From the September 2011 issue of Entrepreneur

Daydreaming in class is often a habit students come to regret on test day--that is, unless that dream turns into a real company.

That's exactly what happened when David Lieb, CEO and co-founder of Bump Technologies, entered the University of Chicago's MBA program in the fall of 2008.

While attending an accounting class, Lieb's mind drifted from the lecture to imagining an easy, efficient way to share contact information. "Business school is all about meeting people and networking, and the first week, I found myself entering in phone number after phone number, and name after name," Lieb says.

As a former employee of Texas Instruments, Lieb had a solid background in technology development. He believed he could create a more automated method of sharing contact information using smartphones.

With a concept in mind, he enlisted former Texas Instruments colleague Andy Huibers (now Bump's co-founder and technical lead) and fellow MBA student Jake Mintz (another Texas Instruments alum, who would become Bump's third co-founder) to help transform his idea into a working prototype.

Two weeks later, in October 2008, Huibers had rigged a rudimentary demo using a laptop; five months later, the team had completed the first version of a mobile app that lets iPhone users share photos and contact information by simply bumping their phones together.

Appropriately named Bump, the app launched officially in March 2009 and exploded in popularity, accumulating more than 42 million downloads to date and becoming the seventh most popular iPhone app in the United States.

"I can't say that there was a particular time that we knew it was going to be huge, but the first day we got 222 downloads, and soon we were getting thousands," Lieb says.

Meanwhile, the scope of Bump's technology has expanded nearly as much as its user base. "Within a few weeks of releasing the app, PayPal actually reached out to us, and we started conversations with them about licensing the technology," says Mintz, who lists the online payment site among the Bay Area company's strongest partners. Others include Facebook, LinkedIn and Twitter.

To run a company that has raised $19.9 million and grown to 26 employees and 11 interns--while also continuing to add and improve features--Lieb and Mintz left their MBA program at the end of their first year. But quitting school didn't mean they stopped learning.

Mintz says two lessons in particular continue to apply: the importance of a strong team able to weather the ups and downs of an unpredictable and fluctuating startup, and the need to regularly test not only products, but also assumptions.

"A lot of people spend a lot of time researching their idea or working on a business plan, and everything that goes into all of that--or many of the things that go into that--are assumptions that are quickly proved incorrect as soon as you launch your product," he says.

In the software space, he says, the solution is to avoid paralysis by over-analysis, and to get busy building a product that you think fills a need. "If it's a consumer product, build it, put it on the internet, put it out on phones and see what people do," he says. "You'll be really surprised."