College Startups: The 'New Master's Degree'
Reposted from Bloomberg Businessweek | by Di Meglio
As a student at University of Indiana’s Kelley School of Business, Derek Pacqué lost his coat at a bar, got angry, and came up with a business plan. He borrowed and saved $500 to purchase racks and hangers to start a coat check business at local hangouts.
CoatChex does not require patrons to keep tickets, which often get lost. Instead, someone at a kiosk photographs clients’ faces and coats with an iPad or smartphone and then uses their phone number and photos for secure pick-up. A paltry original investment eventually had Pacqué negotiating with—and turning down—a $200,000 offer from entrepreneur Mark Cuban on ABC’s Shark Tank for a 33 percent stake in the business. In the last two months, CoatChex earned $100,000.
“You go to school to get a job or an education,” says Pacqué, who graduated in 2011. “I went to college because I wanted to create my own career, to create something of value.”
Pacqué is among a new breed of undergraduate business students. Professors and classmates say they hunger to be their own bosses. More undergraduate business students than ever before are launching startups right after graduation—or sometimes while still at school, say administrators. A query to the top 20 undergraduate business schools asking for contacts with promising startups launched by students, or by very recent graduates, resulted in at least 100 responses.
The popularity of entrepreneurship courses is skyrocketing. For example, at New York University’s Stern School of Business, the number of undergraduate entrepreneurship courses has increased from two in 2003-2004, with 62 students enrolled, to seven courses, with 281 students enrolled, in 2012-2013. The school also introduced its academic track in entrepreneurship in 2012.
A desire to make a difference in the world is also a contributing factor, says Scott Stimpfel, assistant dean of student engagement and innovation at Stern. In fact, many of his students are pursuing social entrepreneurship, or at least getting exposed to it, as early as high school, he says.
The chances that a new company can withstand the test of time are daunting. The U.S. Bureau of Labor Statistics says only half of all new businesses survive for five years, and only a third make it to the 10-year mark—a fact about which many undergrads seem unaware. Many an undergraduate business student wants to be the next Mark Zuckerberg. Ted Zoller, director of entrepreneurship at UNC’s Kenan-Flagler Business School calls it the “Zuck Distortion.”
“He’s created a perception that anyone with a good idea can take off after school and become a billionaire,” says Zoller. “I wish that were true.” While Zoller encourages his students to follow their dreams and give their ideas a decent shot, he tempers their expectations.
“I’ve been very careful to say that entrepreneurship is not a panacea,” he adds. “It’s hard. It requires rigor, discipline, and serendipity.”
Despite the support, most business schools suggest that students shape a plan B for their careers. If students fail, they can always use the experience as a point on their résumé, especially if they seek employment from another startup, suggests Emily Cieri, managing director of entrepreneurship at University of Pennsylvania’s Wharton School.
The biggest reason more undergraduates are starting their own businesses, say administrators, is because school is the perfect incubator. It’s a time in students’ lives when they still don’t have families or mortgages tying them to more traditional jobs—and they have a protector: their alma mater. “Business school allows students to get their hands dirty and try out ideas in a nice, safe environment,” says Stimpfel.
This is not to say that you should expect these young people to run back for a graduate degree.
Ryan Edwards, co-founder and director of marketing and sales for CampusGrumble.com, an online suggestion box for students to gripe about whatever is bothering them at their university, started his business before graduating from Wake Forest School of Business in 2012. He says that coming out of college, he did not find the opportunities he thought he would have. He thought the business had great potential, so he opted to pursue it full time rather than stay in school.
“A startup,” he says, “is like the new master’s degree.”
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