Students will soon decide whether one of this year’s businesses, Santé yogurt spread, survives past the semester.
Wendy Hanson and Teodor Scorpan, members of a team of Carlson School of Management students from the University of Minnesota, gave samples of Santé, a yogurt spread, to Anja Breiehagen, 8, and her father, Per, at the Linden Hills Co-op in Minneapolis this month..
The latest product to spring from a University of Minnesota course sits on the grocery store shelf — between the cream cheese and the ricotta.
Santé, a yogurt spread, is more business than class project. In fact, students say, Entrepreneurship in Action in the Carlson School of Management is not really a class. “It’s an incubator,” said Wendy Hanson, a senior.
Over two semesters, seniors pitch business ideas and pick a few. Teams then vet, launch and operate them, with the help of loans of up to $15,000. It took this year’s class just three months to get Santé into several local co-ops.
“We’re able to fast-cycle innovation, get something in the stores and see if it works,” said Andrew Fuller, a senior and Santé Food’s chief executive officer.
Each May, the students decide: Will they continue the businesses past the class? If a few students do, they buy the business from the school, agreeing to pay off the loan and, usually, a 5 percent royalty for three years.
The course’s syllabus, which the instructors like to call a “handbook,” starts by encouraging students to take risks. The team that created Santé took a big one — they ignored the syllabus’ first restriction. Don’t start a business that involves preparing or handling food, it says.
“To maximize their learning, they need to get their product into the market quickly,” said John Stavig, the course’s instructor. Because of strict regulations, Stavig didn’t think food would fit with that timeline, he said.
Until this class.
The students were brainstorming ideas last fall when one mentioned his mother’s recipe for a thick, Lebanese yogurt spread. They tried it, loved it and went to work trying to re-create it.
“If you look at the market now for spreads and dips, they’re extremely fat-laden,” Fuller said. Two tablespoons of Santé contains no fat and 3 grams of protein. “Why not create a product that you can eat every day?”
They met with Carl Schroeder, of the Schroeder Milk family, to tap his nearly 30 years in the food and beverage industry. (Schroeder Co. Inc. was sold to Agropur Inc. in 2008, and Schroeder left in 2010.) “My first thought was, ‘Wow, this is a very ambitious goal,’ ” given the regulations, Schroeder said, “not to mention competition in the marketplace.”
Schroeder said he was impressed with how Santé “functions very much like a business would,” yet has greater flexibility. “Bigger businesses would get stuck in, ‘We need to do some R&D,’ ” he said. The question is whether Santé can be manufactured at a commercial scale without running low on cash, he said. “That’s where a lot of these ideas go forward or they don’t.”
The class relies on experts and businesses offering their advice but has become more careful about those relationships. In 2011, the Entrepreneurship in Action students who created Toepener — a device that allows someone to open a bathroom door with a foot — were accused by a Missouri start-up of copying its product, StepNpull.
It turned out that a student in the group had e-mailed StepNpull, saying he had “stumbled” across its product, never disclosing that he was part of the Toepener team.
Since then, Stavig has led a class discussion about how students represent themselves and the course. Fuller said his team has acted with the assumption that it’s a business that will live on.
“You could probably get away with that in a class project, but in a business, you need to have that integrity,” Fuller said.
‘Slow and steady’