Northwestern Kellogg: Where MBA Ventures Go To Thrive

When Covid-19 hit in March, Northwestern Kellogg’s classrooms became virtual. But that wasn’t the only major change that occurred. Among the school’s MBA student entrepreneurs, change happened fast.

Zell Fellow Michelle Zighelboim, Class of 2020, transitioned her fashion brand Zéta to manufacture personal protective equipment for front-line health care workers. Zell Fellow Adam Cohen, Zighelboim’s classmate in the Class of 2020, leveraged his technology for his company Stemloop to test for Covid-19. And Kellogg alumnus Michael Aposta, Class of 2012, the CEO of Factor, supplied local hospitals with prepared meals to help feed overworked staff. The crisis has spurred innovation and growth for other Kellogg entrepreneurs. More long-term, another Class of 2020 Zell Fellow, Olivia Cameron, launched UnifiHealth, a next-generation Third Party Administrator for small businesses to self-insure their health benefits, lower health care costs, and provide a better healthcare experience for their employees. 

In fact, coronavirus turned the whole Kellogg campus into a kind of startup, with risk mitigation and a radical pivot to new models of instruction and learning, says Rick Desai, adjunct lecturer of innovation & entrepreneurship. Desai teaches New Venture Development, in which students continue the startup process by testing and validating growth hypotheses; his class is composed of a small group of student founders who want to aggressively test the viability of their startup in the real world, regardless of whether it’s off-line or virtual. The shared end goal: to determine whether they should pursue their ventures post-Kellogg.

“To that end, our students were best positioned to navigate the uncertainty as it very likely shapes their career decisions,” Desai tells P&Q. “The students pushed the boundaries on testing their assumptions and validating their hypotheses virtually — all the while, building strong relationships with their remote teams. And Kellogg operated very much like a startup, very quickly mitigating key risks for each of its many stakeholders. The pivot to virtual and preparation for Zoom training was immediate and immersive.”

A CHANCE TO LOOK INWARD & CLEAN UP SHOP

In turbulent times, Desai says, people flock toward stability. (For proof of his theory, see the surge in applications to MBA programs in the United States and globally.) That’s why it’s a good time to launch a business: success now means a much greater likelihood of success in the long term.

“For MBA students who likely are graduating with student loans, positions in consulting, banking, and tech must mitigate considerable risk,” Desai says. “If you look back to 2009, 95% of students pursued traditional career positions. However, the small cohort of Kellogg students who did launch a startup are part of a historically high performing vintage of startups that followed the recession, such as FourKites founded by Matt Elenjickal ’14, which uses mobile, cloud and analytics software to improve supply-chain efficiency; or HotelTonight founded by Sam Shank ’02, whose mobile app that let travelers book last-minute lodging from the convenience of their smartphones.

“The driving factor is that if you can make it through economic and macro volatility at a startup’s launch, you can likely make it through any future period of the business.”

His best advice to MBAs or others planning to launch new ventures?

“Allow the discomfort to persist. When status quo arrives, the drive to innovate evaporates. Continuing to have a relentless focus on the problem at hand is the mentality that drives the best founders.”

Adam Wolford believes Desai’s class fundamentally changed his career trajectory — especially because the virtual environment allowed him more to focus and reflect on the class takeaways. Wolford, a former Deloitte consultant, came to Kellogg in 2019 with no clear plans to launch his own startup. Then he took New Venture Development, and then coronavirus happened.

“Overall, it was a super powerful experience,” Wolford says. “The Covid pivot, honestly, was great for us. I think we were really going to be focused this semester on connecting with resale stores, getting them to sign up for our platform, see how it was going to drive traffic. I think in lieu of having that experience — since a lot of those stores were closed and were applying for PPP loans and trying to survive — we had a really awesome opportunity to look more internally at our team and our organization, and figure out what we were doing to survive during the time. We actually started collecting our own inventory and selling it in an online platform.

“Basically, our thesis was to develop the brand and develop the platform and we could add in the stores later, so we reached out to our Kellogg community and asked if anybody was Marie Kondo-ing their place, and whether they would donate any clothes to us and allow us to start selling. Out of that, Ciclo was born, which is our startup.

“I would say that the spring quarter created a really awesome opportunity for us to slow down and take some time to think about our brand and how we were going to launch. I also think it was, personally for me, a really great time to be able to kind of engage with classes and then take my own time to reflect. I think when you’re on campus, there’s obviously so much going on, which is the beauty of Kellogg. But in that, you lose a lot of time to personally reflect and think about how opportunities are influencing the way you think.

“So I really used the opportunity to disconnect and think how my experience was going to influence my career, and how I would think about approaching Kellogg next year once we go more into this hybrid/in-person and start having a lot more opportunities. So actually, this class influenced me to go work at a startup this summer, which I am now I’m engaged with, which is really awesome. It’s really made me reconsider my approach to, not only business school, but my career as a whole.”

A CHANCE TO GET CREATIVE & TAKE SOME RISKS

Wolford came to Kellogg in the fall of 2019 thinking about the cross-section of venture capital and entrepreneurship, and wanting to understand how companies were funded and how they were started. Through Kellogg’s experiential VC lab he worked for two different VCs. And he discovered that he definitely wants to double down on entrepreneurship.

“I imagine myself doing more experiential classes, definitely leaning into getting more background in this entrepreneurship, connecting more with the local community in Chicago and seeing what I can plug in,” he says. “I think this opportunity has created a lot of great room for experiential internships and in-semester experiences that maybe didn’t exist before, simply because of the space capacity. But I think it’s going to be positive for me in my experience. I will never say that I’m glad Covid happened, because I don’t think anybody is glad that it happened. But I think born out of it was a lot of really unique opportunities that I don’t think I otherwise would have had.”

The silver lining, Wolford says, is that out of the hardship caused by coronavirus, tough businesses will emerge. As MBA students, the experience was invaluable.

“It allowed us to really focus on our brand and our business internally before we started interacting with them,” he says. “I feel like now once things start to open up or things are starting to move, even now we’re thinking about reaching out to a couple resale stores. I think we’re going to be able to better accelerate our product forward, as opposed to building with them.

“This really created an opportunity for us to understand how we worked as a team virtually and interacting with stakeholders. So Rick is still involved with our startup, we meet with him every other week, we have a board of advisers we meet with every month. So we were already enabled to do it virtually, thus making the transition for us to go from semester to summer super seamless.

“Airbnb was born out of 2008, right? So this is actually the best time, because people have more time on their hands and get very creative, which is how I feel we approached it at Kellogg. We were like, ‘What are we going to do? We are a startup based off of brick and mortar.’ So it forced our hand to be creative, which I think made us all grow as leaders. Obviously, Kellogg made it easy.”

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