It all started with a boy on Beige Block who liked to bake.
As a junior at Penn in 2003, Seth Berkowitz found himself traveling back and forth to see his girlfriend in Boston on weekends with nothing to occupy him during the long solo weekdays. "I was sick of my classes and ready to do something in between [visits], so I had this idea to start my own small business and hand deliver cookies Monday through Thursday," he says. "It was just a college adventure." Berkowitz began using the oven at his house on Beige, where he lived with nine roommates, functioning as the sole baker and deliverer of what would grow to become a booming national success. Insomnia Cookies was born.
In just one year, the economics and history double major, who says his parents "initially thought [he] was totally crazy," was able to upgrade the project to a small commercial facility on 23rd Street that he equipped with the essentials: two ovens, a walk-in freezer and a mixer. But he didn't stop there. About a year after Berkowitz and his business partner Jared Barnett got Insomnia off the ground, they had two bakers and two other drivers.
Fast forward to today: Insomnia Cookies will be opening its 22nd store this month and already supplies its famed cookies and brownies to 15 schools from Ohio State to NYU to Cornell. This past February, Berkowitz was named one of business Web site Inc.com's "Top 30 Entrepreneurs Under 30." This year, he says, the company will likely reach a peak employment of 175 bakers and drivers nationwide.
The long-ago addition of those first several employees, who were Penn and Drexel students, sparked the rapid growth of a late-night student food delivery company that would inspire future budding Penn entrepreneurs.
When it comes to food and drink, a college campus, as a microcosm of the real world, serves as an ideal testing ground for original business ideas. Students who have the drive and creativity to translate their musings into reality are presented with a captive clientele, potentially inexpensive labor and a chance to make it big on a small scale. And it turns out Penn students have more than enough good ideas, some of which have become the very cookies and cupcakes that grace your doorsteps at 1 a.m.
Kelly Schaefer, who graduated from Wharton last December with Management and Marketing and Communication concentrations, cofounded Penn Drinks, an online drink delivery service on campus, with classmate Jason Toff. "To me, starting a business as a student is great timing because you get the chance to learn and test out your ideas with minimal risk," she says. "You probably won't invest much money, and you're not depending on your business as your full time job as you might later in life. Why not see what happens?" Sure enough, Penn Drinks has sold over 21,000 drinks to date and has also licensed their site design to three other colleges.
Given the relatively low risk and ready market of hungry students, delivering food on campus has proven to be a recipe for success. Penn entrepreneurs Richard Talens and Terence Huang founded Cupmakes, an online design-your-own-cupcake venture, earlier this year, and quickly went from baking out of the Kappa Alpha fraternity house (where Huang was a brother) to establishing a permanent operation out of the College Pizza/Chestnut Diner facility at 42nd and Chestnut Streets. The founders had admired the success of Insomnia Cookies, which stood as evidence that Penn has a huge customer base for late night desserts, but they aimed to diverge from their predecessor's model. For Cupmakes, customization was key.
They recently secured enough capital to hire a general manager, Christopher Rice, whose extensive restaurant experience includes training bartenders at eight McCormick and Schmick's locations. Talens, who is taking an extra semester at Wharton before graduating with a concentration in OPIM, says he brought Rice on board to help streamline both the bakery and delivery processes - to do "a little bit of everything," in Rice's words. Cupmakes aficionados will notice even more refinements this semester, including new icings and flavors like cinnamon cream cheese and tres leches, as well as weekly rotational holiday specials and eventually even vegan and gluten-free recipes. "My personal favorite Cupmake is vanilla base, vanilla icing and rainbow sprinkles," Huang says. "It's not the manliest cupcake, but our bakers make mean vanilla icing."
Such variety reflects the great strides Cupmakes has made since its founding. But the sweet taste of success doesn't come easily. An average workday during their first semester of operation consisted of arriving at College Pizza at 6 p.m. after a long day of class to prepare and bake the Cupmakes before opening at 10, Huang says. They would operate until 2:30 a.m., but "so many people [would] call us and beg us to make a last order for them even though it was 15 minutes after closing." They would then clean the tables, mop the floor and wash all the pans and dishes before finally walking back to their dorm at 3 a.m.
While a college campus affords many entrepreneurial advantages, it also challenges students to strike a manageable balance between their academic and professional lives. "The biggest challenge at the beginning was the incredible amount of time it took," affirms Schaeffer. "During the summer before we launched [Penn Drinks], we spent every single night on the computer talking to programmers, in addition to having full-time internships. At the beginning of the year, we were doing deliveries ourselves and were just physically exhausted." However, both Berkowitz and Talens claim their grades actually improved in the midst of scrambling to establish their respective companies because their packed schedules forced them to manage their time more efficiently. "Every single ounce that I'm not spending [on Cupmakes] has to go into schoolwork," Talens says.
But Penn students are not your average brand of overachiever. Home to Wharton and a much-touted pre-professional atmosphere, the University attracts and breeds students with a knack for business. In 2005, former Wharton undergrad Nathaniel Stevens launched Yodle, a company that helps small businesses utilize Internet advertising to increase profit; he later earned a spot on BusinessWeek's roster of top 20 entrepreneurs under 25. More recently, Austin Lavin, C'07, founded Myfirstpaycheck.com, a job-posting site for local teenagers that has gone national and currently offers 750 job listings in all 50 states "ranging from marketing internships to ice cream scooping," says Lavin.
"I think a lot of people can come up with a great idea," Talens says. "But they don't do any modeling behind it, they don't have a plan. I know for a fact that Cupmakes was a great idea. But it's not the idea that made it successful. It's the operations behind it." Penn grants students the tools to make such operations a reality. For example, Schaefer says she discussed her plans for Penn Drinks with her entrepreneurship professor, and Talens says the business experience he has gained complements what he learns in his OPIM classes.
While many of their peers aim to strike it rich on Wall Street, student entrepreneurs try to take their businesses full-time. As his graduation approached, Berkowitz began planning to expand Insomnia Cookies outside Philadelphia. "We were already planning on opening three new stores before graduation. So by the time I got my diploma that idea was already in the works," he says. He moved directly to New York after graduating, and has since upgraded from a 700-square-foot space to a 3,000-square-foot office at 53rd Street and 5th Avenue. Talens has similar ambitions to expand his small-scale cupcakes operation. "South Street would be great, maybe New York," he says. "I really want to do this full time."
The single most irreplaceable ingredient toward such an achievement? Having a good time in the process. "It's fun seeing something that you start grow as much as it has," says Berkowitz. "I like still being part of the college universe and having a unique business - and getting to run it on my own." He encourages other Penn students to take a bite out of entrepreneurship. "Short of opening another cookie company and competing with me, I hope everyone takes that shot," he says. And as long as late night munchies are a part of college life, so too will be the demand for a fresh-baked hunger fix.
That's just the way the cookie crumbles.
