The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 51.0°F | A Few Clouds

$50K Competition Commences With Talk by Ethernet Inventor

Miodrag Cirkovic
Robert M. Metcalfe '68, inventor of Ethernet and 3COM founder spoke to prospective participants in this year's $50K Entrepreneurship Competition in 10-250 on Wednesday.

By Venkatesh Satish
news editor

Robert M. Metcalfe '68, founder of 3Com, addressed a crowd of over 350 people in 10-250 to kick off this year's $50K Entrepreneurship Competition. The event also served as an information session for the $1K Competition, a smaller, preliminary version of the $50K.

Metcalfe, who helped invent ethernet technology at Xerox Research Park in Palo Alto, Calif., spoke to the crowd about starting a company and offered advice drawn from his personal experiences.

"You [must] have plans and you need to be prepared to change them," Metcalfe said.

Metcalfe then related events surrounding the formation of 3Com in 1979 and the subsequent work he undertook to make it succeed, including his pursuit of venture capitalists for advice and funding.

"Venture capitalists evaluate companies on the basis of the technology, the market, and the people," Metcalfe said.

When Metcalfe first approached investors for funding, they asked him to present an organizational chart and a plan to generate revenue. He directed students to become more familiar with such proposals. "I urge you to use market research to obtain [such information as] unit costs. I just guessed."

Metcalfe also drew laughter from the audience with occasional jokes. At one point, he estimated his net worth at approximately one milli-Gates' or one-thousandth the fortune of Microsoft Chairman Bill Gates. He also introduced 3Com as the "name of a football stadium in San Francisco."

Speaker advises students

Metcalfe warned audience members that a lack of focus and capital can doom an emerging company.

Additionally, investors do not want to hear entrepreneurs say they are starting a company simply to lead a business or that they are only willing to live in one region, Metcalfe said.

"You should be willing to move anywhere it takes" to make the company successful, Metcalfe said.

When Metcalfe tried to raise capital for his company, he "overshopped the deal. When you tell people your plan, you're telling the marketplace to create the competition."

Additionally, he had to show the investors that he would generate $50 million in revenues within five years. Metcalfe said he manipulated the numbers on a spreadsheet until he came up with forecasts to meet the goal. "You should not be afraid to fill those spreadsheets with numbers."

Metcalfe has helped the $50K competition in the past by providing contest finalists with contacts in the venture capitalist community.

In his talks, Metcalfe "can connect students from both the undergraduate and graduate sides as well as Sloan and non-Sloan students," Shepard said.

The organizing team expects an increase in the number of team entrants this year, based in part on the contest's growth last year, said Sally A. Shepard G, lead organizer for the contest. The organizers want to focus on improving the quality of the projects, she said.

In order to bring about this improvement, the organizing team has scheduled a number of upcoming events, including team-building dinners and a seminar about intellectual property, Shepard said.

The dinners are "a great opportunity to get people who are interested in forming a team together," Shepard said.

The seminar will allow students to have their worries about intellectual rights addressed by patent lawyers.

"We want to make sure they have the information they need to protect their ideas," Shepard said.

Organizers pleased with event

"I was thrilled with the turnout,"said Patrick J. McCormick '98, communications leader on the organizing team for the contest. The competition, now in its ninth year, "keeps getting better and better every year,"he said.

"The overall goal is to get resources to students to help them create tomorrow's leading firms," Shepard said.

There are a number of resources that are necessary to start a company, and "our job is to help pull it all together," McCormick said.

"It's the only [entrepreneurial] competition of this size that is run by students," Shepard said,

The $1K warmup competition was also a focus of the informational session held after Metcalfe finished his speech. In this contest, awards are given to teams in different categories for submitting summaries of ideas.

This competition is one step in the entire contest, and serves to give preliminary feedback to teams so they are more prepared for the $50K competition held in the spring, McCormick said. Traditionally, the $50K winner has participated in the preliminary competition, whose deadline is in mid-November, he said.