It’s 3:07 p.m. on a balmy Thursday in January and about 120 people are shuffling into in a windowless meeting room in the basement of Draper University, a residential school for early stage entrepreneurs in downtown San Mateo, California. Audience members sitting down, mostly Draper students, are chatting and texting frantically while six non-students stand against the back wall, each with varying degrees of stress showing on their faces.
"I know we are running a few minutes late; we are just waiting for our host to arrive," says Catherine Hoke from the front of the room. Hoke is the founder and CEO ofDefy Ventures, a New York City-based nonprofit that offers a nine-month hybrid online/in-person training program designed to help formerly incarcerated individuals start their own companies. She founded the organization in 2010 and last year expanded it to include the Bay Area. Today is a mock-venture capital pitch competition that marks the end of the third month of the regional program. The six people standing in the back are a few of Defy’s "entrepreneurs in training" (or EITs); individuals who’ve served time and now have ideas for small businesses.
Within seconds of Hoke's announcement, Tim Draper, a Silicon Valley venture capitalist whose investments include Skype, Tesla, and Hotmail, and the namesake for Draper University, walks in the door. He sits in the center chair at a long table opposite the stage, flanked by seven other judges—VCs and successful business owners. Today’s competition is mostly for practice; each EIT will have a few minutes to pitch, judges will provide feedback and a winner will be chosen to receive a small cash stipend toward his or her business idea.
"I find the scale of California’s prison population ridiculous and disgusting," says David Hornick, a partner at August Capital, as he takes his seat at the judges’ table. "We need to make it possible for people to leave prison and live productive lives.
"These pitches will be good if they focus on their stories. A pitch needs to be about you, why you are doing this and what problem you are solving. It’s like a first date. You have to get us excited to want to have a second one."
First up is Seth Sundberg, who towers over the crowd at more than seven feet tall. "I was a professional basketball player and bank branch manager before I was caught for tax fraud and spent five years in federal prison," he begins. "I got out eight months ago and am living in a halfway house in San Francisco."
Sundberg’s business idea is to create a granola snack bar company called Inside-Out Bars. He plans to employ ex-cons and sell his product back to prisons. "I know this works," he says. "I started making these bars while on the inside and sold 3,000 of them for a net profit of $1,300."
Draper asks Sunberg about his margins. Hornick inquires into his sales process. Feedback is generally positive from the panel; many of the judges want to say more but Hoke cuts them off, sticking closely to the time schedule.
More EITs pitch ideas for sales companies, catering companies, and apartment cleaning businesses. It is around 4 p.m. when Jessica Nowlan takes the stage.
"I dropped out of middle school and started living on the streets of the Tenderloin when I was 13," she says, referring to one of San Francisco’s roughest neighborhoods. "I was arrested 17 times. I now want to use my passion to start a business that helps people."
Nowlan’s passion is making handmade gifts for family and friends. She presents CreateShoppe, a company that would hold workshops inside boutiques, for people looking to make handcrafted items. "We’ve already launched pop-ups in Oakland," she says. "Our first event was a few weeks ago and 12 people came. We made candles and shadow boxes."
Ears on the VC panel perked up.
"This is a great idea; people need this," says Draper.
"A good idea, very impressive," remarks Karl Mehta, a partner at Menlo Ventures.
The presentations finish late, but no one seems to mind. Hoke dismisses the group; judges, audience members and EITs linger, liberal with congratulatory hugs and small talk.
"They were good, but I could tell there were nerves," says Draper. "That only gets better with practice. The more comfortable you can be in front of people, the better."
The group reconvenes at Google’s headquarters in Mountain View for a ceremony to honor the EITs. Beth Meadows, a serial entrepreneur who served as a judge an hour earlier, waits in the dinner buffet line and chats about her tips for delivering an effective presentation.
"First, be genuine. You can tell when someone is faking it," she says. "Second, know your numbers. When Tim asked Seth what his margins were, Seth was able to answer quickly, which was good. And, third, be clear on your business. You need to figure out two or three sentences that explain what problem you are solving and how you are going to solve it."
It’s 7:47 p.m. when Hoke calls the group to attention. EITs huddle with members of their families; many of them hold infant children, excited for what is to come.
"You are America’s most overlooked talent pool," she tells the crowd. Each presenting EIT comes forward and the winner is crowned: Jessica Nowlan. Sporting a massive smile, Nowlan holds up her Publishers Clearing House-sized check for $500.
About 30 minutes later, Nowlan is eating dinner with her family and reflecting on her thoughts before the competition. "I was going to fake sick," she says. "I was so worried that I’d mess up."
Tonight’s event was only the first of three business competitions (Defy hosts similar events about every three months), but already Nowlan has learned quite a bit about presenting—knowledge that she will take with her into the next round.
"You have to tell the story of why you are the right person for the business," she says. "You have to pause, talk slowly and take deep breaths. You have to know your numbers and if you don’t know something, admit it right then and there. If you do those things, you will do okay."