B-School Startups: Block Six Looks to Scoreby
Since graduating with an MBA from New York University's Stern School of Business (Stern Full-Time MBA Profile) with an MBA last May, Adam Grossman has been working to score interest in his new company, Block Six Analytics.
The idea for Block Six, a consulting firm focused on revenue growth in sports organizations, was born while Grossman was a marketing intern with the National Hockey League's Washington Capitals franchise during the summer of 2009. As part of the internship, Grossman worked with the Caps' corporate sales group to identify how the team could generate revenue in new business areas, specifically through new sponsorship opportunities. One of Grossman's proposals, for instance, was to find a sponsor for Club Scarlet, the team's fan club for women. He developed a plan that highlights the demographics and channels that a corporate partner could reach with a sponsorship and the potential return on investment.
By the end of his 10 weeks in Washington, Grossman had a list of 80 ideas the team could capitalize on. Tim McDermott, who was chief marketing officer of the Capitals at the time, was impressed by Grossman's work. He sent Grossman back to Stern with a challenge: develop the framework for a website that would highlight the sponsorship opportunities. Grossman accepted the challenge and began laying the foundation for Block Six Analytics.
When he returned to campus, Grossman enrolled in two classes taught by Professor Aswath Damodaran: Corporate Finance and Valuation. The classes discussed discount cash flow models and how to use them to understand how much a company is worth. Shortly after, using the same principles he picked up in class, Grossman developed a corporate asset valuation model that could be used to appraise sponsorship assets within a sports organization. He couldn't have done it without Stern. "I would have never been able to come up with my model without taking that class," Grossman admits.
Capture Those Eyeballs
So what is it, exactly? The model shows how a piece of company inventory (a building, say) can make impressions on a targeted audience that will produce revenue for a partner. For instance, a piece of inventory such as Citifield, home of the New York Mets, has many opportunities to make money because the millions of eyeballs that watch games played there are valuable. So the trick is to make "impressions" on those eyeballs. One opportunity might be the naming rights to the whole venue or the rights to put a corporate logo on the JumboTron. Grossman's model breaks down the value of the inventory for clients.
Grossman officially founded Block Six Analytics in February 2010, offering clients access to the corporate asset valuation model as part of a Web-based application, called Partnership Scoreboard. The name Block Six is a tribute to his work group at Stern. "I wanted the name to be a not-so-subtle homage to how the company got started," Grossman says.
The Chicago company is currently focused on expanding its client list. The initial round of funding—$60,000—came from family and friends, including $20,000 of Grossman's own money and an investment by Stern Executive-in-Residence John Biggs. The company makes money through annual license fees, as well as consulting fees, charged to sports organizations that use the Partnership Scoreboard application.
Grossman is currently the only official employee of Block Six, but he uses application developer IMS, a company that provides technical consulting and programming services, for his technical needs. He met the president of IMS through a club Grossman founded at Stern called the Government and Business Assn. IMS provides the programming and technology support for the Partnership Scoreboard website.
The First Account Is the Toughest
As of now the biggest challenge, Grossman says, is scoring that first official adopter of the system. He has the support of the Capitals, but as a new company with a Web-based technology, Grossman has found getting the first official client to be difficult.
Glenn Okun, a Stern professor of management and entrepreneurship and an experienced investor in startups, has helped Grossman hone his pitch to potential clients. "At this point it's a game of elephant hunting," Okun says. "He is dealing with a small number of very large organizations, so it's critical he lands that first account. But he's got something that offers real value and an interesting approach to the market."
Grossman is confident that once he scores his first client, more will quickly follow. "Many sports organizations want to be the second or third user," he says. "Being the first mover in a technology space is always difficult for clients, but once a team sees the results, they'll know it's worth it."