The startup exercise is part of a new yearlong course for first-year students layered on top of Harvard’s required core of ten courses. Known as FIELD (Field Immersion Experiences for Leadership Development), the three-part course is designed to cultivate intelligence in leadership, global business, and the integration of business disciplines. The experiential course is a major departure for Harvard where business has long been taught almost exclusively via case study discussions in class. “The core motivation is that there are many ways of learning—thinking, reflecting and doing,” says Moon. “We wanted to reset our teaching equilibrium.”
The goal of this final third part of FIELD isn’t to encourage students to become entrepreneurs. Instead, it’s to allow MBA candidates to apply the knowledge they have learned during their first year of study at Harvard. “I want to be really clear,” adds Moon. “A misperception would be for the world to think that we want the next Facebook to come out of HBS. In fact, we tell our students that if you are a budding entrepreneur and you have a great idea that you think will be the next Facebook, don’t use it in this. This is a learning exercise that allows you to experiment in a relatively risk free environment. You’re given the resources, talent and time to go through the motions of a startup enterprise. The idea is almost secondary. And that’s the spirit in which we’re doing this.”
SIX-PERSON TEAMS WERE ASSIGNED IN JANUARY TO START THE EXPERIENCE
The experience was kicked off in late January when Harvard’s roughly 900 first-year MBAs were assigned to six-student teams, given $3,000 in seed capital and told to brainstorm business ideas. The only guidelines set by Harvard were that there could be no companies that created or sold weapons, pornography, alcohol or tobacco and none offering financial advice.
By mid-February, the teams had to pitch their best ideas to a different section of 90 students in their class. After those pitches, Harvard opened up a simulated stock market where students, acting as investors, began trading on the startup concepts. For the next 24 hours, each student had $100,000 of virtual money to invest in any of the business concepts they heard.
“Their ideas were basically being evaluated by their peers so they are getting instant feedback on their viability,” says Moon. “By the end of the first 24-hour period, we had some shares trading at close to $300 and some that were essentially penny stocks. The market spoke. We executed more than 20,000 trades in the 24-hour period. It was phenomenal. Some had to assess why their ideas weren’t well received. Maybe it was poor communication. Maybe it was a poor idea.”
ONE MBA BEGAN SHORTING STOCKS AND PARLAYED $100K INTO $2.4 MILLION IN VIRTUAL GAINS
There also were some unintended consequences. One Harvard student, steeped in high finance, began shorting stocks during the simulation and parlayed his $100,000 in virtual money into $2.4 million. In fact, as many as 18 students began shorting stocks. “About half got hammered and half made a lot of money,” says Alan MacCormack, an adjunct professor at Harvard and one of the faculty designers of the experience. “Nobody did anything illegal, they just adopted extreme positions that were allowed by the software.”
The teams used the early market reaction to decide whether to move forward with the launch of their businesses or to “pivot” and refine their idea to make it more commercially appealing. “If you had a dog stock, your team is pivoting like crazy,” says Moon.
That was initially the case with Yenta. “At that time,” recalls Saskin, “our group hadn’t hammered out all the details. If you asked all the team members what was Yenta, you probably would have gotten six different answers.”
By the time Harvard reopened the stock market a month later in March, each of the teams issued investors updates via an investor relations website. Yenta did better, trading in the range of $40 or more.