An Interview With Columbia Business School Dean Glenn Hubbard

Do you think business schools are being too generous with their fellowship aid to applicants?

It’s an arms’ race. Harvard has infinite resources. We don’t and our other peers don’t but I do think at these price points we have to think harder about how to bring the cost of our programs down. When I filed our long-term budget with the trustees, I told them I am decelerating our tuition increases because I just don’t think they are sustainable. Which means I am going to have a different model. We will have other revenue streams and work harder at getting our costs down. Law schools are going to see this in spades. They are in trouble.

Let’s switch gears and talk about one of the interesting initiatives you’ve started at Columbia: on innovation and entrepreneurship. Silicon Valley surely has an advantage on you here.

New York has become a very entrepreneurial, startup culture. If you look at fundraising in the venture world, New York is actually number two behind Silicon Valley. People think about Boston and Boston is not even number three. It’s behind Austin, which is number three. Columbia is going to ride that. I think that is going to be a big deal for us.

Entrepreneurship has become extremely popular on a lot of campuses. How come?

I think it’s micro factors and macro factors. With the financial crisis and all the dislocation that has occurred, I think students are taking a harder look at the kinds of industries and occupations. Some of the industries they thought were very secure are actually highly variable so why not think about entrepreneurship. This is a generation that is very into that.

Generally it’s only five percent of MBA graduates who go out and do startups. That’s true at Columbia, right?

Yes. Some of the business people who are on my board have as a goal raising that number. I don’t. Stanford has probably done the best job of studying longitudinal data on its graduates and typically finds they become entrepreneurs after ten years. Sometimes, somebody will have an idea in business school. But mostly what happens is you go to work for McKinsey and you work in this industry and then happen to notice something is being done wrong at each of these firms and maybe you have an idea to do it better. That is really where most entrepreneurship comes from.

I don’t think you can turn someone into an entrepreneur. What is teachable is how to identify opportunity. But it doesn’t mean I can give you an idea while you are in business school or that you are necessarily going to have an idea. I don’t really care about whether it is five percent or whether it is three. I just want to make sure we are giving students the equipment they need so that down the road. So when the ball does come across the plate in their strike zone, they know how to hit it. That, to me, is a more realistic goal. I think the fact that New York is becoming more ingrained in an entrepreneurial culture will really help. Even though our students come from all over the world, New York culture is very much a part of our life and our DNA. So I think that is going to make a big difference for us.

So what are you doing in entrepreneurship that is different from other schools?

What I told the students is that some of the most interesting business ideas at Columbia are not in the business school. They are coming from a junior faculty member in life sciences who has a therapeutic innovation or somebody in engineering who has a computer science knockoff. Those people often need the help of business people. So the thesis of Innovation and Entrepreneurship (IE) is that anybody with a Columbia ID, from President Bollinger to a janitor, can submit a business idea. Anybody who would like to work in a startup can post their interests. We have an electronic sort of marriage machine that brings people together. TWe run a competition and this year’s event took 102 ideas that came in from engineering, medicine, journalism and business. We winnowed them down to 16 using some outside venture capital judges and faculty. And then we worked with those 16 and it’s a way for the whole university to make bigger strides in entrepreneurship.

Is this an incubator model?

I would call it closer to faculty mentorship. If you are accepted into IE, you take some classes we offer. So if you are a asst. professor of medicine, you will be taking some Saturday classes with entrepreneurship faculty, including me for the finance part. The goal is to bring the entrepreneur more up to speed about basic business principles. The other part of the mentorship is then to help match the entrepreneur with others who want to work in startups across the university.

The interest in entrepreneurship is very high. The seat miles in entrepreneurship electives is as big as finance which people find very strange for a business school like Columbia. But not all these people want to start a business. Many of them, though, would like to be part of a startup culture. So while it also provided this access to these good businesses, it’s also an employment issue for our students. We do separately have something we call Columbia Business Lab that we started last year. We rented some space on Varick St. and had a competition for graduating students and 22 of those ventures, again selected by faculty and VC judges, got space for one year in the business lab. We are just now having a competition to replace them.

The graduates who went there got an obvious thing and then they got something less obvious. The obvious thing was a year with no rent. But the thing that they really benefited from was they started to learn from each other. They face similar challenges and may have some common interests. That alone has been big. We’ve had four of the groups already leaving because they got funded and moved to their own space.

All this brings to mind a central question given the decline of Wall Street in recent years: Does Columbia need to reduce its dependence on finance?

I’m not trying to increase it or decrease it. What I want to make sure is that we feel we are training business leaders. To my mind, you can’t be a great school if you are an X school and you can fill in the blank, whether it is marketing or finance. Because of who we are and where we are, finance is always going to be important for us. But we should be investing to make sure we are the best general management program first off. Many of our students actually leave finance once they start. A typical pie chart for us is that half go into finance when they come out. But if you look a decade later, it’s more like 33% so they are going to other things and we need to prepare them for that. And the financial services industry will be smaller in the next ten years.

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