Million Dollar D
By Nathanel Mori '14 | october, 2013, Issue 1
Erwin Villaorduna (on right) at a recent industry trade show.
Every year at orientation, Academic Services does a "Booth Myth-Busting" presentation, where some of business school's most popular rumors are denied. One of them is the myth that at Booth it's "impossible to get a D." Upon reaching that slide, Director of Academic Services Christine Gramhofer says with a smile that "You CAN get a D at Booth, but you would really have to deserve it." Ironically though, Erwin Villaorduna '13 leveraged his hard-earned D grade in Strategy and Structure to squeeze out a million dollars, and showed the business world that regardless of whether his D grade was "fair," he most certainly deserved the big bucks that followed.
Erwin's tale is not just that of a sweet turnaround, but also a testament to Booth's flexible curriculum as a means to success. "In spring break of my first year at Booth, I was just hanging out with my friends, until one of them suggested we start a business exporting seafood from Peru to North America." What followed was a series of improvisatory attempts to start a business without a strategy.
"We were desperately looking for any kind of customer, while simultaneously working on getting FDA approval. Because of this lack of strategy, I took a Marketing of Services class in the spring quarter of my first year." Erwin was juggling school, running his company "Seven Seas Products" (SSP), and searching for an internship. In May, he finally got one, doing Airport Operations for United Airlines. Little did Erwin expect that one of the perks of working for United Airlines would allow him to start up his business in a big way. "As a United Airlines employee, I could fly anywhere for free, so I spent every weekend of my internship flying from one place to another, negotiating deals with potential customers. By the end of the summer, we shipped two containers to Thailand. Flying for free was a fantastically convenient coincidence, but at the time I was still running my business on the fly" [so to speak, N.M].
When the second year of business school kicked in, Erwin still had no idea how to sell to the American market, so he enrolled in the Going to Market and Entrepreneurial Selling classes, hoping to amend that gap. "I was analyzing the American market in search of the right channel to enter it. The classes were useful in framing the problem, and we used Entrepreneurial Selling to write our pitch for a roadshow in Boston during March 2013." SSP had a professional advantage in the Hispanic market, as Erwin was from Peru and had experience running two restaurants, one of which he owned. The classes he took were useful for selling to Latin America, but for the United States, Erwin was still missing something.
Enter Professor Elizabeth Pontikes' class, Strategy and Structure. The class is designed to solve a firm's "identity crisis," and that's exactly what SSP was going through. In his final paper, Erwin decided on a strategy shift - switching from a brand-based strategy to a strategy that competes on services. Professor Pontikes approved of the decision, but graded the execution with meticulous notes, resulting in Erwin's "mythical" grading.
According to her feedback on Erwin's paper, SSP did not "comprehensively analyze the market," missing out on understanding the "market need for a high service provider" and determining whether the market is saturated. SSP also did not properly "map out the competition as well as the dynamics and power within the supply chain." Pontikes' notes are filled with more opportunities to explore, most notably relating to SSP having to learn how to translate their failed brand-making experience into the new strategy. Erwin was stunned by his rock-bottom grade: "At first I wanted to appeal, but then I realized I didn't just get a D on my paper, I got a D on my real life company! I was graduating and did not care about the grade anymore, so instead of appealing in school, I appealed in real life." Erwin was now determined to turn the proverbial lemons into a juicy cash cow.
SSP positioned itself as a strong commodity supplier in Peru, but after reading Pontikes' notes, Erwin understood he should position his advantage relative to other countries, not Peru. The first thing to establish in order to appeal to American companies is high-level certification (overfishing standards, labor conditions, fair trade, etc.). Merely being in the process of getting certified was enough to open a stream of orders from U.S. markets. Large importers in LA, Florida and Texas were calling SSP to provide for supermarkets. Beaverfish, a seafood industry leader, made several large orders from SSP, some of which were placed on behalf of Walmart. This opened a new opportunity for SSP, which is now working on a private label manufacture for Walmart (in fact, Walmart even helped Erwin get in touch with reliable certification consultants).
Now, in October, clients are no longer afraid to make orders of large magnitude, like containers of recently available Mahi Mahi fish (typically an order of approximately $300,000). SSP is now en route to break the million dollars barrier before year end, and all because Erwin heeded Dr. Pontikes' advice of adjusting to the market. When asked about this story, Pontikes said "I often wonder if it's worth it to give detailed feedback on final projects, whether people actually read feedback after class is over and grades are in. I'm glad that this helped."
With a successful business in the making, as well as job security with his other full-time job as the financial operations director at a private school in Brooklyn (securing an anchor was an important lesson he learned at Professor Deutsch's Building The New Venture), Erwin can declare his MBA experience a worthy one. Upon hearing this story, Professor Pontikes said, "Erwin is a role model for anyone interested in starting a business. Successful leaders seek out critical feedback and use it to improve themselves and their companies. Rather than dwell on his grade, Erwin used the feedback to strengthen his company. This is a testament to his character. It bodes well for Seven Seas and his success as an executive."
On Sept. 23, Erwin finally reflected upon the tremendous boost his business just went through. He then sat down at his computer, and began to type a unique opening to a rare type of thank-you email. It began with the following words: "Dear Professor Pontikes, I am writing to you to thank you for destroying my final paper this last Spring 2013 and giving me a D in my final grade."