This Harvard MBA Student Wants To Lower Grad School Costs

NOT JUST A FINANCING BUSINESS

Tess Michaels has a message for prospective MBA students concerned about ISAs or other facets of Stride Funding’s business model. “I think when you hear that you’re giving a percentage of your income, if you’e not sure you’re going to earn a lot it’s like, ‘Why would I do that?’ I think a big piece of Stride is, first, a lot of our funders are impact investors, and so the pricing that we offer is actually cheaper than, let’s say, a federal Grad PLUS loan, or other private loan options.

“Let’s say students earn more than expected, a lot of that goes back into funding more students. And so there’s really no downside for the students. It’s really just about making sure that, A, it’s cheaper, and B, it’s over a way quicker period of time. We don’t want you having a family and 10 years in and you’re still paying back loans, right? Five years or so and you’re kind of done with it.

“And then the last piece is around the career support, which I think is really critical. When I think about Stride, I’m not trying to just build a financing business. We’re trying to really have recruiters on the platform, and resume services, and ways to kind of actually list the outcomes for students. A really big piece is people knowing that we only succeed if the students succeed, so everyone’s incentivized the right way now.

“We kind of narrowed it down to what the main pain points for students are, and what we kept hearing was, paying loans for way too long. The interest accruing made it very expensive and they weren’t very flexible if you went through rough times. And so we kind of focused on fixing those three areas in how we structured Stride.”

‘WE HAVE A LOT OF CONNECTED PEOPLE WHO HAVE SUPPORTED STRIDE’

Harvard Business School is not necessarily the first place that comes to mind when you think of entrepreneurship — but that may be changing. Both Stanford Graduate School of Business and MIT Sloan School of Management are ranked higher for entrepreneurship as a specialization by U.S. News & World Report, and neighbor Babson College, about 25 minutes down the interstate, has carved out the cultivation and support of entrepreneurship as the its primary mission. In P&Q‘s inaugural ranking of MBA programs for entrepreneurship, HBS ranked 12th in the world.

Yet the percentage of HBS MBAs who started their own businesses after graduation leaped from 9% in 2018 to 17% last year, and HBS boasts almost unmatched incubation and support resources, including its Innovation Labs’ Venture Incubation Program and the Arthur Rock Center for Entrepreneurship. Over the five recent graduating classes (2014 to 2018), 356 HBS graduates reported founding or co-founding a startup immediately after graduation, compared to 297 at the GSB. Harvard, Michaels says, may be the premier place in the world to nurture a new enterprise.

“There’s no day where I’m not so grateful for the HBS experience,” she says. “A lot of it is about the incredible amount of access that you get at HBS. We have a lot of connected people who have supported Stride, both advisers and investors. Those who have helped fund students have come from the HBS community, which has been really special; but also, as part of the Venture Incubation Program at HBS, which is part of the Innovation Labs, and as part of the Rock Accelerator, which is like weekly meetings with really incredible entrepreneurs in residence — all of that has been helpful for us as far as really refining our business model, really refining our channels, and thinking through our growth strategies. It’s been really special.

“And then on top of that, there is a lot of value in the education itself and the classes themselves. This year almost all of my classes are kind of learning by doing, they’re very hands-on classes. I’m taking classes like Entrepreneurial Sales and Marketing, Creating Brand Value. It’s really about building the brand and the community for Stride. And then I’m also working under select professors on independent projects where I’m growing Stride and really getting their advice and guidance through that for class credit.

“There’s a lot of ways to kind of shape the HBS experience. It’s definitely a different animal working on a business while being in school, but it’s been so helpful in accelerating our growth.”

Stanford and Harvard have long dueled for supremacy in the startup space, with Stanford seeming to pull away in recent years as the entrepreneurship capital of the U.S. But it wouldn’t surprise Michaels to see another shift — in fact one may already be underway.

“I think that back in the day Stanford definitely was kind of the university that attracted a lot of entrepreneurs and fostered entrepreneurship, as part of a core pillar of its ecosystem,” she says. “I went to Penn for undergrad, I was part of Wharton’s undergrad business program, and I’m actually at HBS now, and I’ve really seen both institutions invest heavily over the last few years on creating specific places and communities within the campus for entrepreneurship. Penn just launched a new building entirely dedicated to entrepreneurship. And HBS has the Innovation Labs — and I will tell you, it is just such a great buzz there every time you come around. It’s just tons of students working on the Next Big Thing, and it’s really cool. They have lots of events, lots of social stuff, they make it very collaborative. And so it kind of feels like you’re not alone.

“As an entrepreneur, you’re surrounded by people but it can get lonely at times as you’re growing the business, and what HBS has really done is ensure that you’re learning from each other. And that’s the beauty of the accelerator: I’m walking through my learnings and so many of them are applicable for startups. I think that’s really, really cool that HBS has doubled down on that.”

Learn more about Stride Funding here. And listen to a podcast with Tess Michaels and Linda Abraham of graduate school consultancy Accepted.

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