The Elders and the Upstarts
The entrepreneurial elite and MBA students talk about building companies
The U.S. entrepreneurial boom is barely 10 years old, but it has already generated its own establishment an elite group that has built
high-profile new companies, funded them, and spread the small-biz gospel. Meanwhile, waiting in the wings is the next generation of
entrepreneurs, MBA students many from prestigious institutions who won't reflexively head for lucrative consulting jobs on graduation.
Increasingly, they're founding their own companies or throwing in their lots with entrepreneurs.
Business Week frontier recently interviewed six reigning stars and seven students from Massachusetts Institute of
Technology's Sloan School of Management for their perspectives on the small-business phenomenon. Here are the edited transcripts of those
The Entrepreneurial Elite
They helped define small business in the 1990s. Here's what they see for 2000 and beyond
CEO of Web site iVillage Inc. on how women entrepreneurs are changing the workplaceand vice versa:
"We're seeing more flexibility to craft individual identitiesto balance the various parts of life. We have people who leave at three
afternoon for a soccer game, then work at home on the Internet at night. Women have become more efficient because there's less belief
is the be-all and end-all of existence. At work, you get it done and get out."
Head of small-business lending at First Union, one of the biggest lenders to entrepreneurs, on borrowing:
"With the Internet, geographic lines are gone, and there's much more competition for the borrower's business. Already, we have to bid
business because of the emergence of electronic loan brokers. That's ultimately going to translate into better prices for
JOHN W. NEWMAN
Senior Lecturer at Babson College, a school devoted to entrepreneurialism, on information overload:
"Small businesses' strength has been their ability to respond quickly to the marketplacemuch faster than large companies. But extra
mean extra confusion. There's a risk of slowing down when they have to manage even more information."
JAKE J. WINEBAUM
Co-founder of the Internet incubator eCompanies on Net strategy:
"Everyone will be competing against each other. Five years from now, we won't be thinking of companies as Internet companies and
companies. There'll just be companies, and how effectively a company has integrated the Internet into its business will just be one of
we judge it."
Founder of Patricof & Co., an investment banking firm, on the future of Web business:
"There's going to be a crowding out of the dot.com companies. In the end, not that many will survive. Every business has to look at the
and ask, 'What impact will this have on our company?' We see the Internet not as an industry in and of itself but as a tool for
goods, services, and, most importantly, information."
President of the Kauffman Center for Entrepreneurial Leadership in Kansas City, Mo., on whether the small-business boom is for
"The interesting thing is going to be who gets hurt if we have a downturn. I believe it will have less significance for small businesses
for larger companies. That's because they're small, they're flexible, they can adapt. I don't see anything on the horizon that will
popularity of entrepreneurship."
back to "The Elders and the Upstarts"
A Conversation with Tomorrow
Seven MBA students at MIT offer their takes on the corporate world, the risks of entrepreneurship, and the importance of money
Getting an MBA from a prestigious institution used to be a rite of passage with a
predictable outcome, a ticket to prosperity and stability in Corporate America. These days, a top B-school is just as likely to be an incubator for the
next hot startup, a place where students get pumped up to take calculated risks. To understand how entrepreneurship is affecting the business leaders of
the next century, frontier went right to the source. We assembled a diverse group of second-year MBA candidates at Massachusetts Institute of
Technology's Sloan School of Management, ironically named after the late godfather of modern corporate management, Alfred P. Sloan, the celebrated
chairman of General Motors Corp. In truth, he might admire the students who talked to reporter Hilary Rosenberg about their futures and the role
entrepreneurship will play:
James Brewer, 37, Gary, Ind., spent 15 years working in the automobile industry and started a marketing services company for auto
Kathryn Cosgrove, 26, Needham, Mass., spent three years after college doing economics research at the Federal Reserve Bank.
Jim Hamilton, 30, Cranston, R.I., worked in high-tech marketing six years before coming to Sloan.
Kimberly Markert, 27, New York City, worked five years after college, first teaching high school physics and then serving as a project manager
at the nonprofit Association for Women in Science.
Reza Morakabati, 32, a native of Iran, logged nine years working as a software engineer for various companies.
Randi Rittenband, 32, Scarsdale, N.Y., spent three years in investment banking after college and an additional seven helping to set up
factories abroad for Victoria's Secret.
Michael Schulman, 29, Beverly Hills, Calif., worked as a portfolio manager for seven years.
Q: What are your goals now and what has led you in that direction?
Brewer: I ultimately want to have my own company. I think it's about making a difference, because I am a black American. It's something that's
typically not seen. And I'd like to be one of those who has the ability to show others that they can dream that dream.
Markert: I definitely want to do high-tech marketing. All the way back to college, it seems that I was always in an organization that was just
starting up. I got a job at IBM doing high-tech marketing last summer that was almost like a startup within a larger division because it was a new
product and I was in a very small team. It was a little chaotic, a bit of a struggle, but successful.
Cosgrove: I wouldn't feel comfortable going right into a startup, because I want to know how to keep it from failing. You can have an
entrepreneurial spirit within a large company and start a new division. We all have that goal, to have something that people identify with us, something
that we own and can look back on and say was successful.
Q: How are you influenced by the constant emergence of new companies?
Schulman: There is a lot happening with e-commerce, the Internet, expansion of the World Wide Web, technology, globalization. I think about when I
am much older and my grandchildren ask me, 'Grandpa, so what were you doing then?' I would like to say I created something.
Hamilton: The desire to make a difference and bring one's ideas to the forefront has always been there. But the practical reality today is you
can go out with your own idea and get money to try to implement it yourself. It might not be so easy to get the capital five or 10 years from
Rittenband: And we know how to do it. We know what paths we have to take. We know how to write business plans. We know how to get the money, we
know how to form a team, we know how to hire and fire.
Q: Do you consider it risky to start your own company?
Schulman: In this economy, you can have a failed startup and that's valued, because hopefully you've learned lessons, and the next time around you
can do it much better.
Cosgrove: I think that there's a safety net that's inherent in the American ideal, that we allow people to start over, and that if you don't
follow this regimented track, it's O.K., you can step out of bounds, do something crazy, jump back in.
Markert: People applaud attempts at entrepreneurship. Also, compared with the '70s, capital costs are really low, and so it doesn't cost a lot to
start something up. The Internet and technology take the cost even lower.
Rittenband: An entrepreneur has to know how to do a lot of different things--the marketing, the operations, the finance, the business plan. So if
you fail, people say, O.K., maybe there was something wrong with your idea or the timing or whatever, but ultimately, they recognize that that person
was able to juggle a lot of things and is very marketable.
Morakabati: It is a family decision. I've got my wife, a daughter. If a great idea comes along, I will think about it seriously. But it has to be
great. This is not a game.
Q: Is it risky, perhaps, not to learn entrepreneurial skills?
Cosgrove: People who worked at General Electric for 25 years had a harder time when they were downsized because they were too focused, whereas
people who had taken two or three jobs in different fields were O.K. They had a lot of different experiences and different social networks to draw on.
So in some ways it was almost a hindrance to have taken that steady job.
Q: How do your ambitions and attitudes differ from those of your parents' generation?
Cosgrove: My parents' generation followed a path. You graduated from high school, went right to college, then to a good company. Then you went to
graduate school and then back to a good company and stayed there. Now they're giving me the opportunity to explore different ideas.
Brewer: My parents moved from the south. For my father, ending up in a white-collar job was a big deal. He believed the company would take care
of him over time. Through the recessionary periods, a lot of managements did some irresponsible things, and a lot of people lost their jobs. Many of us
have realized it may not be possible to be there 30 years and get the pen and the watch. I think that's one reason why we chose to come to business
school and ratchet up our skill levels. So when the opportunities are there, we can take the reins rather than depend on somebody else.
Q: How important is it to become rich?
Cosgrove: I want to be able to be comfortable and not to have money making decisions for me. Reward doesn't have to be monetary. It can be the
respect and recognition of your colleagues.
Rittenband: Money can't be a driving force, because you can't go to work every morning thinking how much money am I making this hour of the day.
You think about what good is going to come out of my work, and if you're rewarded for that, great.
Morakabati: My father's goal was always the comfort and welfare of the family. For me it's the same. Money is important for that reason.
Q: Who are your business heroes?
Schulman: Richard Branson. He started out in England, where entrepreneurship is not looked up to as it is here, so he really broke the mold. He
has success in many different businesses. He's a master of marketing and publicity and the right niche.
Hamilton: My heroes are the people who are so right when everyone else is so wrong. They stand their ground and are finally vindicated. Scott
McNealy and Winston Churchill.
Cosgrove: I have a tremendous amount of respect for Alan Greenspan. Whatever you have to say, he listens to you, he factors in your opinion,
takes opinions from everyone, and then speaks.
Rittenband: I admire the people who do the right thing even when it's not clear that it's the right thing to do from a business perspective. The
president of Malden Mills Industries, when they had the fire, said he would pay his people even when critics said that was stupid. It's hard to mix
social responsibility with business because you don't really see how they mix. He made it work. If I had a company, I would want to have enough faith in
it and my people that I could do the right thing.
back to "The Elders and the Upstarts"
These articles were originally published in the December 6, 1999 print edition of Business Week's
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