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Stanford Graduate School of Business MBAs at graduation have plenty to be happy about
There’s a new top dog when it comes to schools producing venture capital-backed companies. After five years of trailing or tying Harvard Business School, Stanford’s Graduate School of Business broke away in a record-setting way on our 2019 list of Top MBA Startups.
The annual list is based purely on investment raised by companies founded within the past five years. The ventures also must have at least one founder who graduated with their MBA in the past five years. In 2018, for the first time since we began compiling the list, Stanford’s GSB edged out HBS for the top spot with 27 of the top 100 startups to Harvard’s 26. This year, however, Stanford zoomed ahead with 39 startups to HBS’s 21.
“If you are thinking only about the 16% of students starting a business right out of their MBA program, one might imagine that the strong job market and rising salaries might encourage students to wait and start a new venture a little later in their careers,” says Deb Whitman, director of Stanford’s Center for Entrepreneurial Studies. “But I think those forces may be balanced by a reasonably strong funding market, keeping the entrepreneurial interest strong and steady.”
To be sure, the GSB is doing its part to keep entrepreneurship top of mind for its MBAs. The Palo Alto, California school boasts more than 60 MBA courses focused on entrepreneurship and innovation. This past year, Whitman says, 100% of MBA graduates took at least one entrepreneurship and innovation class. Over the past three years, that number has ranged from 98% to 100% — up from 92% to 95% in the five to 10 years prior to that. What’s more, Whitman says, last year’s graduating class saw 21% join an existing startup. That number has also ranged between 19% to 24% over the past few years, Whitman says.
“The level of interest in entrepreneurship is staying quite steady at Stanford GSB over the past five years, but certainly has increased relative to 10 years ago,” she explains.
A QUARTER OF MBA ELECTIVES AT HARVARD ARE FOCUSED ON ENTREPRENEURSHIP
Across the country at Harvard Business School, Shikhar Ghosh, the faculty co-chair at the Rock Center for Entrepreneurship, says entrepreneurship is also increasing in interest among Harvard MBAs. This year, 8% of the class elected to start its own business immediately after graduation — a slight uptick from 7% in 2017. Another 9% joined existing startups. Ghosh says about a quarter of full-time MBA electives are focused on entrepreneurship, and all core courses within the MBA program now include at least one entrepreneurship or innovation focus. One core course is completely dedicated to entrepreneurship and innovation.
“We are one of the few schools that has a core curriculum. And out of the core curriculum, we have one entire course dedicated to entrepreneurship,” Ghosh says.
Besides boosting entrepreneurship in the curriculum, Ghosh says the school’s Startup Bootcamp has also gained in popularity among students recently.
“What has struck me recently is (interest in) our entrepreneurship bootcamp, because it’s completely voluntary,” Ghosh says of the weeklong program, which took place January 18-25. “It’s during their (students’) vacation, so they have to choose to spend one week in Boston in January taking classes instead of sitting on a beach somewhere.”
On P&Q‘s 2019 Top Startups list, Columbia Business School and The Wharton School at the University of Pennsylvania followed the GSB and HBS, each with nine startups. For Columbia, it’s a tick up from last year’s seven startups, but still a slight drop from 11 in 2017, which was a record for the school. Wharton’s nine startups is the same number as last year but also a drop from 2017, when it had 12 on the list. That dozen was the highest any other school not named Harvard or Stanford has had on the list since we first launched it in 2013.
This year, Northwestern’s Kellogg School of Management followed with six startups after having seven in 2018 and eight in 2017. Chicago’s Booth School of Business and the University of California-Berkeley Haas School of Business followed, each with five startups on this year’s list. For Haas, it’s the most ever they’ve had on the list.
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UC-Berkeley Haas School of Business
ENTREPRENEURSHIP GAINING INTEREST AT OTHER SCHOOLS AS WELL
Of course, HBS and the GSB are not the only schools reporting increased interest in entrepreneurship among MBAs in recent years. “We’re seeing a big increase in interest in entrepreneurship in the student body compared to five to 10 years ago,” says Jeremy Kagan, the managing director of the Eugene Lang Center for Entrepreneurship at Columbia Business School.
“More and more MBA students are realizing they will be entrepreneurs or at least entrepreneurial in their careers at some point — whether or not they start a company while in school, or five or 10 years later, or simply join a thriving growth company,” Kagan continues. “Columbia has not only expanded and deepened its curriculum for entrepreneurs, but also the definition of entrepreneurship and innovation.”
Kagan says the school has built upon foundational courses like the Foundations of Entrepreneurship and Lean Launchpad to include coursework on “everything from building an enterprise sales team to design thinking.” What’s more, he says, “We also have broadened our audience, engaging not just entrepreneurs planning to launch their company while in school, but recognizing those for whom the big idea hasn’t yet come or the timing isn’t right and encouraging them to build their skill sets as well.”
MIT’S ‘FOUR H’S’ OF ENTREPRENEURSHIP
At MIT’s Sloan School of Management, intermingling is the modus operandi.
“We are completely integrated with the rest of the school. So when MBAs come here, to our center, they walk across the street and they’ll see engineers, policy people, lawyers, post-docs,” says Bill Aulet, managing director of the Martin Trust Center for MIT Entrepreneurship. “Entrepreneurship, if it’s just MBAs is interesting, but if it’s MBAs plus technical people, policy people, and design people, that’s an order of magnitude more interesting and that’s what we’re focusing on.”
Aulet says Sloan’s approach is less about raising capital and starting companies.
“If someone invests in you, they want your fish. If you go to an economic development agency, they want you to start a company. Here, we’re teaching them how to fish,” Aulet explains. “We’re teaching them how to become entrepreneurs. Those entrepreneurs may start companies or they may work at McKinsey or the New York City government or work at MIT.”
With that comes the “four H’s” of entrepreneurship. Aulet says first is teaching future entrepreneurs to have heart. “An entrepreneur is anti-fragile. That means they can thrive in instability,” he says. Next, successful entrepreneurs must have a head. “Do they have the knowledge needed,” Aulet says. After that it’s having hands, or being able to put theory into action, and lastly it’s home, or being part of a community and being able to create and expand communities.
Aulet says the ability to raise venture capital is not an indicator of entrepreneurial ability. “I don’t believe how much money you raise is a proxy of how good of an entrepreneur you are,” he says. “I know it’s not as sexy, because people always want to say, how much investment money has your company raised, how much revenue have they done, how many jobs have they created. And we can give you numbers that would blow your brains out. But that’s not what we should be focusing on. That’s a misnomer.”
But if venture capital money is the route for a startup, Aulet recommends heeding some advice.
“One you take that money, you have lit a fuse. It’s a really great fuse and it’s a powerful fuse. But you better know where you’re going. Because you’ve lit a fuse and you only have a certain amount of time,” he says, noting it’s best to push the fundraising out until startups have a clearer idea of product-market fit, an execution plan, and a culture. “If you’re at the point where the only risk you have is a financial risk, then raising $5 million is a beautiful thing. If you don’t know where you’re going, raising $5 million can destroy a potentially good company.”
MBA FOUNDERS OVER THE PAST FIVE YEARS
Over the past five years, no top MBA program has produced more startup founders immediately after graduation than Harvard Business School: 356, ahead of second-place Stanford GSB’s 297. When size of class is taken into account, however, the GSB’s percentages of graduate founders has doubled Harvard’s over the past five years. Wharton has produced the third-most MBA founders immediately after graduation over the past five years with 216. Columbia Business School follows with 146, and MIT Sloan rounds out the top five with 137.
No matter the school, entrepreneurship faculty and leaders are high on bringing potential startup ideas with you when entering into full-time MBA programs.
“If you have a venture idea, by all means, bring it into your class projects and apply what you’re learning to evaluate that venture idea,” Whitman says. “Several alumni entrepreneurs who percolated a new venture idea while in their MBA program and then started the company after graduation have said that having a startup idea in mind helped them get more about of all their MBA classes, because they kept thinking about how they would apply the learning in any class to their startup idea. So, I think evaluating one (or more) new venture ideas while you’re in your MBA program is a great, hands-on, way to learn that important skill. If you identify and vet a startup idea that you think is so amazing that you want to invest your next career move in it, I’d encourage most students to plan to launch it after you graduate so you can give your startup the best shot possible.”
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