Let’s talk about the future of the Rock Center and Harvard’s entrepreneurship program. What are two or three of the biggest developments that we can expect in the program in the next few years?
Gernon: One thing that I think is really exciting is the moving of the School of Engineering and Applied Sciences to be across the street from HBS. I’m an engineering undergrad. If you can team up the technical world with business school students, they can look at technology and figure out how to take these ideas and build them into a new business. I also think the proximity and the growth in investment going on over there is just going to create more opportunity for HBS.
Eisenmann: What I would add is the alumni engagement efforts like the New York City [Startup] Studio. Once we get the studio working, we’ll be able to plug current students into the programming of the studio. We’ll have 10 teams (We have nine right now) and it’ll grown when we move into bigger space. And those teams will be natural places to have internships. We have the Rock Summer Fellows that Jodi talked about before. Now, we’ll have a director of the studio in New York City who can plug the New York Rock Center fellows into internships and find mentors for them. So this synergy that we’ve talked about between our alumni and our current students gets stronger and stronger as we boost our alumni engagement programs.
Let’s say a stranger came up to you and asked, “Is an MBA a worthwhile investment for an aspiring entrepreneur?” How would you answer that question (and why)?
Gernon: I would definitely say yes. First of all, not everyone decides to be an entrepreneur in their early 20s when they’re right out of undergrad. They’re still trying to figure out which way is up…It’s not even when they get out of business school. It’s when they get out into the real world and see opportunities that they want to take and launch as an entrepreneur. If all you want to do is be an entrepreneur, you might be able to argue that you don’t even need to be an undergrad. What I think, as an MBA, is to go back to what HBS teaches you. It’s really to think, it’s not just the day-to-day execution, but also the longer term execution, planning and strategy. I’ll have to say this too: The network you can tap into for advice, opportunities and connections can be huge. So it’s an individual choice, but I can’t see what you wouldn’t gain by getting your MBA.
What do you see as the three keys to success for student-launched enterprises?
Gernon: A predictor of success is first-and-foremost perseverance. Starting a company has a lot of ups-and-downs. It’s those students who take those downs and figure out how to overcome these issues and don’t give up who tend to be most successful. I think they look at failure as a chance to learn rather than just, ‘Oh, my idea is bad.’ The second key success factor is a willingness to learn and change and go with the market and where it’s taking you. It really is a mindset and that willingness to work hard and being open to connecting with as many people as possible in overcoming all of these obstacles. I would say perseverance as well as adaptability and openness to change and willingness to go the distance [are the keys].
Eisenmann: No one out there who studies entrepreneurship has a clear handle on success and failure rates. What we do know is what it looks like once you get seed funding. From that point on, 60% of the firms that raise institutional seed money (meaning from an institutional investor as opposed to individual angels) will probably raise a Series A. And X% in Series A will go on to Series B. We know what that funnel looks like – and it’s brutal by the way. Essentially, depending on whether you count losing most or all of your money, the failure rates for venture-backed startups are going to be in the range of 75% to as high as 90%.
Problem is, there are a bunch of people who aspire to raise seed funding. And that can range from, ‘I had an idea in the shower this morning and I abandoned it in the afternoon because I got distracted at lunch’ to ‘I’ve been working for two years, nights and weekends, and I just can’t sell it to angel or seed investors.’ The definitions of the denominator are so elastic that I don’t think you ever could know what the success rates are.
What factors should prospective MBA students consider when assessing business schools for entrepreneurship?
Gernon: The classwork is very important. What kinds of programs they have outside the class to support it [is another]. I think the activity level of the club, which really demonstrates the community out there that is helping you to come up with ideas when you’re interested in entrepreneurship [is important]. Those are three key areas.
I also think – and maybe this is just selfishly looking at HBS – that you have to look at the diversity of the students that are coming to the school. We have students who are from consumer products, fashion tech, fintech, adtech, software, biotech. food startups, technology startups, manufacturing. That diversity lends itself really well to finding disruptive ideas that will make a difference. That, on top of the global nature of a school and what’s happening outside of your select metropolitan areas around your school also makes a big difference. You start to look at all the other things happening in other countries and you see growth opportunities there like a Grab Taxi. They took an idea and put it in a different country.
Along with the diversity of the students and the extracurricular activities, I think the professors [are important]…The professors here are so open to meeting with students, making these connections, mentoring them, and asking them the hard questions. I think that’s really valuable for students. Lastly, look at the alumni network. Do you have people coming back who can inspire and support you and answer questions?
Eisenmann: I’d build on Jodi’s diversity point and go a step further. I don’t want to diminish in any way what we do around entrepreneurship here. Frankly, if I were an aspiring entrepreneur choosing a business school, I wouldn’t pay a lot of attention to the quality of the entrepreneurship program. I’d pay attention to the quality of the business school writ large.
To the diversity point that Jodi makes, Harvard Business School’s structure requiring you to sit in a section and take the same 11 classes with same 90 people (the required curriculum) is an incredibly powerful device. I’ve had, as an entrepreneurship educator, fantasies about taking one tenth of the students (a section) who are really fervently interested in entrepreneurship and doing a customized version of the first year for them. I would take marketing, finance, strategy and so forth and I would design (along with my colleagues) a first year that is entrepreneurial marketing, entrepreneurial finance, and entrepreneurial strategy…When I try to sell that idea to students, they say, ‘No! No! No! We don’t want that at all. What we want is to sit in that first year section with someone who is doing a hedge fund or a classmate who’s working in a big packaged goods company in Brazil. We can be entrepreneurs the rest of our careers. But when are we going to be sitting with those other people? And by the way, we came here to learn basic business, marketing, finance, strategy, accounting, and so forth.’ You need a great diverse student body. You need a great alumni pool. And you need a great way of teaching the basics. If you find three places with all of that, then choose between them based on the quality of the entrepreneurship programming and courses. But pick a great business school first.
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