His classmates, Kraus says, see what he is doing as "either good, or good and crazy, or just crazy." He puts himself in the second camp. Kraus has already met the goal he had upon entering Wharton: to do something other than accounting, banking, consulting or law-the traditional paths of Wharton undergrads, followed by a return to business school. Currently, Kraus owns just 10% of the shares with options for another 10%. Bluestem wound up owning most of the company. "Then I was able to bring actual deals to the money guys." The result was that during the first full year of operations, he had deals with 400 stores, sales of $100,000, and had raised $1 million in venture capital. "I was doing business deals that I did not have the ability to fulfill" without financing. "I was able to back end the deal and that was important," Kraus says. He also found Bluestem Capital Partners, a venture capital firm based in Sioux Falls, S.D. Then he found his angels, a lawyer and two businessmen whom he met at a dinner where he received a Young Entrepreneur Award from the governor of Pennsylvania. He prepared a 20-page business plan and sent it to venture capitalists using referrals and referrals from referrals. To raise capital from his Wharton dorm room, Kraus had to go far afield. The idea for Tiramisu ice cream, now one of the company's most popular flavors, came from seeing the dessert on so many restaurant menus. She did less well in cheese and says concocting flavors for Microbatch is a "dream job." Ideas for new flavors come from everywhere from magazines to eating out to letters from customers. Riley has a degree in dairy science from the University of Vermont and actually received an A in ice cream. (It was Dairy Queen until Dairy Queen, the company, found out about it and threatened a lawsuit.) Other flavors are conceived collectively under the direction of Jessica Riley, who came to Microbatch through a headhunter and whose corporate title is Dairy Diva. Kraus says he invented Vanilla Cream Stout, the first beer-flavored ice cream, in part as a tribute to the microbrewers who inspired him. Instead he would rotate through a roster of wacky flavors like Eve's Sinful Cider and Vanilla Cream Stout. He thought he could add excitement by not doing plain vanilla, or plain chocolate. "A pint of ice cream was what a girl bought when she broke up with her boyfriend," Kraus says. Microbatch was inspired by what microbreweries like Boston Beer Company How was it, then, that Kraus himself was not blinded by the same light? "I don't follow trends," he says. In 1997, the hard part was "finding people who were not blinded by the dot-com du jour," Kraus says. ![]() Kraus built the business and started raising capital simultaneously, and doing both at the same time was critical. But Microbatch deals in chocolate chips, not computer chips, and that makes him a horse of a different color. By senior year, "the business was in full swing." If he were an Internet guy, this would be almost an old story. Kraus hit upon the idea for Microbatch (nasdaq small cap:ĭuring his junior year at the Wharton School of the University of Pennsylvania and wrote up a feasibility study as a class project. Though he never dreamed of owning an ice cream store as a boy, he says he was always "an entrepreneur to the core," the kind of kid who started his first enterprise in junior high.Īnd it wasn't just cookies, or soda and iced tea to the Little Leaguers-Kraus sold water purification systems door to door. Kraus, now 24, was raised in Dallas and grew up on Blue Bell coffee ice cream. ![]() What you will get is a company that sells its product in 5,000 stores and has projected 2000 sales of $2.5 million. "If you're looking for a romantic story, I don't think you're going to get it."
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