From the Blackboard to the Boardroom
For more on this year's college entrepreneurship programs,
The business world has a love-hate relationship with academia. Plenty of industry titans mythologize their dropout status (see Bill Gates, Steve Jobs, Ralph Lauren). Others are so enamored with their alma maters that they drop hefty endowments and scholarships on B-schools around the country (see Lee Iacocca, T. Boone Pickens, Phil Knight).
The fact is, school is what students make of it--half of those who enter will emerge with a solid direction, and the other half will be as clueless about their next career move as they were when they started. During the last decade, however, many business schools have shifted away from the nebulous academic study of business and started to offer an unprecedented bridge between academia and the real world. With their increasing focus on entrepreneurship and programs for developing solid, marketable business plans, business schools are becoming the 21st century version of the legendary Hewlett-Packard garage. The cocoon of the business school gives students the chance to develop their ideas under the mentorship of some of the sharpest minds in the business world. In many cases, it also gives them a chance to fail without destroying their reputations or bank accounts.
The result? You're as likely today to find an entrepreneur who developed a business concept in the classroom as you are to find one who bootstrapped a startup in Silicon Valley. We spoke with entrepreneurs whose ideas successfully made the leap from academia about how an entrepreneurial education can be the first step in creating a dream business. --Jason Daley
1. A Charter for New Courses
In 1996, Peter Findley was three years into his degree at the University of Washington, and he was flailing.
"I spent a year as an engineering major, but that wasn't for me. I did a year of pre-med, but I didn't like that," he says. "So I applied to the business school, thinking at some point in my life it would be useful. Then I went to an open house and found the brand new Program for Innovation and Entrepreneurship. A light bulb went off."
The focus of the program was to create a viable business plan. After rejecting more than 100 ideas because he lacked capital or expertise, he decided to focus on what he knew: education and technology. From that, the idea Giant Campus was born.
Findley created a detailed business plan for a network of summer camps that would teach middle- and high-school kids new-media skills, including multimedia and web design, on college campuses. Not only did the plan help him earn his degree, it also earned him first place in a statewide business plan competition, along with $15,000 in seed money to launch Giant Campus.
Within five years, Giant Campus was running camps at more than 70 colleges, including programs in China, Hong Kong, Korea and Saudi Arabia.
Findley has switched away from camps recently and now focuses on creating online curricula for high schools, offering electives such as entrepreneurship, forensics, law and veterinary medicine. "There's a huge shift happening toward online education. Most schools don't have the manpower to deliver high-quality classes beyond traditional subjects," he says. "We can deliver fun electives and career prep courses that go beyond the core curriculum."
The model is working: More than 52,000 students took Giant Campus courses in 2009. Findley thinks he ultimately would have ended up in the education industry, but his business school experience put him in the express lane.
"I would have eventually found my niche," he says. "But school enabled me to figure it out in an institution with access to professors and business professionals. Universities are a nexus of knowledge--it's nice to have people to bounce ideas off of, especially when you're younger."
2. Guilt-free Gifting
Putzing around during a sustainable supply chain management course at Michigan State University's Broad College of Business in 2008, then-MBA student Sam Hogg opened his wallet and stared at one of several plastic gift cards he had received for Christmas.
"I thought: 'This is so stupid and wasteful,'" he says. "So I started to form this business model when I should have been taking notes."
The course challenged Hogg and his classmates to examine supply chain inefficiencies from creation to elimination, a deviation from the traditional supply chain rhetoric that focuses on the quickest and most cost-effective way to drive a product to market.
"This class taught us to think cradle to cradle. For example, at face value you may think an SUV is far worse for the environment than a hybrid, neglecting to consider the impact of battery disposal. There are costs in both use and disposal, and the answers aren't that easy. The same is true of gift cards," Hogg says.
In November 2008, he launched East Lansing-based GiftZip.com , an electronic gift card aggregation site that has the potential to dramatically downsize a wasteful supply chain.
"I looked at gift cards and saw that 75 million pounds of them go into landfills every year," Hogg says. "If people heard that, they would never buy another plastic gift card."
Since GiftZip's launch, usage has increased by 2,100 percent. "We're not at a scale yet where we can make a dent in the waste from plastic gift cards, but five years from now, who knows?" he says.
Hogg also used skills gleaned in business school to create his site, which places competing retailers next to one another--a model outlined by a marketing professor who suggested consumers are more likely to buy a product when given multiple choices, even if those choices sit next to competing brands.
"I thought maybe Macy's would sell more gift cards if they were right next to Target," he says. According to Hogg's retailer participation, which has grown from 120 to 275 retailers, the model works.
He continues to meet with and seek advice from multiple professors, and his classmates have helped promote his service. "We sent out e-mails to 110 of my classmates who are placed within some of the largest corporations and largest HR offices all over the country," Hogg says. "You don't need an MBA to start a business, but I couldn't have gotten that from scratching my head in a basement."
3. Elder Care for a New Age
Before and during graduate school, Megan Shea was helping her family manage the care of her aging grandparents, including relocation from their home in West Virginia to a Colorado independent-living facility. The process became all-consuming, and the challenges were top of mind when Shea started her MBA program's entrepreneurship elective at Babson College in Wellesley, Mass.
When it came time to pitch a business to develop, Shea dove into making the care-finding process easier for aging adults and their caregiver children, which sparked RetireLife.net. She hit on an exploding market: According to the U.S. Census Bureau, the population of people age 65 and older will zoom from 40.2 million in 2010 to 88.5 million in 2050. Market research firm Freedonia Group puts the annual elder-care market at about $192 billion.
RetireLife.net was one of 15 of 42 businesses selected for development by Shea's business school peers. She competed to get students to join her team and started roughing out a business plan. As she was doing research and touring care facilities, she mentioned to one facility owner her site's cost-comparison tool, which helps caregivers evaluate cost differences over time. When the facility owner wanted to purchase the tool, she knew she had a winner. "I knew I had stumbled upon something, but I was not quite sure how to proceed with it," she says. "That's where the resources and people at Babson came in."
After graduating in May 2009, Shea raised $79,000 from family and friends in July. She used Babson's free office space to get started, then moved into a larger space in a nearby facility in January. Two of her fellow students have joined her as partners in the company, which now has a database of more than 5,800. They will be rolling out a more national roster of services and information later this year.
Shea's close family relationship and experience with aging matters have motivated her. "My personal interest in helping families has really helped," she says. "If something doesn't go right on the business side, I can at least look at our traffic and say, 'We helped 500 families today find a care option.' That does a really good thing for my heart." --Gwen Moran
4. How to Print Money
Mike Zaya's approach to school was simple: get the hell out of there as soon as possible.
"I really wanted to just graduate and do business," says the Simi Valley, Calif., entrepreneur, who earned his bachelor's degree in business from California State University, Northridge, in a two-and-a-half-year blitz. "It was 1997 and I knew timing was a factor; everything online was brand new. But I knew I had to go to school to be able to do what I really loved."
In fact, that brief college career is what pushed him to come up with the plan that eventually became 123Inkjets, a company he sold for almost $20 million in 2005.
"Every time I received an assignment, no matter the class, I'd work on my business plan," Zaya says. "If it was a philosophy class, I'd write on the philosophy of business. Every time I wrote out my thoughts and my teachers critiqued them, they got a little better."
As he refined his plan, Zaya decided he wanted to create an online business with low shipping costs, simple products and items he could sell at discounted prices. Remanufactured printer ink seemed to fit the bill perfectly. By the end of his college career, Zaya was able to present a final business plan for his concept in a marketing class. (He got an A-; the professor thought the scheme was too aggressive.)
Armed with a diploma, his idea and $500, Zaya set up in his mother's spare room and eventually grew 123Inkjets to 250 employees based in a 20,000-square-foot facility in Simi Valley before cashing out to ValueClick.
Zaya now has his hand in half a dozen businesses, but, along with his friend Seth Staszower, is concentrating on PrintRunner.com , an online design and printing service. And he's still constantly refining his plans.
"What college taught me was to be a disciplined researcher and studier of others," he says. "There are so many successful older people out there who want to give to the next generation. We just need to read them." --J.D.
5. The Chicago Way
Chicago is no Silicon Valley. Big-time investors don't clot Lake Shore Drive the way they do U.S. 101. That lack of a venture capital scene is one of the challenges three students from the University of Chicago Booth School of Business encountered as they nurtured the idea that became ReTel Technologies.
"Chicago is still nascent as a VC stream, and in particular there is not a lot of technology expertise," says ReTel CEO George Aspland, who with classmates Adam Rodnitzky (CMO) and Scott Roberts (CTO) founded the company in October 2007. "And we had no track record."
In 2006, Aspland and Rodnitzky knocked around ideas for starting a business and settled on a company that would use RFID to track shopping carts throughout retail stores and provide retailers with hints about customer shopping patterns and buying decisions. That idea didn't fly and later morphed into the concept of using cloud-based crowd-sourced analytics to review in-store video footage and assess buyer behavior.
Developing their concept through 2006 and 2007, the would-be innovators took advantage of university life in different ways. They used offices and computers through the internship program at the school's Polsky Center for Entrepreneurship. Aspland shaped his schedule around classes that would help him deal with various aspects of getting the business off the ground. Rodnitzky, having committed to start businesses instead of participating in the typical business school corporate recruiting circus, had more free time to massage the business case.
The entrepreneurs were helped along by advice from numerous professors, but most immeasurably by Linda Darragh, clinical associate professor and the director of entrepreneurship programs at the Polsky Center. "She was great in helping us network, introducing us to people left and right," Aspland says. "She got excited about it and wanted us to succeed as much as we wanted to succeed."
All that work culminated in winning the $50,000 prize at the 2007 Midwest Venture Summit University Business Plan Competition. ReTel later landed a $15,000 Illinois Technology Association Grant and went through the TechStars mentorship program. Those wins were the ticket to more funding, from Chicago's Hyde Park Angels fund, and got ReTel noticed by Silicon Valley VCs, several of which participated in a $1-million funding round in December 2009.
ReTel's success thus far is helping Rodnitzky repay another resource he leaned on while at business school. "Being able to work on this idea while I was on financial aid really helped," he says. "Now, I need to pay it back." --Dan O'Shea
6. A Hub of Online Innovation
Serial entrepreneur Dharmesh Shah was taking a break from running companies and pursuing his MBA at Massachusetts Institute of Technology when he met Brian Halligan. Both had backgrounds in the software industry, and both had plans to launch new companies after they finished their degrees, creating a software platform for the small-business sector.
After using an MIT project as a test to see how they worked together, they hatched the idea for HubSpot.com in a New Enterprises class. The idea came from a typical small-business conundrum, Shah says: There are so many new tools to connect with customers, but few are able to master and manage the technology available to them and fully leverage the power of the web.
"People were learning a bit about Google and putting a blog out there," Shah says. "But the technology was just too hard."
Fortunately, HubSpot.com's birthplace on the MIT campus offers rich technology and business resources on which fledgling companies can draw. As the idea grew, Shah says he and Halligan wanted to "rub the MIT brand all over us." They tapped the intellect and input of the best minds on campus---including those of Edward Roberts, chair of the Entrepreneurship Center at MIT, who became an angel investor (the second investor after Shah's own $500,000 investment in seed money from the sale of a previous company).
Today, the company, which started in 2006, has 2,000 clients and more than $10 million in annual revenue, with a growth rate of 300 percent in 2009.
But Shah and Halligan haven't ventured far from their roots. They still rent space for HubSpot's 110 employees--14 of them MIT alumni--next to the campus in Cambridge, Mass. --Gwen Moran
7. The Water Track
Warren Paul Anderson was conducting research for his master's degree in environmental and sustainability management at Harvard University when he realized that relatively little is known about water consumption in commercial, agricultural and residential sectors--an important problem, given World Health Organization estimates that 1.1 billion people did not have sufficient access to clean drinking water at the beginning of the decade.
Anderson founded Hydrolosophy to change that. His company created software that companies can use to monitor and reduce their water footprint by tracking water usage and spotting inefficiencies. "We drastically need to improve the way we approach water, but we can't improve anything until we have data to work from," he says.
Harvard and its environment played a key role in enabling Anderson to start Hydrolosophy. In just less than a year and with little funding, Hydrolosophy has a prototype set to launch in the first quarter of 2010. He tapped into the alumni and student networks and surrounding universities to recruit a software team. University advisors and Harvard's intellectual environment provided a sounding board and other business students with whom Anderson could discuss and refine ideas.
Hydrolosophy's ultimate goal is to create a platform that auxiliary water monitoring services can be plugged into to aggregate data and provide a dashboard for CIOs, investors and water resource managers. If everything works, the company's technology could help companies save money and reduce water waste--all while executing on a business model with its philosophical roots in environmentalism. Says Anderson, "People will respond to numbers." --Alex Lindahl