Planning, Startups, Stories

Is College Worth it for Entrepreneurs?

Last week I got an email from Chris Hearse, of studentbusinesses.com, asking my take on "what students and universities could do to prepare for a world in business."

And then on a breezy refreshing Saturday-after-the holiday in Bend, Oregon, I was browsing Startups at Alltop and came across Is College Worth it For Entrepreneurs? at youngentrepreneur.com.

US News' Take On Benefits of College

In his "Is College Worth It?" post, Blog Manager Scott Carmichael quotes U.S. News on three ways entrepreneurial-minded students can benefit from college (I can't find the original source quote, and Scott doesn't link to it):

1) Study entrepreneurship while developing an outside niche.

Tina Seelig, executive director of the Stanford Technology Ventures Program at Stanford University, says that while successful company builders have a natural inclination to be entrepreneurs, sometimes it takes education to bring that inclination to full bloom. “There are people who are natural athletes,” Seelig says. “There are people who are natural musicians. That doesn’t mean we don’t try to teach them those skills.”

2) Expose yourself to as many different courses and experiences as possible.

What if you don’t go to a school that lets you study entrepreneurship directly? Seelig says she would advise trying to get as exposed to lots of different disciplines. Having broad knowledge can make it easier to identify opportunities as an entrepreneur. Hello, liberal arts education.

3) Consider even more education.

Depending on your field of interest, going on to graduate school can help a lot. Litan says that the stakes are now higher for tech startups because the world of technology has grown so much more complicated and expansive. “If Bill Gates were asked if when he was 19 years old, could he create Google, he’d probably say no,” says Litan, whose organization recently published a study that looked at founders of tech startups. It found that 31 percent of them had master’s degrees and 10 percent had Ph.D.’s. In addition, the study found that having an M.B.A. meant that a tech entrepreneur on average founded a startup 13 years before others.

My Take On College for Entrepreneurs

I have a different take on it. It's the wrong question. Education is good for you, long term, for living your life. You should study what you want to study, not what will get you the best job; and if you're interested in business, then study business.

I hate the idea that we evaluate educational choices based on the income that results.

Separate education from job training. They are different things.

If you like studying business, great; do it. And the best way to study business is to study startups and small business, which is what we call entrepreneurship. That's my opinion.

But what really helps is any education that helps you learn to think, read, listen, and analyze.

YoungEntrepreneur.com Blog » Is College Worth it for Entrepreneurs?

Entrepreneurship Epidemic

Watch out. Entrepreneurship might be contagious. I see it a lot these days. A lot of my family members are involved in it. Then I go over to the University of Oregon a few blocks from my office, where I teach Starting a Business one quarter every year; they are not business majors, but they do want their own businesses. It's an epidemic.

I've seen a lot of it in different research outlets, different blogs. This was in yesterday's Wall Street Journal, an opinion piece by Michael Malone, called The Next American Frontier:

The most compelling statistic of all? Half of all new college graduates now believe that self-employment is more secure than a full-time job. Today, 80% of the colleges and universities in the U.S. now offer courses on entrepreneurship; 60% of Gen Y business owners consider themselves to be serial entrepreneurs, according to Inc. magazine. Tellingly, 18 to 24-year-olds are starting companies at a faster rate than 35 to 44-year-olds. And 70% of today's high schoolers intend to start their own companies, according to a Gallup poll.

An upcoming wave of new workers in our society will never work for an established company if they can help it. To them, having a traditional job is one of the biggest career failures they can imagine.

Much of childhood today is spent, not in organized sports or organizations, but in ad hoc teams playing online games such as Half Life, or competing in robotics tournaments, or in constructing and decorating MySpace pages. Without knowing it, we have been training a whole generation of young entrepreneurs.

And who is going to dissuade them? Mom, who is a self-employed consultant working out of the spare bedroom? Or Dad, who is at Starbucks working on the spreadsheet of his new business plan?

In the past there have been trading states like Venice, commercial regions like the Hanseatic League, and even so-called nations of shopkeepers. But there has never been a nation in which the dominant paradigm is entrepreneurship. Not just self-employment or sole proprietorship, but serial company-building, entire careers built on perpetual change, independence and the endless pursuit of the next opportunity.

Without noticing it, we have once again discovered, and then raced off to settle, a new frontier. Not land, not innovation, but ourselves and a growing control over our own lives and careers.

So that's a very powerful set of numbers and facts.

Meanwhile, on the very same day, I get an email for a webinar on how to manage Generation Y employees. Is this related? Different sides of the same coin? Big companies find them hard to manage, but they're out starting their own little companies instead.

Maybe that's just coincidence.

True Venture Contest Story: the Fish Tacos

The board room had maybe 15 or 20 people in it, most of us judges, some of us faculty and organizers, for a lunch meeting just before the presentations and judging started. Outside the windows, the campus of the University of Notre Dame on a gorgeous late Spring day in Indiana. Inside, boxed lunches, shaking hands, getting started. It was just after noon, and the competition -- McCloskey Business Plan Competition at Notre Dame -- was due to start at 1 pm.

Teams were ready and waiting. They'd been carefully selected using a process that took several months to pare them down to a few finalist teams. They had done summaries, business plans, and they were about to do their pitch presentations for the judges.

"But did you want this to be a realistic experience?" One of the judges asked. Most of the judges were members of the Irish Angels, an angel investor group. A few (including me) had other affiliations. I'm not sure which judge asked that question.

"Yes, of course," was the answer. It probably seemed like an odd question.

"Well then, what's this about 20 minutes without interruptions to give the presentations? That's not realistic. I don't think I've ever heard an investor actually listen to a pitch without interrupting. If you want it to be realistic, let us ask our questions when they come up."

"But that's not what we told the teams would happen. That's not what they prepared for."

"Aha, even better," another of the judges answered.  "Let's give them a real experience then. That's what we want, right? Since when don't things change at the last minute."

"And we could keep the playing field level, make that the same for all the groups," added another.

So it was decided. The rules of the game were changed. The teams were notified.

About an hour later, a team was two minutes into a presentation about taking fish taco restaurants into Baton Rouge. At the time they were common, and successful, in San Diego, but unheard of in Baton Rouge. But one of the judges interrupted.

"But do you know whether or not they like fish tacos in Baton Rouge?"

The presenter, prepared to be interrupted, said that was one of their assumptions. If they liked them in San Diego, they'd like them in Baton Rouge. No?

"Not necessarily. Have you cooked up a batch, and given them to people in Baton Rouge?"

"Well no, not ..."

"Here's what you should do. Make three or four trays full of them and go to the busiest place in Baton Rouge at lunch time on a Saturday. Give them all away. See if people like them. Oh, and by the way, be sure to check what happens in the trash cans on either side of you."

It was a good learning experience. In fact, it was the start of a great program at the Notre Dame Gigot Center for Entrepreneurship, one that has flourished since, and reaches its annual final event late next week. I think this will be the eighth year.

Yesterday I had to decline an invitation to judge the Notre Dame contest (again) later next week. I'm not able to make it from Oregon to South Bend this year to be there, although I did help with the screening last November. If you are anywhere around that area next week, I envy you; it's an excellent event to attend. Business presentations from teams with the ideas can be fascinating. And Notre Dame does two venture contests in one: the McCloskey Business Plan Competition, for traditional entrepreneurial ventures; and the Sustainable Social Venture Competition, for ventures combining entrepreneurship with social purpose.

I wish I could be there again this year.

Answering a Complaint: Arguing About Education

Answering a complaint: no I really don't think you need a business degree to start a company. I don't have any hard evidence that people who have degrees are more successful than people who don't -- although I have to admit I'd like to have that evidence. I do have very good evidence that people with degrees are more educated, on average, than those without. An education is good. Maybe it's not a direct line to more money, but it's still good. The opposite of education is ignorance.

The complaint was that I post too much about education. Don't I know, the critic asked, that lots of people start companies and become wildly successful without having degrees?  It seemed angry. There was some name-calling I edited out.

So, when a teenager in email says he's going to inherit a family company "so I don't have to get an education," I wince. I shudder. I answer "please, give yourself a break, get that education while you're young and it's easy, you'll be so glad you did." And I don't apologize for that.

I'd like to think my thread on education has been fairly consistent, and that my posts on the topic show pretty much the same opinions here.

Seriously, don't you agree with me? Do you really think any teenager is better off without more school?

Of course there are special cases. Hardship cases. Can't afford more school, have to work. And I wouldn't want to be insensitive to those exceptions. But the rule is, at least through college, if you have a choice, get the education. You'll be way better off. And not necessarily wealthier or more successful; not necessarily more likely to start and grow a company; just plain better off.

Quote from a bumper sticker: "If you think education is expensive, try ignorance."

I'm not saying you have to. I'm not even sure that you'll end up wealthier if you do, on average (although it would surprise me if that weren't generally true). I'm just saying you're going to be better off.

And I am saying, strongly, that it isn't about money. I hate it when people argue for or against education by comparing what it costs to the income differential it supposedly generates. I object to the line of argument that education pays for itself, because that puts the whole thing on a different level. Some things are good -- health, relationships, integrity, a clear conscience, and education, among them -- whether or not somebody can show that there's a provable monetary value.

I had a cynical older friend, who had the same MBA degree I have, and had it before me, who always referred to it as "a union card." He said it meant nothing except "you get to bill more." He was a good guy, a good friend, and I enjoyed his healthy cynicism. But I also liked what I learned in the classes.  And I've used it a lot since.

So at least I've also practiced what I preach. I studied what I was interested in, what I wanted to learn. I won't run through that here, my bio is there if you want it, but I followed the advice of a wise person who suggested, "choose your major as if you were going to die on the day you graduate." That was almost 40 years ago, and I still think he was right.

I've also remained consistent with that idea when advising my own children. The five of them have five undergrad degrees and two grad degrees among them, none of them in business. They made their own choices, but when they asked me, I always said "business is a trade. Get an education first, a general education, and then, if you want, you can learn  business."

So there. That's my opinion. I might be wrong.

Entrepreneurship Week at Stanford

One of the highlights of Entrepreneurship Week at Stanford is the documentary on the previous year's Entrepreneurship Week.  If by any chance you can't see the YouTube direct, click here for the link.

An Innovative MBA for Entrepreneurs?

David Miller at Campus Entrepreneurship has a very interesting post today about the Acton MBA founded by some University of Texas professors and entrepreneurs. Sounds like an innovative MBA program. That's at THE MBA for Entrepreneurs? — Acton.

A Session with Oxford MBA Students

Yesterday I had a delightful session with a group of Oxford University MBA students. This was at the Said Business School, an impressive new, modern installation near the railroad station.

The students were even more impressive than the installations. Bright, diverse, quick to ask questions, and engaged. The program has a heavy dose of entrepreneurship and, as you might guess, a very international flavor.

It's also probably the best one-year MBA program available anywhere. That timeframe, a single year, is unusual. And it's right there in Oxford, one of the best and most well-known institutions anywhere.

If you get into Oxford, the MBA program starts every September and finishes at the end of the following summer.

I first heard about it from Alan Gleeson, Managing Director of Palo Alto Software's UK subsidiary. Alan got his MBA there four years ago. Yesterday was my first chance to actually be there, and I was very impressed.

Reviewing Entrepreneurship Education

Paul Brown did a good review of various entrepreneurship programs last week in his story The Right Places to Learn Entrepreneurship in the New York Times. He quotes some of the highlights from Fortune Small Business, including recommended lists for MBA, online, undergrad, executive courses, family business, and social entrepreneurs.

These are good lists and offering good food for thought, but lists are lists. Their tires need kicking. For example, the beyondpinstripes.org list of green MBA programs I cited last month has Stanford and Notre Dame at the top of its US schools, but FSB leaves Notre Dame out of its social entrepreneurship lists. Yes, I'm biased. After a couple of days with Notre Dame's social entrepreneurship program last week, I mistrust a list of social entrepreneurship schools that doesn't include that one.

For the record, here's Brown's summary from the NY Times:

The best places for  learning online were Boston University, the University of Houston at Victoria, the University of Wyoming, and Western Carolina University.

For graduate school, the top places were Babson, Harvard, Indiana University, M.I.T., Stanford, Syracuse, the University of Arizona, University of California at Berkeley, the University of California - Los Angeles, the University of North Carolina at Chapel Hill and the University of Pennsylvania.

The top choices for executive education were Babson, Harvard, Northwestern, Stanford, the University of Chicago and the University of Texas at Austin.

And for family business, the best places were Babson, Baylor, Kennesaw State University, Loyola of Chicago, Northwestern and the University of Texas at El Paso.

The FSB site also has some interesting additional insight on entrepreneurship education, including Is it smart to go to school for entrepreneurship, which features stories  from nine entrepreneurs.

Measuring the MBA Degree

Is the MBA degree worth the time and money? I just caught another one of the every-so-often articles that uses economic analysis to show that an average MBA degree doesn't offer enough incremental money to pay for the income lost plus the expense of getting the degree.

Although it's a cheap trick, the analysis is amusing. One of my professors did the same thing many years ago when I was in business school. It assumes that two years of lost income plus two years of living expenses plus books and tuition will cost more than the incremental salary increase the MBA degree means for the rest of a career. It's not a hard analysis to do.   

This same analysis has appeared in the media every so often for at least the 30-some years that I've been watching, and maybe longer. These days of course it's as likely to appear in a blog. I think it reappears because it's not only amusing, it's also contrarian (always good for media), and there's something peculiarly satisfying about using classic MBA-like analysis to pop an MBA bubble. It's man bites dog. 

However, amusing or not, the analysis is aimed wrong. In my opinion, education isn't about money. It is about thinking, learning, asking, and understanding. People who study business seriously should do that because they're interested in it, not simply to get a higher salary.

Does that make sense? Can the study of business be academic, in the better sense of the word, like the study of literature, philosophy, science, engineering, and so on? Or is it necessarily a career step in the same sense as law school, or accounting?

Education should improve your power to choose and manage your life, which should mean more money, but it shouldn't be measured in salary alone. Do you care what you do? Are you interested? Do you want to have a better analytical understanding?

If high school didn't measure up in dollars, would you wish you hadn't gone? Would you not send your kids? What about a college education in anything but business? Is a literature degree (I own one) a bad investment? I grew up in the fifties and sixties when the United States was in the cold war and the space race and education was skewed towards science and engineering. Even then, competition notwithstanding, we still had lots of people in liberal arts. And, looking back, those educations were never meant to be measured in money.

Is business education an oxymoron? Can business be taught in a classroom? Good questions. I've posted here several times in the past on MBA topics .

When one of my daughters started at Whitman College in 2000, college president Tom Cronin told an auditorium full of parents that his institution was about education, not learning a trade. "That's why we don't teach business, or accounting," he explained. That's an interesting viewpoint. Can there be education about business, or is all business education learning a trade?

I'm father to five people, all of whom went to college, none of whom majored in business. When the subject came up, I advised them against a business undergrad degree. I told them to get "an education" first, during the four undergrad years, and leave business for later.

Maybe we should call the "A" in MBA "analysis" instead of "administration." Maybe the MBA degree is to business what a literature degree is to creative writing. If that's true, then you'd think the MBA curriculum would be for people who want to learn about business, investment, starting companies, managing people, managing organizations, group behavior, teamwork, and so on.

MBA Get Rich Quick and Easy -- Not

From a letter in yesterday's New York Times:

The M.B.A. program was never designed as a personal get-rich-quick plan. It's about entrepreneurship, building organizations and preparing for a lifetime of principled leadership in all kinds of operations — not just on Wall Street, but around the world.

For a significant number of young women and men, business school provides valuable knowledge, skills and perspectives that will transform potential into a real capacity for leadership. A rigorous M.B.A. education is an excellent long-term investment.

That's signed by Carl Kester, a finance professor and deputy dean for academic affairs at the Harvard Business School.  It's here as a follow-up to my posts MBA buzzwords and Reflections on MBA experience.

Here's the link to the letter, although it might require signing up for NYTimes Select -- which is now free, but presumably still requires registration.