April 5, 2017
Wall Street Journal
Millennial entrepreneurs are starting to hear an unlikely piece of advice when their ventures stall: consider an M.B.A.
Graduate business programs from Columbia University in New York to University of California at Berkeley’s Haas School have spent millions of dollars building innovation centers and creating venture-capital funds in recent years. They are adding new courses and deploying industry veterans to teach, all in an effort to recruit more would-be founders.
A quarter of prospective M.B.A. students aimed to start a business in 2015, according to the latest Graduate Management Admission Council survey, up from 20% in 2010. Even so, academia has been slow to adapt, with fewer than 10% of graduate business programs offering degrees in entrepreneurship last year, according to the Association to Advance Collegiate Schools of Business.
The ballooning resources for student ventures reflect a streak of opportunism among young entrepreneurs in need of funding and university admissions officers, who can proudly plug graduates’ startups on their schools’ websites. Some administrators hope the growing interest among millennials to create companies—rather than pursue traditional post-M.B.A. careers like investment banking—will reinflate a shrinking pool of applicants to U.S. business schools.
“More of our students have started multiple businesses already by the time they arrive,” said Sara Neher, assistant dean of admissions at the University of Virginia’s Darden School of Business. “For those that have failed, when they talk to us about why they’re applying, it’s often ‘I didn’t have the business skills to make it work.’ ”
Ahead of the pack, Darden admissions officers now host M.B.A. recruiting events at startup incubators in New York City, San Francisco and Washington. The school pitches perks like free tuition for a handful of seasoned founders. Recruiters also are using social-media platforms like LinkedIn and Facebook to target prospective students, searching profiles for terms like “founder” and “entrepreneur.”
Once they are on campus, student entrepreneurs can enter competitions for seed “money with no strings attached,” said Ms. Neher.
Tapping into the market of hopeful founders, the University of Texas in Austin’s McCombs School of Business invites prospective students to a ‘Shark Tank’ style pitch competition for as much as $20,000 in scholarships to cover tuition. Annual applications have doubled to 30 since the scholarship’s 2013 launch, and all but one of the nine total winning entrepreneurs has chosen to enroll.
Business degrees have become an easier sell for would-be founders as schools now teach how to grow small businesses, in addition to managing large ones, said Steve Blank, an entrepreneur and lecturer at Haas and Columbia’s business school.
Rena Pacheco-Theard applied for a master’s degree in business at Massachusetts Institute of Technology’s Sloan School of Management as the company she started with her husband Dan Driscoll floundered.
“I knew I wanted to do work with high social impact, but the business side of my resume was missing,” said Ms. Pacheco-Theard, who had a graduate degree in public affairs at the time.
During her second semester at MIT, she started a new venture called Prepify, which provides test preparation services to low-income high schoolers. She used roughly half of her business-school class time to fine-tune the startup’s model. She left MIT last spring with a degree, a co-founder classmate and a total of $15,000 in funding from the school. “Becoming a real entrepreneur became a distinct reality for the first time at Sloan,” said Ms. Pacheco-Theard.
Administrators say the hard part isn’t always recruiting, but getting students to focus on schoolwork—especially at programs like Stanford University’s, where roughly 15% of each class launches a business shortly after graduation.
Instructors can tell when students are devoting too much time to their startups, said Garth Saloner, a professor who, as the former dean, overhauled Stanford’s M.B.A. curriculum to focus more heavily on leadership and communication. He said he can see the passion in their eyes. But when they fail, as many do, he said it breaks his heart because “they could have been learning how to avoid those mistakes in class.”