For an Entrepreneurial Edge, Go to B-School?
An MBA sure is expensive, but many grads say the skills, experience and network you get are worth it
When Scott Kucirek left the U.S. Navy a few years ago, he wanted to
do one thing really badly -- start his own company. A helicopter pilot,
he had plenty of guts. But Kucirek was short on managerial skills and business
So he enrolled at the University of California at Berkeley's Haas School
of Business with the goal of founding and launching his first startup by graduation.
Now a second-year MBA student, 33-year-old Kucirek and classmate
Juan Mini are forming an Internet real estate brokerage, zipRealty Inc.,
with an eye to a July launch. They could never have gotten so far so fast
without B-school nurturing, Kucirek insists. He hashed over the idea in
class. Fellow students did hours of market research for free. The Haas
School's business incubator, which this year lent computers and office space to
six student ventures, has kept costs to a minimum. Best, the Haas
name gave Kucirek and Mini entrée to a prominent Silicon Valley lawyer
-- now a company adviser -- who offered to help them find venture capital
when they were ready. "Networking is everything," says Kucirek. "There's a
huge network of Haas entrepreneurs, and they help you learn faster."
Such sentiments are driving the hottest area in B-school these days.
To satisfy student demand, the University of Chicago's Graduate School
of Business increased openings in its entrepreneurship courses by nearly
40% -- to more than 1,200 last year. At Harvard business school, 90% of the Class
of 1998 took at least one course in starting a business. Since 1995, Northwestern's
Kellogg Graduate School of Management has boosted faculty at the school's
eight-year-old entrepreneurship program to 13, from 3. And New Product and
Venture Development is the fastest-growing managerial track at Massachusetts
Institute of Technology's Sloan School of Management. "At orientation,
when I ask the incoming class how many would like to start their own company,
almost all 350 hands go up," says Ilse Evans, director of Sloan's career
development office. "Today, the issue isn't whether students will, but
What's driving them? The astounding success of such high-tech entrepreneurs
as Bill Gates, Michael Dell, and Palm Computing Inc. founders Donna Dubinsky
and Jeff Hawkins. Or perhaps it's the lure of striking it rich from an Internet initial
public offering. Still, the price would-be entrepreneurs pay for
this two-year crash course is daunting -- considering people have
learned how to start businesses by "just doing it" since commerce began.
Annual private or out-of-state tuition at Business Week's Top 25 B-schools now
B-schools are sensitive to the money issue: It's one reason why many are
pouring so much into such features as incubators and school venture-capital
funds, which get students' businesses off the ground before they leave
the nest. "It's worth more than $130,000," says Kucirek of his education. That
figure includes tuition, living expenses, money he put into the business,
and two years of foregone income.
Even B-school administrators admit that no academic program can teach
you what it's like to hire and fire people, weather cash crunches, and
manage an employee-benefits package. What's the real virtue of such programs?
They help students avoid costly but common pitfalls of startups, B-school
defenders say. "Most of today's successful entrepreneurs that you read
about -- the Bill Gateses are the exceptions -- fail five, six, seven times
before they've succeeded. Providing people the tools and teaching them the
techniques to run their businesses profitably off the bat -- that certainly
is well worth the investment," contends Thomas E. Moore, dean of Babson College's
F.W. Olin Graduate School of Business. The Babson Park (Mass.) school is a pioneer in entrepreneurial training.
Not everyone is convinced. "It's one thing to learn about business.
But it's another to conduct it," says Lance Chastain, who founded his company,
Interex Inc., a computer peripherals and accessories manufacturer, at 19.
Sixteen years later, his business employs more than 100 people and has
over 50 million customers. He attributes his success to on-the-ground
experience -- for example, developing his supply chain with manufacturers
in Asia. "You just can't learn that in a book," he maintains.
REAL-WORLD KNOWHOW. B-schools are getting better at marrying theory with hands-on learning.
Increasingly, they use entrepreneurs and venture capitalists to inject
real-world insight into classwork. Harvard, which claims
to have offered the first course in 1947 on running one's own venture,
has updated its vaunted case-study curriculum to include some 26 examples
fresh from Silicon Valley. At Babson, where 8 of 21 faculty members
have founded companies, all first-year students work as consultants for local companies. To earn an entrepreneurship certificate at Haas, a student
must spend a summer as an intern at a young company and help develop a
Many top MBA programs offer business plan competitions, where students
with compelling ideas vie to win cash and other resources to turn their concepts into real companies. One of the best known, Massachusetts Institute of
Technology's $50K Entrepreneurship Competition, has spawned 35 companies
in its 10-year history. Over three months, teams of students submit business plans
repeatedly to a panel of angel investors, venture capitalists, and businesspeople, who eliminate contestants during each round. Three winners split $50,000 in cash and receive business services.
Alexander Kleiner III, a 1998 Sloan grad who entered (but didn't win) the contest, used it to get free feedback for the idea behind the company he launched after graduation, Frictionless Commerce, which makes software to help Internet shoppers compare products. "Going through the competition
really gave me a risk-free environment to practice, do a lot of market
analysis, strategizing, and grunt work that I don't have time for now,"
he explains. The University of Arizona's Eller Graduate School of Management
considers such efforts so valuable that it requires all its entrepreneurship
students to enter the school's competition.
Babson, University of Michigan Business School, and Columbia Business
School -- to name a few -- have established venture-capital funds in recent
years to invest in student startups, a potentially lucrative move for
the institutions. Founded in 1996, Columbia's Eugene Lang Entrepreneurial
Initiative Fund has invested $250,000 in each of two promising student
companies. "We put students in front of experienced entrepreneurs and capitalists
for the purpose of vetting student ideas and telling them where the ideas
make sense and where they don't," says Murray Low, an associate professor
and entrepreneurship program director at the school.
INCUBATORS. The University of Texas at Austin, Berkeley, and Babson take a different
tack -- sponsoring incubators to jump-start student-run ventures. Haas's Kucirek says the school's incubator has a professional atmosphere, which lends credibility. He pays almost nothing for his three computers, rent, telephone, and Internet connections. And, the students swap lore.
"I now know, for example, which is the best law firm and where to get
the best deal on business cards," says Kucirek.
As eager as they are to promote their entrepreneurial programs, one
thing few B-schools stress is how many graduates start their own companies.
The available figures suggest a mixed record. At Berkeley, 150 of
240 second-year students enrolled in at least one entrepreneurship course
in 1998. But, says Laura Tyler, director of the school's career management
services, "There are probably about 10 students graduating this year who
are truly starting their own businesses." At Stanford -- in Silicon Valley,
where startup fever runs high -- a mere 5% of the Class of 1998 founded
The picture changes over time. At Carnegie Mellon, 30% to 40% of
grads start their own businesses five years after graduation. And more than
33% of Harvard's alumni end up running their own companies 20 years after
Some schools encourage newly minted MBAs to wait. Says Tom O'Malia,
director of USC Marshall's Greif Center for Entrepreneurial Studies:
"We encourage our students to take jobs where they can learn on somebody's
nickel, assuring a greater chance of success when they embark on their
The financial incentives are compelling: After two years without an
income and student loans to pay back, it's hard to reject a lucrative corporate
offer for the penury of an entrepreneur's first years. A Harvard B-school graduate's average compensation package was $163,800 last year,
for example. With many big companies looking for enterprising types to
launch aggressive little ventures, the options are less clear-cut.
Wherever grads end up, entrepreneurship programs have a growing fan
club. Even skeptics admit that the alumni networks that come with an MBA
are golden. "Ten to 15 years ago," says Columbia's Low, "we didn't
know how to [teach entrepreneurship]. Now, classroom experience is
being combined with pursuing real ventures. That makes a difference."
It's becoming gospel to people who want a fast track to becoming their
By Nadav Enbar in New York
TABLE: What Top B-Schools Offer Entrepreneurs