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Note: This is the first of two stories on how college students are mastering the art of starting their own businesses while they complete their formal education.
Speaking from his office -- a converted shower-room in a former elementary school -- 20-year-old Vincent J. Pasceri reflects on the failure of his first two businesses, both launched when he was an undergraduate at Rensselaer Polytechnic Institute in Troy, N.Y. "I didn't have the time to do it," he says. "It was just too much."
Now a grizzled entrepreneur, Pasceri learned from his mistakes and pressed ahead. Last year, with two other students, he started his third venture, ProductivityNet, which has developed software to help teachers work with groups of students on a network. In May, the fledgling company won the Polytechnic's business-plan competition and $23,000, which will add to the "few thousand" that Pasceri had contributed from his savings. Homework, meanwhile, is not a problem. "The busier I am, the more organized I am," Pasceri says.
Welcome to the 21st century's version of the campus revolution. Increasingly, college students are trying to master a tough balancing act by starting and running businesses. While no reliable count of student entrepreneurs exists, they are surely proliferating. One indicator is the Collegiate Entrepreneurs Organization growth in just two years to 3,000 members at roughly 100 schools, with more than 10% of those students running businesses.
More evidence: Now in its third year, the North American Collegiate Entrepreneur Awards run by St. Louis University has 15 participating states, plus Canada and Mexico, each of which runs local contests and submits winners to the larger one. In 2001, it will operate as 15 regions covering all of North America.
BUSINESS BOOSTERS. At individual schools, professors express amazement at the development. "I get maybe four calls a week" from students seeking financing, says David BenDaniel, a professor of entrepreneurship at Cornell University in Ithaca, N.Y. "I know 75 to 100 students here who are fiddling around with businesses," says Fred Kiesner, Conrad Hilton Chair of Entrepreneurship at Loyola Marymount University in Englewood, Calif.
Driving the trend are the same forces that have powered entrepreneurship in general: the rise of the Internet, growing affluence, media hype, and increasingly available seed capital. And, of course, many college students have the technical literacy vital to today's startups. Beyond that, colleges themselves have become business boosters, offering students such new campus resources as entrepreneurship programs, incubators, and business-plan contests, not to mention a growing corps of alumni who are angel investors.
Not surprisingly, most student-run businesses are Internet-related. Typical is Nightfunk.com, an online campus events guide. In 1997 when Seth M. Cohen was a sophomore at Cornell and Michael A. Zivin was a freshman, they patched together a Web page to keep fellow students informed of local happenings. The following year, with $40,000 in money from friends and family members, they hired programmers to design a more professional site including events, bars, chat, and -- the item that pays the bills -- sales run by local stores.
LONG HOURS. The Cornell students launched the company in August, 1998, operating from their living quarters -- Cohen's off-campus apartment and Zivin's room in a frat house. Last year, they tested the Web site at six schools, and "it caught on very rapidly," Cohen says. Today, Nightfunk extends to 80 campuses, and its headquarters staff of 30 works out of an office near Cornell. Cohen, 23, graduated last year and Zivin, 22, graduated this spring.
Many student entrepreneurs don't actually turn the switch on their business until after graduation. But the process of developing a product, raising financing, and establishing initial customer relationships is as time-consuming as running a company. A case in point is Glow365.com, a Web business targeting prestige beauty-service providers that was founded last November by Cindy Palusamy, then a second-year MBA student at New York University's Stern School of Business, and Reema Shroff, a health-care attorney.
In the semester before graduation this spring, Palusamy, 27, spent up to 40 hours a week working on the enterprise, plus time spent traveling to meet with her partner and potential clients in New York, Los Angeles, and Boston. Her studio apartment on the Upper West Side was a flurry of course books for her five classes, fashion magazines, spreadsheets and cosmetic samples. The Web site will open for business in the fall.
"LIKE FIELD STUDY." Launching a business at school has clear advantages. For starters, student entrepreneurship makes the theory studied in class immediately real. "There's no better way to learn [entrepreneurship] than to experience it. It's sort of like field study," says Scott Belsky, a 20-year-old Cornell junior who operates Live Big Enterprises, which distributes sportswear bearing the motto "Live Big," with Princeton University junior Ben Grossman, also 20.
The rich stew of resources on campus also sustains business development. The budding entrepreneurs have libraries and technology at their fingertips, often with free research assistance. They can find mentors, advisers, and potential partners otherwise known as fellow students. And faculty often serve as liaisons to potential investors: The president of the Cornell Business Innovation Center, an advisory group run jointly by the school and the county for the benefit of local startups, introduced Nightfunk's partners to a nearby venture-capital firm that financed the company in partnership with another firm.
In recent years, schools have become quite specific about supporting campus entrepreneurship. Business-plan competitions, now numbering about 30, help students refine their ideas, get in front of venture capitalists, and meet partners. And if they win, they get seed financing.
NURSERY TIME. Just participating in these competitions yields dividends, by giving the student the experience of completing a business plan and an opportunity to attend seminars hosted by celebrity entrepreneurs. At Rensselaer Polytechnic Institute, top prize in the business-plan competition is $3,000, with a one-year option of an additional $20,000 if the winner decides to launch the company while still in school.
Incubators -- rent-free space that includes such amenities as conference rooms, phones, and business advisers -- are also becoming increasingly popular. Washington University has taken the unusul path of setting up a retail incubator where students like Gabe Moskoff can test out their ideas. Moskoff, 19, who just completed his freshman year, ran a used-CD store called See Deez in the afternoons and evenings four days a week. He used about $500 in savings and $500 from his parents to buy insurance, advertising, licensing, shelving, office supplies, and a stereo. For inventory, he contributed his own collection and cajoled friends to give up some of theirs.
"It was an awesome opportunity," says Moskoff, a disc jockey at the campus radio station. He says despite heavy competition from the Internet, where music is easily available, he will probably continue running the business next year.
More typical is RPI's incubator where Pasceri and his partners James R. Kazukietis and Shawn Pearce are running their company in 400 square feet -- some of it still festooned in the original shower tiles. In addition to providing office space and amenities, the incubator gives Pasceri something most entrepreneurs wouldn't think about -- a place to do homework where "my roommates aren't bothering me."
Hilary Rosenberg, a former assistant managing editor at Institutional Investor magazine, is a freelance writer in New York. She is the author of two books, The Vulture Investors and A Traitor to His Class, about shareholder activist Robert Monks
By
Hilary Rosenberg
in New York
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