One variable Newton doesn't analyze, however, is how effective schools are at developing entrepreneurs who start successful businesses. That's because few schools do a good job of tracking students after they leave. "We've had thousands of students go through, and it's hard to state with any accuracy the results of the program," says Raman Chadha, executive director of the entrepreneurship center at Chicago's DePaul University.
There is no shortage of anecdotal evidence, however, as all schools can point to alums who have started and run successful ventures. That kind of evidence can turn skeptics into believers. "Originally, I had the viewpoint that it's difficult to teach entrepreneurship and have an impact on the likelihood that someone will become an entrepreneur," says Chadha. "But I've changed on that."
He'll get no argument from Jeffrey Betz. Betz and fellow students Cecilia Domingos, 27, and Michael Lobsinger, 33, invented, designed, manufactured and created a plan to sell attractively styled inflatable life jackets as part of an assignment in Rensselaer Polytechnic Institute's graduate entrepreneurship program. Today, 3-year-old Orca Gear Inc. of Troy, New York, is getting widespread praise for its products, and Betz, the 30-year-old COO, projects $1 million in 2005 sales.
"Our story definitely supports that you can learn entrepreneurship," says Betz, who earned his MBA in 2003. To get their product off the ground, the trio used cash won in business plan competitions for initial funding, tapped professors for consulting and got free help developing a prototype from local companies. "For the first two years, no one really charged us anything," Betz says.
Encouraging anecdotes like Betz's aren't the end of the story--while few programs can say for sure how many and what kind of entrepreneurs they produce, some have made the attempt. Iftekhar Hasan, acting dean and interim director of Rensselaer's entrepreneurship center, says that about 1 in 6 of its entrepreneurship graduates start and run businesses successful enough to attract significant funding. "Fifty percent of the students say they're going to start something," Hasan says. "But about 15 to 20 percent have successes three to five years after graduation."
The University of Houston's Center for Entrepreneurship and Innovation reports 35 percent of its more than 300 graduates are running their own businesses, and all who began ventures stayed in operation for at least two years. "Does that mean they are better off with this program than without it?" asks Daniel E. Steppe, director of the center. "We don't know for sure, but when we talk to people who have succeeded [without the program], they wish they'd had it when they were starting."
Perhaps the only way to say for sure would be to compare the experiences of entrepreneurship students with those of other business students. As it happens, just such a study was published in 2003. The "Impact of Entrepreneurship" study compared 105 graduates of The University of Arizona's entrepreneurship program with 406 non-entrepreneurship business school graduates and found that the entrepreneurship grads were three times as likely to be self-employed and three times as likely to be somehow involved in forming new ventures.
"I'm a firm believer that it works," says Gary Libecap, co-author of the study and director of Arizona's Karl Eller Center. Not only do entrepreneurship students start more companies, but they are also more successful at it. Sales and employment growth of companies owned by or employing entrepreneurship graduates was more than five times the rate of other firms. Want to hire such a paragon? Get ready to pay--the study found entrepreneurship graduates working in large firms earn, on average, $23,000 a year more than non-entrepreneurship business graduates.
Odds are, however, the best students won't be interested in coming onboard. "I didn't want to work for 'the man,'" Seton Claggett says, explaining why he started TriSports.com LLC, a Tucson, Arizona-based online retailer of athletic gear, after graduating from Arizona's entrepreneurship program in 1998.
"I learned a lot," says the 29-year-old, whose 10-employee business projects between $5 million and $10 million in sales in 2005. Studying business planning and getting advice from professors and other alumni--especially while getting underway after graduation--top Claggett's list of benefits he got from his studies. "If you paid someone for that information, it could cost you a fortune," he says.