SDM alumni entrepreneurs use systems thinking to drive success - SDM Pulse Spring 2011

Editor’s note: The curriculum of the MIT System Design and Management Program (SDM) integrates coursework and lectures on management, technology, and social sciences to prepare graduates to innovate in, and lead, organizations. Here is a look at five SDM alumni who have used systems thinking to start and grow new businesses.

Solar-powered refrigeration

Sorin Grama, SDM ’06
Cofounder and CEO
Promethean Power Systems, Founded 2007

Sorin Grama, SDM ’06, cofounder and CEO of
Promethean Power Systems,
with his cofounder, Sam White.

I joined SDM because I wanted to learn more about business and engineering issues affecting larger organizations. Ironically, I changed paths and decided to start my own business, but SDM gave me the crucial understanding of how large organizations operate—insight that is often necessary to run smaller, entrepreneurial organizations.

My partner and I founded Promethean Power Systems in 2007, right after I graduated from SDM. We had traveled to India to evaluate one possible business opportunity, and discovered a different one in the Indian dairy market. India is the largest consumer and producer of milk in the world, but most milk comes from remote villages that lack refrigeration. As a result, raw milk must be collected twice a day. Transportation costs are high, and a large percentage of milk spoils before it reaches the processing plants. We formed Promethean Power to develop a hybrid solar-and-grid-powered milk chiller that can be operated wherever the electric grid is unreliable or nonexistent. The systems are sold directly to dairy plants that have the need and buying power to purchase these units.

My SDM training was instrumental in starting this company. SDM’s course in product design and development underscored the importance of first understanding the customers’ needs and then developing the product to match that need. System architecture, project management, and system dynamics have also helped us to craft the initial product architecture and form our team. To date, we have developed three prototypes and performed an extensive field trial in India. Our latest generation product was shipped to our first customer in India at the end of January.

Going forward we plan to transfer the technology to our Indian subsidiary and establish an initial production facility in India to meet anticipated customer demand

Web services

Ken Huang, SDM ’05
President, Founder, and CEO
Sayagle, Inc., Founded January 2009

Ken Huang, SDM ’05, is the president, founder,
and CEO of Sayagle, Inc.

Sayagle is a location-based social marketplace designed to be a win-win-win arrangement for users, merchants, and charity organizations. Users can make the most of their day-to-day transactions with Sayagle’s local deals and recurring rewards program. And merchants—particularly brick-and-mortar stores that have not been able to capitalize on electronic marketing—get access to promotional tools that drive local traffic in real time. Sayagle has also created a new charity donation method—partner charities can collect receipts from Sayagle’s merchant network instead of asking people for cash donations.

Founded in January 2009, Sayagle had its soft launch in September 2010, establishing the time-stamp for my two US patent applications. The official launch should occur before this summer. The company has 25 employees, and more than 250 Boston-area businesses have joined Sayagle to offer user deals.

The SDM program has helped me to identify key variables that are on the critical path for my business, as well as the cost-benefit analysis I apply to every aspect of my company. Most importantly, I am taking a holistic view to project the company direction along with the business strategies.

My goal going forward is to roll out Sayagle as a fully bundled package to the local community and continue to recruit top-notch talent to make Sayagle successful. Hopefully, I will create a mutually beneficial equilibrium in the Boston community and contribute value to society. Sayagle’s vision is to enhance life beyond the screen.

Internet marketing

Yoav Shapira, SDM ’05
Vice President for Platform Strategy
HubSpot, Founded 2006

Yoav Shapira, SDM ’05

HubSpot is doing exceptionally, amazingly well. We help small businesses with their marketing using a new methodology—inbound marketing. Old methods like direct mail and other strategies that are based on interrupting customers either don’t work or are diminishing in effectiveness. Our philosophy is that if you do some research and distribute content that people want, customers will find your business in the course of their activities.

The company started in June 2006 right after the two founders graduated from MIT. I knew them at Sloan, and they approached me to start the company with them, but I went instead to another startup first and joined HubSpot a year later. Today HubSpot has expanded to about 4,000 paying customers. Just last month we added almost 300 more. Close to 200 people work for the company. It’s growing very fast and we’ve successfully raised venture capital three times.

SDM has definitely helped me in my business. For example, we frequently do the sort of modeling taught in Professor David Simchi-Levi’s system optimization course, and I had no background in that area prior to studying at SDM. I use accounting every month. And, I found the course in disruptive technologies taught by Professor James Utterback just transformative. We discuss the theory at management meetings, asking ourselves questions like “who do we disrupt?” and “how do we keep others from disrupting us?” That was probably my favorite class at MIT.

Speech indexing software

Ben Jiang, SDM ’08
Cofounder and CEO
Nexiwave, Founded 2008

Ben Jiang, SDM '08, cofounded Nexiwave to
make finding information in audio files easier.

Shortly after joining SDM, I became obsessed with the path that the information technology (IT) industry was taking in helping people find the information they need. One area that had been less explored by the IT industry was content in the audio format. While people communicate vast amounts of information by speech, it was virtually impossible to find and extract information from audio files.

My partners, including Cynthia Munoz, SDM ’08, and I founded Nexiwave to search audio files for information—a service that was not widely accessible before. Nexiwave shipped its first product, the core speech indexing and audio search feature, in December 2008. In February 2009, Nexiwave sponsored and developed a conference call service, known as SearchMyMeetings. SearchMyMeetings is a demonstration platform of the benefits of our audio search feature. It processes audio recordings for fast keyword search and playback. SearchMyMeetings has signed up the MIT Sloan School of Management as its first major user.

From the beginning, SDM has been a big part of our success. SDM concepts of marketing and industry analysis have helped us to hone our products, and system project management has enabled us to determine what steps to take along the way. Accounting has proved invaluable, as I now understand financial matters better and can speak knowledgeably with our finance person. Finally, SDM students were major users during the company’s infancy.

Moving forward, Nexiwave expects to utilize its knowledge to broaden its customer base, as well as the company’s focus.

Electrical power systems

David Sharman, SDM ’01
Managing Director
Ampair, 2003

David Sharman, SDM ’01

Ampair manufactures small-scale renewable and distributed electrical power systems. Our ambitions are in the sub-100kW range, and most of our existing work is in the sub-10kW range. The company currently manufactures wind turbines, hydro turbines, and phase converters. We also do work in adjacent spaces that we expect will grow.

The Ampair 6000 wind turbine is shown at a
test site in Berkshire, UK. David Sharman,
SDM ’01, is the managing director of Ampair

The business really began in 2003 when I took over an existing phase converter company that employed about half a person (which became me—at the beginning I did everything from design to assembly, installation, and accounts). Then, in 2005, we acquired the Ampair wind turbine business, and now we have grown to about 15 people (we are recruiting more—good mechanical engineers are welcome right now). We generally spend over 25 percent of turnover on R&D, and we sell 1,000 systems a year in about 50 countries. Our clients range from individuals to major corporations. Last year we took in our first round of venture capital, which has allowed us to invest and make faster progress.

For me, the SDM experience was an intense period of learning in concert with many high-quality people who understand systems thinking. That experience helped me to identify a viable space within which to build a business and then to create a valid framework for not missing anything that is mission-critical at a holistic level.

Now I am keen to grow the business to the point where it is robust in all economic circumstances and can withstand the loss of any key individual, including me. That will give me the satisfaction of knowing that the livelihoods of our people are assured.

This report was compiled by Kathryn O’Neill, managing editor, SDM Pulse.