick to your guns, because there's going to be many people that tell you, you're crazy, you can't do this, et cetera. If you've done your homework and are convinced of it, just stick to it.

However, you got to be ready to make changes when you find out that, hey, it wasn't really quite that way, and I have to go a little bit to the left to get around this corner. So you do have to make changes. But basically, you gotta plow ahead and stick to it . And I don't know if they ever teach you this in your finance class, but cash is king. You've got to have the money to get there. You've got to protect it. You've got to take good care of it. Fancy offices don't mean an awful lot. What counts is being able to meet the payroll, et cetera.

And along with cash is king, there's another area that I think is equally important. And that is marketing is queen. And without a king and queen, you won't get there from here. You know, particularly for technologists, they think that they have this hot idea, and it probably is real hot, and they maybe have done their homework, et cetera, in terms of technology. But I got to tell you, these two elements are absolutely necessary to get there from here, particularly the marketing. And of course, you've got to have the cash for the payroll and so forth.

And finally, as I said earlier, work for the achievement. Don't worry about the money. If you do a good job, the money will come. And you can quote me.

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PRESENTER: That was so cool. Before we continue, we need everybody to stand up. Up. And look into the center and see if there's an empty seat next to you. And if there is, move to the center, because we have people standing in the back, and we'd like them to be able to sit during the presentation. Here we go. Squish. All right, everybody in? You can sit down. That was our intermission.

We're up to the part in your program that says Organizing Team Transition. The competition is organized by students for students here at MIT, and we've had a great team leading the competition this year. It's been wonderful to work with them. And I would just like to recognize them and have them stand up so you can meet them.

We have Maya [? Hansen, ?] who graduated early, leading events, Scott Blanksteen, who took her place, communications who's leading the evangelism part, Pat [? McCormick, ?] operations of communications is Dave Chan, sponsor relations Andy [? Sweaky, ?] and Margo [? Gore ?] [? Stockman, ?] who is graduating this, year but has made a major contribution to the core team as well as [? Lona ?] [? Plantier. ?] Can you please stand? Thank you very much.

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Let me tell you a little bit about what the team has put together this past year. Our goals were to really maintain the quantity of entries that we had while increasing the quality and building infrastructure to grow the competition in the future. And we met those goals. This fall, we had 120 1K entries. Our team size match last year with 3.9 in the spring competition. We're up to 5.6 in our finalist teams. We had 30 full business plan submitted. We wiped out our debt. Go, Andy.

And we increased our sponsorship dollars. We've had some tremendous additions to the judging panel from the West Coast venture capital firm from successful entrepreneurs and some great professional services. We sponsored the first ever Global Startup Workshop, which is like a lot of words. But those words really mean it's the first venue for all organizers of business plan competitions around the world to get together and share best practices. We sponsored the first alumni reunion in preparation for our 10th year next year. We've received international media attention from CNN and from Japan Public Television, who are here tonight. And best of all, we have a great team for next year.

Before we go on and introduce that team, I want to say thank you to all our sponsors. And I would read their names. But this competition is really a tremendous network. And if you turn to page nine, you can see all the people it takes to put together a competition like this during the year. It's just a tremendous contribution from each person that is listed here, and we want to thank them.

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And now, the part I personally have been waiting for is to introduce the organizing team for next year. They're wonderful people. Gert-Hartwig Lescow is leading events. Our communications person, we're still recruiting. Sponsor relations, definitely in control with Dave Magnoni. You guys can please stand so they can find you later. Eve Phillips is leading the alumni mentor program. And before we introduce Scott and get him up here, we want to introduce the rest of the core team, and I have to get my list, because it's pretty large.

Please stand, [? Sachen ?] [? Devecha, ?] [? Moder ?] [? Fu, ?] [? Chef ?] [? Hong ?] [? Kwong, ?] Richard [? Li, ?] Pat [? McCormick, ?] [? Xtian ?] [? Mersa, ?] [? Monus ?] [? Rafa, ?] Paul Rosenstein, Joel [? Surface, ?] [? Chuck ?] [? Sestak, ?] and Dave Yang. Thanks so much, you guys.

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And now I'd like to introduce Scott Blanksteen, lead organizer for next year, first year Sloan MBA, and a good friend. Thanks, Scott.

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SCOTT BLANKSTEEN: Thank you. Good evening. I'd like to thank Sally first of all for the great job. She's done this year coordinating all of this and helping us all learn the process a little better.

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The other important members of the team that haven't been mentioned yet are the judges who help us choose the finalists from these great set of plans we get. And I'd like to read each of their names individually, because I think they spend a lot of time, a lot of effort writing feedback to each of the teams, providing advice, and just helping out with our own process of running this competition. So we have Mark [? Gorenberg ?] from Hummer [? Winblad ?] Venture Partners. And if you'd like to stand, that would also be great. Dan [? Hart, ?] Fundamental Capital. Adam [? Hoenig ?] from Sea Bridge Internet Solutions. Mitch [? Kapor, ?] founder of Lotus Development.

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[? Omar ?] [? Cadari ?] of [? Via ?] Web. Duncan [? McCallum ?] of One Liberty Ventures.

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Ed Miller of Testa, Hurwitz, & Thibeault.

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David Morgan [? Thaler ?] of Morgan [? Thaler ?] Ventures.

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John [? Pitchioni, ?] Sullivan & [? Werster. ?]

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Edmund [? Pitcher, ?] also of Testa, Hurwitz, & Thibeault.

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Robin Plummer of Wolf, Greenfield, & Sacks.

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Bill [? Podeska ?] of Advanced Visual Systems, and also the founder of Prime and Apollo Computers.

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Dan Roach of Coopers & [? Librand. ?]

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Dan Schwinn of [? Avadine ?] & [? Sheva. ?]

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Blair Whitaker of Norwest Ventures.

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And George [? Zachary, ?] who made the trip out from California to be with us.

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We really appreciate the work this fine team has done. And yesterday, we had them locked up in the room for seven hours because we had such a great set of finalists this year to choose from. And I think that's really reflected in some of the comments that came out of that session. We were told that, in fact, the plans that came in here are better quality than the plans they receive for funding consideration. And I think that's an amazing testament to the effort people put in to entering this competition.

And the judges also were very happy to see how the teams and the plans improved over the course of the competition from the status of an idea in the fall to an executive summary to a full business plan. And we hope we can take some of the credit with some of the educational events and programs we provided during the year. And finally, of course, the disclaimer. You may not agree with the choices the judges have made, and that's great, because as we saw before, at least a dozen teams are planning on going forward, notwithstanding the results of tonight. And I think that's great, too.

So the best part of the evening, we get to introduce and hear from the finalists. As we see, there's no particular order to this. There's no ranking. It's simply the order in which they presented to the judges yesterday. I'll read the names, and then we'll have them each come up here in this order and give a short 10-minute presentation as they made yesterday. First team is SiliconTest.

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The second team is CarSoft.

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WeddingBell.com

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Volunteer Community Connection.

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Akamai Technologies.

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And finally, Direct Hit Technologies.

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And to start us off, we'll have the team from SiliconTest up here.

ROHINI CHAKRAVARTHY: Hi, my name is Rohini Chakravarthy I'm a first year Sloan student. And I will go with a brief overview of the business plan for SiliconTest. It will be briefer than the 10 minutes allotted, so we can get to the winners quicker. Let's start with a challenge statement. SEMATECH, which is a semiconductor industry consortium, has articulated in its National Semiconductor technology roadmap that over the next eight years, high frequency [INAUDIBLE] probes will be a major roadblock. SiliconTest plans to address this challenge squarely.

The company was founded in February 1998 and has its roots in our CEO's graduate work. We plan to provide probe cards for chip testing based on new technology that's more scalable and more cost effective than those currently used. To give you a brief idea, basically chips are made on silicon wafers. And while they're still on a wafer, a probe card sits on them, and you test each chip for functionality. So we plan to make new kinds of probe cards.

The company, Arvind Purushotham is the President and CEO. He is currently working for a large semiconductor manufacturer. I will be the VP of Marketing and Sales, and as I said, I'm a first year Sloan student right now. We also have William Huffman who is not here today, but he will be the VP of Engineering. And he is an expert in testing and packaging and has worked in the area for 14 years now. We also have two future recruits who have committed to join us pending funding.

The market opportunity itself is-- it's a large market, 450 million as assessed by [INAUDIBLE] research for 1997. And it's set to grow at 25% following the growth of the [? IC ?] market at least over the next few years. The industry is characterized by tight customer and supplier relationships. Basically, what happens is every time a new chip is designed, a probe card has to be custom designed to go with it. And so the semiconductor manufacturer and the probe card manufacturer act as partners in developing this probe card. So the relationships have to be really tight as you work with the customer.

It's a fragmented market. There are many important players, but no one player holds the majority of the market share. And all of them seem to use precision machining based technology. So the underlying technology is fairly homogeneous. The major customers are semiconductor manufacturers here in the US, in Japan, and in Southeast Asia. So examples would be Intel, AMD, Motorola, Lucent, and so on.

So to start off with this venture, we plan to request funding in stages. The first milestone will be a prototype development milestone. And optimistically speaking, we will need about 1.3 million to achieve this milestone. We also believe we will need an additional 1.5 million at least to reach the first customer acquisition milestone. So who are the logical investors for such a venture? It's not uncommon in this industry for semiconductor manufacturers to take equity positions in key suppliers since they invest so much time in developing these relationships.

So we will look at those customers as possible investors. Also, industry associations that are a possibility. SEMATECH, for example, although they don't take equity positions, do offer technical and financial assistance to startups that show industry changing potential. And finally, angel investors and seed venture capitalists will be valuable sources of funding. They will bring in financial assistance, as well as their networks within the industry, and we look at them as very positive sources of funding.

So why do I believe SiliconTest is a great investment? We have a very clearly identified market need. We believe we have the right technology and that this is the right time to deploy it. We have assembled a uniquely qualified set of people, people who understand both the technology and the customer environment. And through our contacts, we have unusual access to the customer, to the first customer. Finally, we believe we have a huge upside potential. It's a great market. It's waiting to change. And we believe we can change it. Thank you.

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SCOTT BLANKSTEEN: OK, the next team up is CarSoft.

CHUCK MYERS: Hello. We'd like to thank everybody right off, especially Sally and the organizing committee. This has been a stellar event. They have done a fantastic job putting this thing together. And we sincerely offer our thanks for all the hard work and the late nights they put in. Next, we'd like to thank the judges for selecting us to get this far. We were fairly honored to be here tonight.

And next, I think you'll find through the CarSoft presentation that maybe we and Bill Porter have a little bit in common. CarSoft is know what your car is thinking. See if we can find the page down button on this. There we go. First of all, I'm Chuck Myers. I'm on board to offer the strategic and marketing initiatives to the company. I'd like to introduce Diego Borrego. Diego is the father of this brain child. And we classify him somewhat as a little eccentric and our technical leader. And Morten Gunnarshaug is our operations guy. And he's here to make sure that Diego and myself don't kill each other.

What is CarSoft? What we've done is to create a hardware and software product that links the car's computer with an outside processing source, like your home PC or any other database. And with that, I'd like to turn it over to Morten Gunnarshaug.

MORTEN GUNNARSHAUG: Thank you, Chuck. Thanks to all of you. I'll say something about the market. The market we will target basically consist of two segments. The first segments as GearHeads. That is people who work on their cars and also know about computer and look like this.

They are quite easy to target. They are online. And we think that'll be a low cost to find them. The second market, it's consumers, like you and me. And there are about 39 million diagnostic checks performed each year in the US markets of cars. And AAA price for this is about $50, which would in this market would be about 2 billion.

The opportunity for this market-- or the market's pain is that car owners and general fear mechanics and dealers and depending on where you live in the United States, you have to bring your car to a smog test or annual inspections once or twice a year. And the solution for a problem I'll hand over to Diego to tell some more about.

DIEGO BORREGO: Thank you, Morten. CarSoft solution, our painkiller. CarSoft intends to provide consumers with an easy to understand version of the same kind of information that is used by only highly trained automotive technicians and mechanics today. And we plan to do it at a low price.

Why now? Why can we do this now? Why is this the right time for CarSoft? More and more, there are computers in cars. There are more higher power computers in cars. There's more processing in your car. There's more electronic sensors in your car. Wireless technology is coming of age. It's more ubiquitous. It's available at a lower price. There's a proliferation, of course, of the internet and of PCs. We all know that.

Perhaps the strongest reason why now is the time is because of EPA mandated regulations now that stipulate that these cars have to be able to diagnose themselves and have greater and greater capabilities. So the information is there. It's in your car. We plan to give it to the consumers.

Why CarSoft? We have an inexpensive design. We believe it's a unique design. It leverages the processing power in your home PCs or any other type of computer. And also, CarSoft is positioned to provide unbiased information. We don't make money from selling parts. We don't make money from selling repairs. We can tell you the truth about what's going on inside your car.

And with that, I'll let Chuck finalize our presentation.

CHUCK MYERS: What CarSoft has, we have people, we have founders that are committed to this project. We have founders that are committed to moving forward with this business. We think it's a good business. We think it's a strong business. And we think that there's a strong underlying fundamental soundness to it. We have maybe, again, a little bit like Bill Porter, we have some developers already working on some prototypes. And we'll say that they're in stealth mode as well. And our technology is readily available.

And what's our future? We see this as being a service and an information business as we go along. We don't just see it as one device or one product in the beginning. We see it from the continuous monitoring of the vehicle performance. We see us as being that content that a lot of these web-based sites are looking for that we can actually maintain owner profiles, and we can maintain all of the history of the vehicle as the vehicle goes on in its life and as the owner changes vehicles, and they want to know when to service their car.

So again, we think we're a content provider for those sites. And we think around our business, we can build and create these internet communities. As we were saying before, Diego's a member of the fine gearhead community. And these guys are on the web day and night talking to each other. We think this is our business. And we think that we can move forward and really turn this into something. Thank you very much.

[APPLAUSE]

SCOTT BLANKSTEEN: Well, thanks, guys. That was really great. As soon as I finish paying off my MIT loans and buy a car, I'm right there. Next up is something a little different, WeddingBell.com.

STEVEN ROSENBLATT: Good evening. Actually, I don't think I was this nervous before my own wedding. So you know, just bear with me. My name is Steven Rosenblatt, and this is my colleague, Peter Stein. And we'd like to welcome you to our WeddingBell.com presentation. You know, most people are under the impression that the most difficult question asked with regard to a wedding is, will you marry me? In fact, this is not true at all.

We found some more difficult questions that are being asked through the course of the proceedings. Well, maybe not. For instance, the engaged couple might ask, how can we let everybody know where we're registered for all our wedding guests? The wedding guests may ask, how could we find out where the engaged couple is registered for without having to ask them? Or they may ask, how could I get to a store and purchase one of these gifts when I'm real busy working all day and don't have time to get to one?

Finally, the retail stores may ask, you know, this wedding registry business is growing. How can we expand our customer base and become part of it? Well, WeddingBell.com is aware of these concerns and has found a solution. WeddingBell.com will provide any retail establishment, regardless of its size or location, an internet-based, full-service gift registry system, which will allow end users, being the wedding guests, to purchase gifts from an engaged couple's registry from the convenience of their own home or office 24 hours a day, seven days a week.

Today, we're going to talk about the WeddingBell.com team, the potential market in the online wedding registry business, our value proposition. We're going to present our business model, talk about the risk of an internet wedding registry business, and then we'll have some concluding comments. Obviously the key to success of any organization is its team. WeddingBell.com currently consists of six members who have diverse professional-- I didn't even get to the joke yet.

[AUDIENCE LAUGHTER]

You all have to laugh when I get to that part again. We have diverse relevant professional experiences and skills. Tonight, I'd just like to highlight for the members. Peter Stein is our President and CEO. Peter will be responsible for the day to day operations of the organization. He has experience in IT project management. And he'll be graduating from Sloan this June. He also has very relevant wedding registry experience in that he's currently going to be married this November.

I am the Vice President of Sales and Marketing. I'll be responsible for selling the systems into the retail stores as well as handling the day to day finances. I, too, will be graduating from Sloan this June, and I still am familiar with the registry process, as I was just married this past June. Next we have Josh Tolman, who's our Vice President of Product Development. Josh will be responsible for system implementation and internet programming. Josh has four years experience as an IT systems consultant, an internet programmer, and fortunately, he will become very familiar with the process as he's currently contemplating engagement. Last but not least, we have Luke Tuttle. Luke is our Vice President of Technology, who will be responsible for network implementation. Luke has a BS and a master's degree in computer science and programming. And unfortunately, he has no idea what the wedding registry process is all about as he's still currently looking for a date.

[AUDIENCE LAUGHTER]

That's good. Thank you.

[AUDIENCE LAUGHTER]

Before we talk about the potential market, I think it's important to examine some of the trends that currently exist. First, more people are registering for wedding gifts than ever before. Brides Magazine-- yes, I do read Brides Magazine-- is currently completing a survey, and they found that 90% of the engaged couples register for wedding gifts in 1996 as opposed to only 60% in 1993. Trend number two. This is probably pretty shocking to everybody. More people are using the internet than ever before.

Internet Data Corporation estimated in 1997 that there were 50 million users on the internet, and they estimate this number will reach 175 million in 2001. Trend number three. Not only are more people using the internet, but more people are making purchases on the internet than ever before. American Express estimated that there were $5 billion in purchases on the internet in 1997, and they estimate this number to reach $80 billion in the year 2010.

These trends, based on our projection of a 10% penetration into the wedding gift market, we foresee the total potential online wedding registry gift market to reach $250 million in 1998 and $544 million in the year 2002. Now Peter will talk about the WeddingBell.com value proposition.

PETER STEIN: Thanks, Steve. Steve just hopefully demonstrated to everyone that there is a market for an online wedding registry system. Now I want to show people how it'll help the customers. We have three types of customers-- engaged couples, the wedding guests, and the retail stores. The engaged couples, with our system, will be able to register in any type of store, large department stores or small boutiques that you would find perhaps on Newbury Street.

These little stores, all they need is a computer and an internet connection, and they're all set up with a wedding registry. There's no need for the engaged couple to worry about registering for one gift in a small store. They don't have to alert their wedding guests which stores are registered in, because the wedding guests can go to the internet and purchase the gifts whenever they want right over the internet. They can also purchase the gifts from the store if they want.

While on the internet, they can search by gift type if they want to just get something in the linens category, or they can also search by costs, if they're only willing to spend a certain amount per gift. Lastly, the retail stores. The retail stores, especially the smaller ones and the ones that currently don't have registry systems will have an enormously expanded customer base. Obviously, with the internet, people who aren't located near the retail stores will be able to just, again, go on the internet and purchase gifts from there. Therefore, WeddingBell.com is the entire registry solution, the online solution and the in-store solution.

Our business model, this is the way we're going to make money. We've done some surveying, and we've talked to some industry experts. And we've found that the retail stores are willing to pay a setup fee and a maintenance fee. They're also willing to pay a percentage of sales. This helps us a lot. We get fees from them in two different ways. The wedding guests-- that's the little yellow people there-- we're going to charge them a surcharge, only about $2.95. You might find yourself saying, well, would I be willing to pay that?