By Ed McLaughlin and Wyn Lydecker
The startup ambitions of MBA students and college undergrads have spawned discussion about whether aspiring young entrepreneurs should launch new business ventures while still in school. Students, graduates, professors and investors have varying opinions on whether startup fever should be a pursuit that is encouraged or discouraged while students live out their academic requirements.
Sure to be an ongoing dialogue for quite some time, here are three important topics of conversation that have been voiced on the subject:
1. Is Starting Up a Distraction?
Wall Street Journal writer, Lindsay Gellman, recently reported that Stanford Business School is encouraging its MBA students to avoid the distractions of a startup and instead focus on their courses, campus life, and getting their degrees.
Educators argue that students need time to test their ideas and “embed desirability into the products, services, and experiences they create.” Instead of taking on the obligations of planning a new business and the pressures that come with meeting investors’ requirements, educators want students to spend their time on campus in preparation – not execution of their new businesses.
This runs counterintuitive to the lure of the Mark Zuckerberg startup experience with Facebook, which began with the collaboration of students in a Harvard dormitory and catapulted Zuckerberg to billionaire status by the time he was 23. But isn’t Zuckerberg the rare exception, the unicorn, not the rule?
2. Can Students Afford to Put Funding on Hold?
It’s tough to put startup ambitions on hold when one is convinced of an idea that’s ripe and time-sensitive to attracting investor interest. In Rolfe Winkler’s article, Secretive, Sprawling Network of ‘Scouts’ Spreads Money Through Silicon Valley, he describes how venture firm, Sequoia Capital, funnels millions of dollars “to scores of well-connected entrepreneurs and academics” through scouts who looked for aspiring young entrepreneurs and their promising ideas.
Students argue that it’s hard and even foolish to swim upstream against the undercurrent of investor’s dollars that are available today and may or may not be there for the taking upon graduation.
First and foremost, startup fever and the desire to take hold of available funds must be weighed against whether or not the timing is right. Capital raised too early could lead to giving away too large a portion of equity and control. On the other hand, entrepreneurs who wait too long could endure a cash crunch as they attempt to scale.
As I wrote in When Is the Right Time to Fund Your Startup? – I recommend that founders complete these three steps before seeking outside funding:
- Make sure your business is positioned for consistent user growth
- Make sure your business offers the promise of future profits
- Make sure to develop a strategic plan that enables you to scale your business
3. Can Campuses Offer Real-World Preparation?
MBA and undergraduate courses on entrepreneurship are on the rise to meet the swelling interests of a generation inspired by a combination of Silicon Valley’s billion-dollar success stories and the glamorization of entrepreneurship through programs like Shark Tank. Most college students are not looking to graduate with a one-size-fits-all skillset that will slot them into long-term commitment at a single company. Besides, as proven out by prior generations, students are wise to the fact that big companies can no longer offer the benefit of long-term career security anyway. So many ask, “Why not take control and start your own business?”
Colleges and universities want to be prepared for an incoming generation of problem-solvers with the drive to find solutions and the ambition to turn their ideas into new business ventures. Today’s students are wired to make a social impact and are willing to take the business risk to make a difference. They want to know how to pitch to investors, build a successful small business, and even take a shot at becoming the next Unicorn.
The Real Question
Rather than trying to turn back the dial on startup fever and asking if students can receive real world preparation on campuses, the real question is this: “How will college campuses help budding entrepreneurs identify where they are in their startup journey, meet them at that point, and provide them with the resources and mentorship programs to set them up for success?”
In The Journey to Start Up: When Is the Right Time for You, I identify a Startup Readiness Framework that points to different needs during various phases of the startup journey.
Let’s start by discussing each type of entrepreneur along the y-axis:
The Very Rare Entrepreneur with Visionary Talent (think Bill Gates and Paul Allen, Steve Jobs and Steve Wozniak, Sergey Brin & Larry Page, Michael Dell, and Mark Zuckerberg) sees the immediate purpose and potential of their business idea. These highly unusual entrepreneurs have both a vision and the inherent ability to create a unique product that may just change the world. Sometimes these entrepreneurial visionaries have such a strong belief in their business idea; they are willing to forgo school to pursue it.
Entrepreneurs with an Adaptive Skillset have a developed skillset, but they realize they need more wisdom to further define their market opportunity and to learn how to adapt their skillset to meet it. For these aspiring entrepreneurs, a professional business or technical degree can go a long way to iron-out the wrinkles in their business plans laying the foundation for long-term success.
Entrepreneurs with Road Tested Innovation have uncovered a market need while carrying out the day-to-day responsibilities of working for someone else. Before the dawn of innovation and creativity labs on university campuses, this kind of entrepreneur would have been exclusively born out of the existing workforce. They understand the characteristics of the industry, they understand the needs of customers, and they have had the time to road-test their ideas inside an established company. Oftentimes, these entrepreneurs offer their existing company a stake in their new company– but they are absolutely determined to take the lead and fulfill their business vision.
Entrepreneurs with Distinctive Competence have long ago graduated from the world of academia. These entrepreneurs have had the chance to build a career and develop distinctive competence – a combination of expertise, experience, and a track record of success. In many respects, they have built a reputation as an expert in their field. Distinctive competence provides you with the proven expertise and experience that enables you to execute your idea, the connections to secure pre-orders and land funding, a strong network of customer relationships, and the vision for the working culture you want to create.
Embracing Startup Fever
Since entrepreneurship does offer independence and the fulfillment of dreams, we can hardly be surprised that it is becoming an important component of the curriculum on college and university campuses around the world.
Ed McLaughlin is the author of the upcoming book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business along with co-authors Wyn Lydecker and Paul McLaughlin. The Purpose Is Profit (Greenleaf Book Group) is scheduled for release August 2016.
Connect with Ed on LinkedIn here. His email is Ed@ThePurposeIsProfit.com