There's a reason British Airways doesn't operate these anymore...


I am re-designing my blog to position it for my upcoming independent study in aviation entrepreneurship and finance, as well as for future posts on any of the millions of topics that interest me. The posts below are idea analyses and reflections from my Management 230: Entrepreneurship class in Spring 2014. The first post is a reflection on my team’s final venture project, Recover-All, which was effectively a healthy snack product. The venture didn’t come to fruition due to several reasons discussed in the post, but it was still a great experience in idea generation, identifying a target demographic, testing the waters, and implementation. The posts before that relate to an idea I had for building a flight service on the Pune-Bombay route in India called Helios Air (using helicopters, which I quickly discovered were ridiculously expensive to operate). The calculations were quite back-of-the-envelope but once again, it was a great first-round experience in idea generation and preliminary testing.

Recover-All: Team 110 Entprentice Exercise, 2014

Lessons in Entrepreneurship: Reflections on the Entprentice Exercise


I had the chance to catch up with Professor Wry on Wednesday to discuss a common interest of ours: microfinance. Over the last few years, I have built a microfinance portfolio on, making $25 loans to entrepreneurs across a variety of industries in emerging markets. It’s always empowering to see how far my $25 goes towards helping these businesspeople achieve their dreams – but I always remember that my investment is only a small fraction of the large pool of crowd-funded capital received by each entrepreneur. For this reason, I was rather shocked when Professor Wry gave each team $20 in convertible debt at the beginning of the Entprentice exercise. I wondered: “How could we possibly expect to turn this measly startup capital into thriving retained earnings?”  My skepticism soon disappeared, once I realized how much our team could truly achieve by applying several rigorous analytical frameworks to ideate and implement our venture.


The Team

I would be remiss not to acknowledge my team members before diving into the major aspects of the Entprentice. I had previously worked with Sean Murphy for Management 100 in our freshman year, so I knew a lot about him from both a personal and professional standpoint. And it didn’t take long for me to get close with TJ and Quincy, as they are both incredibly personable, witty and intelligent people. We had the misfortune of losing one of our team members, Larry, shortly before the end of the drop period. While this was slightly demoralizing for the team, we came together and pitched in to fill the gap left by Larry. Altogether, our team was incredibly diverse, and this provided a unique set of perspectives as well as a wide range of on-campus networks to use when implementing our project.


Idea Generation: Strategy, Challenges and Reflection

Given our team’s dynamic personalities, we approached idea generation with great enthusiasm. However, we soon found ourselves stuck in the ideation trap: wanting to create the next Venmo, but only coming up with ideas for grocery stores. It was a good idea to utilize various frameworks from the course readings in order to broaden our thinking. In particular, Nalebuff and Ayres’ “What Would Croesus Do?” theory allowed us to recognize the global trend of students become a) more health-conscious and b) more stressed about their time-constrained lives. Our strategy became centered on addressing the need of students to fuel their constantly moving (and often unsustainable) lifestyles. Thus, Recover-All was born, and our team launched the venture with boundless optimism for where it might take us.

In retrospect, however, it seems that our approach to idea generation restricted us and almost ensured that we would not end the Entprentice with the highest retained earnings. Using the “Croesus” theory – an approach that encourages idea generation without monetary constraints – led us to choose a business idea that involved significant costs compared to the other ventures. Looking back at the Entprentice, we can see that the highest-performing teams excelled because they had little to no costs. A prime example is the “Penn Portraits” team, which consisted of a skilled photographer and did not need to invest in a camera nor pay for the use of prime locations on campus. Even Selfie Straws, which had to produce physical goods, was able to manage its costs effectively by gauging customer demand before placing any manufacturing orders. By comparison, we lacked this ability to determine demand for Recover-All prior to purchasing the raw materials. As a result, we were frequently left with leftover inventory and sunk costs – often times of perishable goods, such as bananas – when sales did not match our expectations.

If we were to complete this exercise a second time, I think that we should have approached idea generation with a different mindset. Prior to using the “Croesus” framework to come up with the idea for Recover-All, we had focused on coming up with a business idea that did not necessarily address an existing problem but, if properly executed, would create a need for itself. Ironically, this “Solutions in Search of Problems” or ignorance management approach led us to an idea very similar to Penn Portraits: we wanted to use TJ’s photography skills to help Wharton students take professional LinkedIn-style photos. Recognizing that people inherently love to be photographed, we hoped to create a market where people would see us on Locust Walk every few days and want to “renew” their photo for LinkedIn or any other social media platform. However, we readily discarded this idea because we felt it lacked originality, and we feared that there would be too much competition for similar services. This is an important lesson about entrepreneurship: you are not required to have the most revolutionary business model. While venture originality definitely provides a distinct competitive advantage, there are numerous other ways to differentiate yourself in what appears to be a mature market – for instance, by being “faster, better, and cheaper” than the competition. We approached the Entprentice wanting to create a “high potential” business similar to our individual ventures, but it was unfeasible to roll out a brand new product and turn a large profit in such a short amount of time. The most successful Entprentice ventures used existing products and services, and by taking advantage of low cost barriers to entry, accessed new markets of customer demand. Perhaps if we had entertained the simpler photography venture idea, we would have saved significantly on costs and turned a much higher profit.


Venture Implementation: Strategy, Challenges and Reflection

Although Recover-All was a relatively successful product (with final retained earnings of $157.00), we faced several challenges in implementing our venture. In general, our response to these problems was appropriate, but did not align with our overall strategy of being “faster, better, and cheaper” than our competition. A prime example is the initial dissatisfaction expressed by our customers towards several items in Recover-All. In our survey for Challenge 1, many respondents suggested that we remove the water bottles from the package, citing environmental concerns along with the readily available water fountains on campus. In addition, many students felt that adding a bottle of Gatorade or other energy drink would raise the package’s intrinsic value. However, we had invested a lot of our startup capital into water, and thus we didn’t have the cash to buy Gatorade in bulk until Challenge 3. Meanwhile, we still had a surplus of water bottles, which we were forced to continue selling as part of the package. This was detrimental to our brand image, because customers didn’t feel as if we were adapting to their preferences quickly enough.

If we were to complete this exercise a second time, I think that we would need to better manage our inventory. As discussed in Idea Generation, above, the best Entprentice ventures were able to estimate demand prior to incurring any production costs. This was hard to achieve with Recover-All because we needed to show our customers a tangible product in order to convince them to buy it. However, we could have created a minimum viable product using items from our personal pantries (it’s not too hard to find a water bottle, a pack of Oreos, and a granola bar lying around). Then we could have showcased this MVP for one or two days at the start of the project, and directed potential customers to a landing page where they could express their interest in buying Recover-All, as well as any comments they may have. Based on these “pre-orders,” we would buy just the right amount of each product, minimizing both initial costs and inventory surplus. In addition, this MVP could have helped us test the core “must-have” features of our product, and we could have used the money saved to dynamically adapt to the customer’s preferences. This is something that could also be achieved by simply creating our venture’s Facebook page at the very beginning of the project, instead of during Challenge 2 – after all, being millennials, we didn’t have to wait until the “Marketing” class to know that the most basic advertising medium is Facebook. Thus, determining customer demand and forecasting our inventory needs earlier on in the project would have given us more flexibility in the start-up phase.

Addressing our marketing strategy in particular, I believe that my idea for the “dual station flyering” tactic (discussed in Challenge 2) provided additional value to the venture. However, this tactic, although unique, did not raise sufficient awareness about our venture – indeed, we only received 5 flyers in exchange for a $1 discount at the actual sales station. Although we distributed 120 flyers, we were unable to make a widespread impact because students tend to disregard and throw away flyers shortly after receiving them on Locust Walk (something I know from personal experience). Instead, we should have dedicated our resources to mass marketing, as this would have reached a wider audience and driven greater sales without the discounted price. The same goes for a sales tactic used by one of my teammates, Quincy, who regularly discounted the unit price by $1 “just to make the sale.” Although these tactics certainly drove additional sales, they were ineffective at raising sufficient awareness of our venture to justify the discounts offered.

The discounts offered as part of our marketing strategy highlight yet another challenge to our venture: keeping track of the financials. As with all retail businesses, it is incredibly important to keep track of sales as they are made. However, since each of us played the role of individual salesperson, it was difficult to tally up the sales unless we were all in one place at one time. Considering myself quite skilled with Excel, I created a spreadsheet to record the sales, and shared this with the team through GoogleDocs. However, it was difficult to ensure that people actively updated this spreadsheet as sales were made. When it came down to calculating retained earnings at the end of each period, it became a nightmare for me to reconcile the cash that Quincy had been collecting with the number of sales recorded – in part due to the fact that certain sales were also made at a discount. In the end, we had $5 in unrealized gains because recorded sales exceeded cash by one unit. This problem could have been easily avoided with a bit of task management – by putting one person in charge of holding the cash and recording sales.

Finally, there was a legal problem that we overlooked, and which a customer kindly brought to our attention during the final challenge: several of the items included in Recover-All were ineligible for re-sale, since we had bought them in bulk. For example, the packets of Oreos we bought at Walmart were originally contained in a large box marked “Not For Resale” (although we only bought individual packets, not the whole box). If we were to continue with our venture, we would either need to a) attain explicit permission from the manufacturers of these products or b) become a channel partner for these manufacturers. In the latter case, becoming a licensed distributor would most likely require us to share profits with the manufacturers, depleting our margin even further. This is a central reason for why we are closing down our venture after the Entprentice exercise.


Key Takeaways and Lessons on Entrepreneurship

The Entprentice has been a great exercise for me to learn about myself as an entrepreneur. As someone who has taken on many leadership roles in several extracurricular activities, this project really opened my eyes to the various types of entrepreneurial management. In comparison to established organizations, which already have a defined vision and merely require the execution of activities and events, startup ventures must both craft a vision and innovate on it to create a meaningful product or service. From a leadership perspective, this involves working effectively with a high skilled management team to apply ‘design thinking’ and drive core success factors.

I explored my own entrepreneurial leadership style while working with Sean, TJ and Quincy in the Entprentice. In terms of ideation, one of my core strengths as an entrepreneur is having a risk-taking attitude. When we were coming up with our venture, I offered several ideas that had a high potential for growth but also required us to spend our entire startup capital at once, with the risk of losing it all if the venture failed. I was willing to pursue these ideas, but my teammates expressed their desire to undertake a more predictable project with at least some guaranteed cash flows. I adapted to this attitude and demonstrated my ability to be cautious of risks by suggesting we keep some of our funds aside as “working capital” for any possible contingencies (although I didn’t speculate as to what these contingencies might be). After seeing how this working capital was insufficient to allow a product switch from water to Gatorade, I learned the importance of building flexibility into the venture’s business model. By tempering my entrepreneurial drive with careful financial planning, I will one day be able to run a startup that pursues its high-level vision while still remaining prepared for any pivots in its business model. Although I may have a high “tolerance for stress and discomfort” (Bhide 9), I should always remember that certain members of my team may not share this temperament and accordingly, my vision may need to reflect this balance of risk tolerances.

I am a results-driven entrepreneur: I like to see tangible actions being performed that lead to profitability and measurable product awareness and virality. While this “powerful bias for action” (Bhide 12) is certainly a positive trait to have as an entrepreneur, I have the opportunity to grow by thinking about the bigger picture. There’s more to success than having an extremely profitable and well-known enterprise, and it is important for an entrepreneur to think about the “goals, strategies, and capabilities” (Bhide 12) of his venture in order to drive its long-term growth. Entrepreneurs must constantly ask themselves about the direction they want for their venture, and whether their business decisions align with, or compromise, their vision. Where profitability is not the main motive – as with many social enterprises – there are a whole host of other concepts to consider when building a startup, many of which can ultimately lead to profitability. By asking myself tough questions about my vision and goals as an entrepreneur, I will hopefully one day create a highly successful venture.

After participating in the Entprentice, I have a much greater appreciation for the men and women whom I’ve been funding on Many of these entrepreneurs wish to start businesses in mature industries, such as clothing retail or entertainment – but I have learned that this is perfectly acceptable and equally deserving of funding as high-potential ventures. At the end of the day, what truly matters to a venture’s success is the entrepreneur’s vision: where they want the business to go, and how they want to get there. A strong, codified vision with testable hypotheses and tangible goals allows a venture to maintain a distinct competitive advantage. I also have gained a deep appreciation for the value of the team in entrepreneurial ventures. Many microfinance loans go to small groups of entrepreneurs who operate in the same space and collaborate to develop their businesses and ultimately repay their startup capital to the original lender. A quote from New Venture Creation really stuck out to me:

“The lone-wolf entrepreneur may make a living, but the team builder creates an organization and a company – a company where substantial value, and harvest opportunities, are created.” (New Venture Creation, p.277)

At its heart, entrepreneurship is all about the individuals that come together to ideate, innovate and potentially revolutionize the world.

Qantas Ground Crew


Earlier this week, I read about a Cypriot low-cost airline that coincidentally went by the name of Helios Airways. The airline ceased operations in 2006 due to a tragic accident caused by an inadequately prepared flight crew – an event that ultimately led to the manslaughter convictions of five senior officials for their oversight in risk management and compliance. The story of this airline was a sobering reminder of just how risky this industry is. After reading the article “Startups Rarely Do Anything Well” by Eric Paley, I feel that my “boundless ambition” as an entrepreneur in the last few weeks has led me to overlook the one aspect that is ultimately paramount to success in this industry: customer safety. Unlike most other service-based firms, airlines have responsibility over their customers’ lives. This is a major part of the competitive landscape: airlines with the best customer safety procedures will thrive, and a single event caused by even the smallest oversight can serve to tarnish an airline’s reputation and send it into bankruptcy overnight.

Qantas Airlines has built one of the industry’s strongest brands around its accident-free record, by implementing one of the most complex and rigorous safety compliance systems in the world. From checking every bolt on every aircraft, to training flight crews in crisis management, Qantas has invested millions of dollars in ensuring that its passengers are safe. Here is the airline’s risk management model:

Qantas Airlines: Risk Management Model

Qantas Airlines: Risk Management Model

What this says to me is: at the end of the day, you can invest in the highest capacity, most fuel-efficient aircraft out there, but neglecting to invest in passenger safety and crew training is a recipe for failure. Managing the increasingly complex external risk environment is key to market dominance. Aviation entrepreneurs tend to avoid the subject of accidents – after all, no one ever wants to even imagine it happening to their airline. But this is something that needs to be discussed. I did a small analysis of the accident rates between helicopters and fixed-wing aircraft, using US data from the National Transportation Safety Board.

Type of Aircraft Accidents per 100,000 flight hours
Helicopter (rotorcraft) 9.47
Fixed-Wing (single or multi-engine) 8.38

Although the accident rates are very similar between aircraft type, the worldwide perception is that helicopters are far more dangerous than fixed-wing aircraft. A simple Google search will yield one of the largest passenger concerns: whether a “helicopter will drop like a rock if the engine dies,” although there is a significant body of evidence against this. Clearly, it would take a lot more than several compliance procedures to convince individuals that Helios Air will get them to their destination safely.

To be honest, I am fairly certain at this point that my idea for Helios Air will not come to fruition. Given the serious pricing issue I raised last week, along with other factors such as the immense amount of capital and operational risk involved, it is hard to think that a successful business plan could be crafted to offer profitability and market penetration within a reasonable industry framework. However, I am glad that I rationally considered the factors that ultimately falsified my various hypotheses. This meant that I didn’t remain “overly fascinated or over-committed to a product idea,” one of the key entrepreneurial pitfalls discussed in Chapter 8 of New Venture Creation.

In preparing for the ‘Venture-palooza’ on March 17, I intend to conduct some research on a specific substitute product for Helios Air: high-speed rail (HSR). This is a fast-growing mode of transportation in various regions such as Germany and Japan, and is currently being proposed in India. The StartupBoeing team doesn’t view HSR as a threat to commercial aviation, since the network of global aviation routes is approximately 4000% larger than that of trains. However, for short-haul routes where regular rail services already operate (such as Pune-Mumbai), HSR could be the service that beats even the fixed-wing airlines in this incredibly competitive travel market. More to come soon.

Boeing Business Plan Development Iterations


On Friday, I had a call with a member of the StartupBoeing team. After briefly explaining my idea, we discussed how I might pursue my short-term research goals. The representative provided me with several documents to guide me with the venture development phase, including a roadmap detailing the various business plan iterations, which ultimately lead to the Enter into Service / Airline Launch phase (see diagram above). One key point that we discussed is the need to be very specific when choosing what segments to target. The global airline industry is very fragmented, and consumer travel demand varies from region to region. For this reason, I narrowed the target region for Helios Air to the 154.4km journey from Mumbai to Pune, India, as proposed in my first blog post.

Having previously looked at substitute products and fuel-related issues, this week I centered upon another major industry trend: consolidation. Over the last 10 years, many airlines have strengthened their market positions by combining operations with their competitors – major examples being the 2010 merger between Delta Airlines and Northwest Airlines, and the 2012 merger between United Airlines and Continental Airlines. This has ramped up the level of competition in the market, creating significant barriers to entry for startup airlines in virtually every geographic region. Given this, I believe that achieving market dominance in the airline industry revolves around two key factors: revenue generation and market penetration. I will focus on the first of these in this week’s blog post.

Revenue Generation

The low-cost business model has pervaded the airline industry, with well-known carriers such as Southwest Airlines and Ryanair earning revenues at a significant premium to the industry average. However, other airlines have also proven that their traditional models still work in this new low-cost context. A key example is that of the Santiago, Chile-based LAN Airlines, which reduced its ticket prices by 30%, captured a majority of the South American market, and has since brought in over half a million new customers each year. The key to LAN’s success was targeting a niche, underserved market – passengers who wanted to travel short distances but would usually choose alternative, cheaper modes of transportation. This example is important to my own venture because it provides a basis for selecting a target customer. When forming this idea, I had envisioned the target market as middle-class Indians who live in Pune but travel to Mumbai for work-family reasons. I still see this target market as ideal for the venture – just like LAN, these passengers usually choose to travel by train, because the price of flying does not justify the time saved (a 55-minute flight for $96 compared to a 2 hour train costing at most $11).

Using a helicopter is certainly faster than both the train and the scheduled flight, as one can see in this table:

Mode of Transportation Travel Speed (km/h) Approx. Travel Time from Mumbai-Pune
Intercity Express 12127 (Train) 60 3h 12min
Jet Airways 9W618 (Boeing 737-800 fixed-wing plane) 840 0h 50min (including time spent on the ground taxiing, parking, pushing back, etc.)
Boeing 234 Chinook 269 0h 34min

The ground procedures for a helicopter flight are also far less complex than for a fixed-wing aircraft (i.e. no physical movement on the tarmac is required) – passengers can simply get on and off once the rotors have stopped spinning.

But now comes the elephant in the room: price. Although a helicopter would certainly beat both a fixed-wing aircraft and a train in terms of time, would it be possible to operate one profitably while still being cheaper than the fixed-wing flight? This was the point that the Boeing representative was most skeptical about. He explained that it while it might be possible to run a profitable helicopter airline, the real problem arises when the term low cost is thrown into the business strategy. After several hours of looking around online, I managed to find another helicopter airline, HeliJet, which serves the short-haul distance between Vancouver and Victoria, Canada. The flight, which also takes about 35 minutes, costs $273.85. Of course, there are other factors affecting this, including higher aviation taxes and operating costs in North America. But what this says to me is: if HeliJet is one of the only other helicopter airlines out there, and the only reason they’ve survived for 30 years is with these prices, then is it even possible for Helios Air to be profitable? Certainly, customers in India would not pay $273 for a trip which would cost them anywhere between $11-$100 on an alternate mode of transportation. An idea would be to target a second customer segment – such as businesspeople – to offset the high operating cost of the helicopters with mid-range fares. Still, with all factors considered, the question remains: would a flight with Helios Air cost less than the scheduled Jet Airways flight?

I have to give this question some serious thought over the next week. Perhaps the target customer needs to be changed to one with a higher willingness to pay for the convenience of helicopter travel. This might even mean that the target region gets changed altogether, to a sector that truly justifies the fares charged. If I can’t come up with a creative solution, I fear that this pricing issue may sound the death knell for Helios Air.

The Sikorsky S-76C++

Idea Analysis Blog 2: Industry Trends and Substitute Products

In the last few days, I have focused on making my idea network more diverse. I established contact with StartupBoeing, a division of Boeing that exists to help aviation entrepreneurs navigate and adapt to the various challenges in the industry. By talking to members of their team, I hope to develop a credible database of information about the competitive landscape surrounding my idea.

This week, I focused on getting an overview of industry trends and substitute products. I confirmed my initial suspicion about this venture: it is really difficult to start an airline in the current market. Although the global aviation industry is picking up, with passenger growth expected to average 5%/year for the next 20 years, airlines have begun devoting their entire efforts towards capacity utilization. In order to cope with a variety of dismal macroeconomic factors, especially unprecedented triple-digit oil prices, today’s airlines require incredibly efficient, low-cost planes in order to maintain and boost profits. Companies like Boeing and Airbus have met this demand by creating new fuel-efficient fixed-wing aircraft; however, this presents a problem in my business idea.

Up until now, I had assumed that there would be a low-cost, high-capacity helicopter that would be more efficient to operate than the closest substitute product (a fixed-wing aircraft). I now had to test my hypothesis – and I quickly found many articles online claiming helicopters to be far less fuel-efficient than fixed-wing planes. Most of these claims were unsubstantiated, so I did my own analysis, comparing several high-capacity helicopters to the substitute fixed-wing aircraft that are popular on short-haul routes:

MODEL Aircraft or Helicopter? Passenger Capacity (1-class configuration) Flight Range (nautical miles) Fuel Cost ($ per nautical mile) Average Aircraft List Price ($ millions)
Boeing 737-800 Aircraft 189 3,115 6.38 90.5
Airbus A320 Aircraft 180 3,300 7.66 91.5
Sikorsky S-76C++ Helicopter 12 345 4.89 7.9
Bell Boeing V-22 Osprey Helicopter 24 879 13.75 68.0
Boeing 234 Chinook Helicopter 34 540 22.22 38.55
Kazan MI-38 Helicopter 30 477 13.64 13.0

It is obvious that helicopters have less passenger capacity than their fixed-wing substitutes, and I expected lower flight range as well. However, there are several helicopters that have lower fuel costs per nautical mile than regular aircraft, such as the Sikorsky S-76C++. I did a back-of-the-envelope calculation and found the fuel cost per passenger to be similar between the 737 and the S-76C++. This posed a major question: given these numbers, how can I expect to compete on a cost basis with fixed-wing airlines?

The answer is simple, but presents yet another assumption in my idea. Traditional low-cost airlines don’t pass on 100% of fuel costs to passengers in the form of fare increases; instead, they find alternative revenue streams to make up this burden (e.g. charging for on-board services). I will need to hunt for these additional revenue streams if this idea is to be somewhat viable. Looking for niche cost savings is also a good idea – for instance, landing fees at helipads are much lower than those charged to regular airlines at major airports. There is a lot more research to be done, with several new hypotheses to be tested and calculations to be made.