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New Mexico State University

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New business launched as "laboratory" for New Mexico State University students

A New Mexico State University business professor and his students are taking the old dictum "learn by doing" to heart and launching their own company.


Inc., an Internet web design and hosting company, was developed in the spring of 2001 and, with luck, will begin its maiden voyage in the upcoming fall semester, said Sam Gray, an assistant professor of management in New Mexico State's College of Business and Economics.

The concept of using a for-profit business as a living laboratory to give students hands-on, real-time experience is becoming more widespread in business schools, Gray said. Begun as part of his "Entrepreneurship Laboratory" course, Grayzon Inc. is intended to supplement traditional theory-based education by putting students in a situation where their thoughts and actions actually make a difference, he said.

Because of concerns about liability to the university and New Mexico laws against using state property in for-profit situations, Gray and the students in his spring 2001 class decided to create a completely independent enterprise, with its own offices and its own funding, he said.

"I told them the idea was to come up with something that would be interesting, high tech and would make money," Gray said.

After considering and rejecting several ideas for ventures, the students settled on a web design and hosting company, he said.

"They felt there is a market for a web design and hosting company in Las Cruces, since the companies that currently offer web design and hosting subordinate that service to their Internet provider service. Also, although we plan to begin by offering the service in Las Cruces, web hosting has worldwide potential. You could use our service if you were in India," Gray said.

Students in the spring semester class filed incorporation papers for Grayzon Inc. in Delaware, a state with relatively friendly incorporation laws, then registered as a foreign corporation in New Mexico. They also filed a first report with the state Public Regulation Commission, obtained a federal employee identification number and obtained a state gross receipts tax certificate. They registered with the state Department of Labor, opened a corporate bank account, rented a corporate post office box, completed and filed local business registration forms, applied for federal and state trademark and tradename registrations, and registered the domain name grayzon.com.

On top of all of that, they also sold 130 shares of stock at $40 each. The shareholders are Gray, each of the students, several students' parents and several New Mexico State faculty members. Each of the students is required to buy stock so that he or she has an investment in Grayzon's success, Gray said.

The students who bought stock voted to donate 25 percent of the company's profits to scholarships for entrepreneurship students and put 75 percent back into the company, he said.

Next, Gray said, students in his fall semester class will be required to get the business under way, renting office space, buying equipment and hiring employees. If all goes well, he said, Grayzon will become an employer and a contributor to the local economy. It will also become a holding company for businesses created by future students and a laboratory where business, management and economics students can apply their theories, he said.

Of course, he admitted, when you launch a new business into the waters of the real business world you have to face real business conditions -- and many businesses founder and sink in their first year.

"If that happens, I guess it'll be back to the drawing board -- but that, too, will be a learning experience," he said.