Source: The Wall Street Journal
by Lindsay Gellman
Dec 2, 2015
Students and professors meet in the lab space at the Center for Entrepreneurial Studies at Stanford University. Some business school leaders wonder whether the pendulum has swung too far in the direction of startups. Photo: Jason Henry for The Wall Street Journal
Stanford University encourages its students to think big and hatch ideas for new companies. But those who plan to start their own ventures are hearing a new message from the school: Wait.
Worried that student founders have become so absorbed in their fledgling companies that they are missing out on course work and campus life, Stanford’s Graduate School of Business is asking M.B.A. students to curb their startup ambitions until graduation and focus on getting their degrees.
That is proving to be a tall order in a program frequently visited by venture capitalists who work on nearby Sand Hill Road in Menlo Park, Calif. In recent years nearly all Stanford M.B.A.s took entrepreneurship courses and 16% of this year’s M.B.A. class founded a new company.
“We’re not the graduate school of entrepreneurship,” said Garth Saloner, the school’s departing dean. He advises students intent on starting companies to apply for a business incubator, not business school.
Colleges and M.B.A. programs have poured millions into entrepreneurship education in the past decade, partly in an effort to cast themselves on the cutting edge of innovation and technology. Schools as disparate as Harvard Business School, Oklahoma State University, Pace University and New York University have added courses, new faculty and sleek innovation labs. Promising founders are hailed as campus celebrities, while some schools are tracking—and touting—venture-capital fundraising by alumni.
Yet some school leaders now wonder whether the pendulum has swung too far in the direction of startups. Founding a company can bring heartaches, and the vast majority of student ventures fail, said Mr. Saloner.
At the University of Michigan’s Ross School of Business, about 5% of M.B.A.s set up companies soon after graduation, but the school has been finding ways to “thin the herd” of student ventures, said Alison Davis-Blake, the business school’s dean.
The school has instituted activities like business-plan competitions and accelerators where students can test-drive ventures with feedback from peers and advisers. Weaker ideas are weeded out.
“A lot of these ideas are not going to be ready for prime time,” said Ms. Davis-Blake.
Leah Edwards, who runs Stanford’s Center for Entrepreneurial Studies, encourages rising second-year M.B.A.s to intern with an existing company “even if they’re sure” they want to start their own. But some Stanford M.B.A.s say there is no better time to launch a venture.
Second-year student Alli McKee said she is “at a crossroads” with her corporate-communications venture, Blot Inc., as she evaluates whether to begin raising funds now or wait until graduation in June. The 28-year-old said she has received mixed advice from professors and classmates—but the voices urging her to forge ahead resonate most strongly.
“If I wait until June to actually raise money, I might not have enough momentum to really build it out,” she said.
Joe Du Bey, 31, co-founder of business-services startup Eden, said “nothing kills a startup like inertia.” He raised about $1.2 million in capital before graduating from Stanford’s business school this summer.
Nathan Sharp’s view has shifted. When he arrived at Dartmouth College’s Tuck School of Business in 2010, he knew he wanted to start a company. He created a price-tracking app, Nifti, with a classmate in the fall of his second M.B.A. year. Within a year-and-a-half of graduation, he’d raised $2 million from Google Ventures and others.
But beyond the university walls, Nifti failed to quickly attract new users, and Mr. Sharp wondered if the co-founders had incorporated prematurely, he said. Even with funding secured, he found himself in a “trough of despair,” he said, applying the term startup founders use to describe their darkest days.
The company pivoted recently, launching a new app that allows users to create polls with photos. It has proved popular among teenage girls, who use the app to determine which selfies to post to Instagram, said Mr. Sharp, who is considering whether to pursue more funding or sell.
Beth Altringer, a lecturer at Harvard’s School of Engineering and Applied Sciences, teaches a course that examines the common pitfalls of startup ventures and has observed students trying to balance ventures with their course work. “If you’re beholden to the pressure that comes with having accepted outside capital, it’s quite difficult to be part-time about it,” she said.
Startup fever has also frustrated recruiters, amid declining interest in their campus events, said Maeve Richard, who runs Stanford business school’s career center. Ms. Richard has urged would-be startup founders to think about stable employment. “We want to make sure they know what’s out there,” she said.
Harvard Business School tracks the percentage of students who found startups soon after graduation, a figure Prof. Thomas Eisenmann calls the “canary-in-the-coal-mine number.” If the number of founders increases, as it did from about 5% in 1999 to 11% in 2000 against the backdrop of the technology-startup bubble, it suggests students are succumbing to “herd behavior,” said Mr. Eisenmann, co-chair of the school’s Rock Center for Entrepreneurship.
About 9% of this year’s HBS graduates started new ventures right around graduation—suggesting no immediate cause for concern, according to Mr. Eisenmann.
Plenty of schools continue to urge students to act when inspiration strikes.
“When somebody has passion, an idea and the timing feels right, we wouldn’t want to dampen that,” said Rich Lyons, dean of the Haas School of Business at the University of California at Berkeley.
Dartmouth has even supported student decisions to leave campus.
Justin Gerrard co-founded Bae, a dating app geared toward black singles, close to the end of his first M.B.A. year at Tuck, winning thousands dollars in school funding. He has put his second year on hold as the company closes a round of seed funding. If Bae—which stands for “before anyone else”—fails, he said he plans to finish his M.B.A. while working on a new startup.
Stanford acknowledges it can’t rein in all aspiring founders. Still, Ms. Edwards said she would like them to consider “some big, hairy problem” to solve. “We don’t need another app to order food.”
