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Students' idea could revolutionize grocery store shopping

Change how you shop

by John Bach

Paolo Dominguez could be the poster boy for entrepreneurial thinking. He envisions the day when grocery shoppers will navigate the cereal aisle, while a discount ad for Honeycomb or Raisin Bran automatically appears on a cart-mounted touch-screen display. The same display will help consumers avoid the arduous search for hard-to-find products with a simple store map. Dominguez would prefer to let the technology determine if olive oil is shelved with the salad dressings or the baking goods: Aisle 18, midway down, top shelf.

He also sees no reason to stand in long checkout lines to rehandle all those groceries. The interactive unit will allow you to scan your groceries as you fill your cart and stop only to pay your total, minus the digital coupons.

Just a year ago, Dominguez, Bill Kinnaird and Mike Ross were classmates at UC fleshing out their idea for a business plan in their New Ventures class at the College of Business. Today they are founding partners of Interactive Shopping Experience Technologies, a venture company they hope will revolutionize the retail industry. For now, however, iSE-Tek exists only on paper. It hasn’t earned a penny. According to the business model, it will achieve millions -- even at the rate of a few pennies at a time.

An outlandish-sounding financial prediction rolls off Dominguez' tongue like a trivial fact. "We are projecting $500 million in revenue within three years," the 29-year-old MBA grad says without hesitation.

The centerpiece of iSE-Tek is the i-Shopper, a touch-screen display that attaches to a shopping cart. The technology delivers targeted advertisements to consumers as they make their way through a store or at the "point of decision." And each time an ad appears, iSE-Tek banks a few cents.

"If you walk into a grocery store today, it seems like it is asking for a technological solution," Dominguez says. "People are holding a bunch of paper coupons, the specials are draped over the cart, and they are wandering around looking for products. It is just too awkward."

The recent UC grads-turned-ambitious-execs are yet to make it big with their jackpot concept, but the group spends long lunches strategizing ways to attract an angel investor or corporate partner. Paolo Dominguez says they have verbal commitments from investors, and the idea has even piqued the interest of both Procter & Gamble and Kroger. If successful, the technology has potential not only in grocery stores but also in national chains like Home Depot, Target and WalMart -- wherever there is a shopping cart.

From product development to full implementation in a single chain, Dominguez estimates it will take two years and a $20 million investment. To start with, they'll need $600,000 to get off the ground.

"The hardest thing is trying to raise investment capital," he says. "It is tough at this stage to go to your friends and family and say we need $600,000. We are looking for that big break -- someone who recognizes this is a great idea."

The part they have perfected is their pitch. Dominguez, Kinnaird and Ross created their business plan in professor Charles Matthews' class last fall, a process all of Matthews' students go through. Some of them take it beyond the classroom. The iSE-Tek group spun their concept into an entry in the CBA New Venture Competition and placed second.

Breaking from their student business competition in New York last year, recent UC grads and iSE-Tek founders (clockwise from left) Mike Ross, Bill Kinnaird and Paolo Dominguez, with his spouse, Traci, paused next to Wall Street’s massive bronze bull, much-rubbed by passers-by seeking to earn their fortune

Recent UC grads and iSE-Tek founders (clockwise from left) Mike Ross, Bill Kinnaird and Paolo Dominguez, with his spouse, Traci, paused next to Wall Street’s bronze bull.

Then they entered the Business Plan Challenge sponsored by "MBA Jungle" magazine. The competition drew 225 entries from accredited business schools around the world. Only nine were invited to New York to present their plans, and iSE-Tek made the short list. The assembly of finalists resembled a Who's Who of business schools: Cal, Columbia, Harvard, Michigan, Texas, UCLA, Washington, Wharton and UC.

The fact that iSE-Tek has now emerged from a mere competition entry to a viable business thrills Matthews, associate professor of management and executive director of the UC Center for Entrepreneurship Education and Research -- the Ecenter. He teaches his students a rather simple three-part equation to making it as an entrepreneur.

"Planning, strategy and luck," he says. "The more you do of the first two, the more you get out of the third one."

His favorite teaching tactic is to invite successful business people like Jim Cook, the founder of Sam Adams beer, to come into the classroom and "share stories."

"It is a very humbling experience," says Matthews, who helps run a successful family auto parts business. "Anyone who has ever dipped a toe in that fire can tell you it is incredibly easy to start a business on one hand and incredibly frustrating and complicated on the other."

The professor says students who take an idea from class and marry it to their own skills to start a business create an "explosive combination."

"You want to contain that explosion," he adds immediately. "That is where I see the Ecenter coming into play -- helping students manage that explosion in a beautiful firework kind of way instead of a horrific 'Oh my God, this has blown up in my face' kind of way."

One thing that may assist iSE-Tek and others like it to light up the sky is qualification for the Bearcat Bridge Fund, a new program that last year awarded honor loans of up to $5,000 to four student ventures. Matthews seeks an endowment to expand the program, which was initially funded from the Chicago-based Coleman Foundation. The three other recipient ventures were Physiomics, Solano Interiors and Pig-E Bank.com. Physiomics was also first runner-up among 200 entries in the Dayton area's "I-Zone" business plan challenge in July, taking home $15,000 to help develop their entrepreneurial dream to offer faster, lower cost testing of new pharmaceuticals.

Dominguez, Kinnaird and Ross may even land an executive office suite thanks to their UC connections. Bearcat Launch Pad, Matthews' latest effort, allows students, recent grads and faculty who are trying to launch ventures to use excess office space at office parks around Cincinnati at greatly reduced rates for the first year.

"Bearcat Bridge Fund and Bearcat Launch Pad are two elements of the Ecenter that were specifically designed to help break down any barriers that students have when they graduate and attempt to launch a business," Matthews says. "What I heard over the years from students was that they really wanted to do this, but the stars weren't aligned properly. That is code for, 'I didn't have any money to do anything.'"

Helping others help themselves to the entrepreneurial pot of potential excites Matthews. It is an obvious passion and partly explains why Success Magazine named UC one of the top 50 entrepreneurship programs in the nation last year. That open invitation to venture out on your own and start a business, he says, is one of the things we as Americans takes for granted.

"We live in a society where if you want to start a business right now, you could do it in a heartbeat," Matthews says. "By 4 o'clock this afternoon, we could be up and running and mostly legal.

"The only thing that is really stopping us is ourselves and the resources to make it happen. That's incredible. I travel around the world visiting companies --to China, to Russia, to Eastern Europe. We take that for granted big time."

He refers to entrepreneurship as the great "equalizer." "You don't need an MBA to start your own business," he says. "You don't even need a college education. I think it is a tremendous advantage, but there are plenty of people who are hugely successful without it."

The key principle, which he admits is so simple it is nearly absurd, is to go into business for the right reason.

"The most fundamental economic driver for why you are in business isn't to make money, to make yourself happy or for independence," Matthews shares. "These are all good things. The basic driver is to provide goods and services. Period. It is just that simple.

"If you do it better they will beat a path to your door. If you do it cheaper, they will probably do the same. If you can do both, which is extremely difficult, that is a double whammy on your competition."

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