Can Business Schools Teach Entrepreneurship?

4/9/09

When the Dow is sitting at half its 52-week high, the U.S. economy is shedding about a half million jobs a month, and the financial institutions of entire countries are collapsing, it’s as good a time as any to do some hard thinking about your professional future. At business schools these days, more and more students are trying to figure out whether this is the best time to start a business. With entrepreneurship as the flagship program at the MIT Sloan School of Management, the chatter here on this topic is loud.

Since we started in the fall, every professor, keynote speaker, and panelist has said that this is a great time to be an entrepreneur. The reasoning goes that The Party is over, most of the money is gone, and the only people left are the Serious People. And if these Serious People can create products that others need, then there will be suppliers who want their business, and plenty of cheap office furniture. This is what we’ve been told.

“Go for it”
The best way to figure out if this is a good time to be an entrepreneur would be to start a company. Instead, we decided to examine entrepreneurship and its relationship to business school. Can entrepreneurship be taught at a business school? What are the tools that students can use to start new ventures? What kind of environment facilitates budding entrepreneurs? What needs to be changed to encourage entrepreneurship at business schools? Armed with these types of questions we talked to several first-year, second-year, and alumni MIT Sloan students who either have entrepreneurial aspirations or have already started new ventures.

Mahesh Konduru Carter Dunn

So what did we find out? In our conversations with a select pool of people, there was a near unanimous agreement that MIT Sloan is indeed a fertile ground for aspiring entrepreneurs. Environment, competitions, classes, and access to resources are some of the many factors people cited that help MIT Sloan students build new ventures.

We also found that not everything is perfect. A few small changes would ensure that an even higher proportion of students gets excited and succeeds in starting new ventures.

It’s the Environment, Stupid
The entrepreneurial environment at MIT Sloan was the advantage cited most often among all the people that we interviewed. On paper, MIT Sloan has essentially the same diverse mix of students as other business schools. But here, students hear directly from successful entrepreneurs every day, many of whom were sitting in their seats only a few years before. These entrepreneurs are at once river guides, role models, and catalysts for our own startup ambitions, inspiring us to action.

The ClickDiagnostics founding team is a perfect example of a group of individuals with diverse skill sets, from an MIT neuroscientist to a consultant, who came together as a result of the entrepreneurial ecosystem at MIT and the Cambridge/Boston area.“The idea was so big and we needed passionate people with so many different skill sets—where could we have gotten them all, nowhere else but MIT,” said Tania Aidrus (Sloan 2008). Tania and Ting Shih (Sloan 2009) helped co-found ClickDiagnostics while they were students at MIT Sloan. ClickDiagnostics and their non-profit arm ClickHealth connect rural patients with remote medical specialists through community health-workers equipped with mobile phones.

“Coming to Sloan exposed me to a real network of entrepreneurs,” said Jeff Vyduna. Vyduna is a co-founder of PollEverywhere, which claims to be the most affordable way to make events interactive by displaying and counting real-time text messages and votes from your audience directly in your PowerPoint presentation.

Vyduna is an interesting case study in that he started at MIT Sloan in 2007 but took a leave from the program after the spring 2008 semester to concentrate on PollEverywhere full time. Vyduna said that being around like-minded people at MIT Sloan that he could bounce ideas off of gave him enough confidence that he was right about his idea to go all-in.

Shuba Swaminathan (Sloan 2010), with one venture already under her belt, felt that her Silicon Valley network was inadequate. “My network in the Valley consisted of mostly engineers. Business school was a quick way to diversify and grow the network with top notch people,” said Swaminathan, who is now working on another new venture in the high-tech space.

Although she has only been at MIT Sloan for only seven months, Swaminathan has already felt the power of association with MIT. She believes that the main reason she got an audience with a Fortune 500 CEO was because she was at MIT. “My email to the CEO would have been ignored if it had not originated from the @mit.edu address, I am sure,” said Swaminathan.

Getting an audience with investors, usually not an easy task for many entrepreneurs, gets easier at business schools. Josh Miller (Sloan 2009) says, “As a student, reaching out to other entrepreneurs and VCs for advice, or to invite them to speak, is so much easier. There’s less pressure because … Next Page »

Carter Dunn and Mahesh Konduru are first-year MBA students at MIT's Sloan School of Management. Follow @

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  • http://lazowska.cs.washington.edu/ Ed Lazowska

    There’s a terrific February 2009 report, funded by the Kauffman Foundation, on MIT entrepreneurship. You can grab a copy here:

    http://web.mit.edu/newsoffice/kauffman-report2009.pdf

    An interesting finding is that in the decade of the 1990′s, MIT *alumni* established roughly 10,000 companies.

    This powerfully demonstrates the entrepreneurial spirit of MIT alumni.

    It would be really interesting to know, though, how many Sloan alumni (vs., for example, Engineering alumni) were involved in these companies. I have my own hunch …

    By the way, I believe that during a roughly comparable period, fewer than 300 companies were established based upon technologies licensed through the MIT TLO. That’s not a negative reflection on the MIT TLO. Rather, it’s a positive reflection on the true power of MIT and all universities: their alumni, and the knowledge and spirit that these alumni gain in the course of their education.

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  • http://www.startup-book.com herve

    To follow Ed’s comment, there is a talk by Prof Byer (Stanford) about the Silicon Valley and Stanford ecosystems, where the author claims about 5% of companies are direct transfers of technology: http://spie.org/documents/Newsroom/audio/Byer.pdf
    It is not clear how many companies Stanford alumni have created. At least 2’500 but probably many more. Now the role of business schools is another subject of interest. You have stories on both sides, i.e. pure engineers or scientists (Google, Yahoo, Cisco in the academia, Apple outside) or entrepreneurs from bus. schools (Sun Micro, eBay).

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  • http://lazowska.cs.washington.edu/ Ed Lazowska

    Wait a second. Weren’t Bechtolsheim and Joy two of the four co-founders of Sun? To claim that Sun devolved from the efforts of b-school entrepreneurs seems just a bit wacky. Sun was Baskett and Bechtolsheim’s DARPA-funded university workstation, and Joy’s (and Fabry’s and Ferrari’s) DARPA-funded university operating system. (Further, DARPA (Bob Kahn) insisted that the SUN workstation run Berkeley Unix. Kahn also insisted that Berkeley Unix include a TCP/IP protocol stack. Kahn was/is one smart cookie.)

  • http://mit.edu/http://mit100k.org/ Carter

    Ed,

    The report you cited is excellent. My favorite statistic in there is that if all of the active companies founded by MIT alumni formed an independent nation, the revenues from these companies would give that nation anywhere from the 17th to 11th largest economy in the world (depending on how conservative your extrapolation of the survey data). This nation would edge out Sweden or Russia on a GDP basis.

    Your point on the relative proportion of MIT companies started by Sloan students vs Engineering students is well taken. There is no arguing that the vast majority of the technology that powers these companies comes out of the world-class labs around campus – not Sloan.

    That said, every single semi-finalist team in the Development Track of the MIT $100K Entrepreneurship Competition this year has at least one Sloan student on it (this is the track I run so I’ve got this info handy). Given that there are about 5.5 Science and Engineering students for each Management Student (http://web.mit.edu/facts/enrollment.html) Sloanies seem to be holding their own at least as far as the $100K is concerned.

    While anecdotal, there are two recent MIT web startups that should be mentioned both for their early success and because the founding teams were all from Sloan. Hubspot (http://www.hubspot.com/) develops and sells an in inbound marketing system and Visible Measures (http://www.visiblemeasures.com/) quantifies how viewers interact with web video.

    All this to say that founding teams can be just engineers, just MBAs, or a healthy mix of the two. But whether the engineers have a knack for business, the MBAs used to be CS/engineers (like 45% of Sloanies), or they have clearly defined roles, no company is going to make it unless they’re bringing something new to the market and they can sell it.

  • Mahesh

    Ed,

    To your first comment, believe me I am as interested as you are in finding out the % of Sloan alums involved in those companies. I would love to do it but it would take quite some time to compile that data.

    Anyway, I am curious to hear your hunch though.