1. Your most recent research analyzes trends in entrepreneurship among MIT alumni. What are some of your findings?
Entrepreneurship at MIT is alive and well, and growing stronger every year. The number of new companies being formed by alumni keeps going up, and it keeps going up pro-rata — that is, a larger percentage of the alumni every year are forming first companies. We have an increase taking place with respect to female entrepreneurs coming out of MIT. They are still less than half the proportional rate of the men, but it has been a rising curve, so over the last 15 years in particular, female alumni are growing proportionally as entrepreneurs. We also have a dramatically increasing rate of international students becoming entrepreneurs. As a matter of fact, in the last 10 to 15 years, international students from MIT form new companies at a higher rate than domestic students. I mean a higher proportion, so a larger fraction of individuals who come to MIT as foreign students go on to become entrepreneurs than those who come to MIT from the U.S.
2. What about the incidence of serial or repeat entrepreneurs?
I previously mentioned the rate of forming first companies. That differentiates from what we call serial entrepreneurs or repeat entrepreneurs, people who form more than one company over their lifetimes. This is also increasing dramatically. More and more alumni who become entrepreneurs become entrepreneurs multiple times. Both the fraction of people doing that and, on average, the number of companies they are forming over their lifetime, is increasing. So, to sum it all up, entrepreneurship coming out of MIT, as measured just by looking at alumni, is a real, flourishing phenomenon. Our estimate is that there are more than 25,000 current companies that were formed by MIT alumni and that those companies, if put together as a single country, would be something like the 10th largest country in the world, economically. We're talking about a GDP of over a trillion dollars. And that doesn't even count companies formed by non-alumni staff and faculty. MIT's entrepreneurial economic impact is huge; the number of people employed by those companies is several million employees. We have reason to believe that — except for the possibility of Stanford, and nobody has ever done a study at Stanford so we don't know — MIT is the largest single university source of entrepreneurship in the world.
3. You are also finding that MIT alumni are starting their own businesses at a much younger age. To what do you attribute that shift?
Our data go back 60 years, to the classes graduating in the 1950s. We clustered them by decade of graduation to look at trend differences over time. For a long time, the typical MIT alumni entrepreneur formed his first company at 38 or 39 years old. That founding age gradually started to come down, and by the 1980s, it was around 34 years old. Then, during the Internet boom, the average age of new start-up entrepreneurs coming out of MIT was 27. That dramatic age effect is a bubble, just like the start of the Internet created a bubble in so many dimensions. The average age of new entrepreneurs coming out in the late 1990s and the decade of 2000 is around 29 or 30 years old. I think these shifts have occurred because MIT has changed. Over the years, MIT has become a remarkable entrepreneurial university. It's now attracting more and more people — students, staff, and faculty — who are inclined to become entrepreneurs. Once people who are interested in doing entrepreneurial things get to MIT, their orientation is strongly reinforced by formal education, by student clubs, and by the contacts they make.
4. How do you see these trends reflected in the programs at MIT?
Among the major things that we've examined are the changes and growth in the entrepreneurial institutions at MIT. We've been looking at the development of the MIT Enterprise Forum, the Entrepreneurship Center itself, and the key clubs. For example, the first entrepreneurship student club was originally the $10K Business Plan Competition, which began just one year before I started the MIT Entrepreneurship Center. The first prize was $10,000 awarded for best business plan. The name of the competition has changed along with the growth of the program and our ability to raise prize money. After about a dozen years, it became the $50K Business Plan Competition because the first prize went up to $50,000. Two years ago, it became the $100K, because the prizes went up to $100,000.
Basically, we started with a clean, comparison study of the alumni, but we've expanded our horizons to look at the influence of a lot of other things at MIT. Our survey data include a number of sections in the alumni questionnaire that ask about the role played by various parts of MIT that related to entrepreneurship. We got tremendous feedback about things like the Entrepreneurship Center itself, various programs that the E-Center has run, the 10K-50K-100K competitions, and the MIT Enterprise Forum, which is the alumni organization related to entrepreneurship. We are even tracking the impact of the MIT Technology Licensing Office. Formally, the licensing office only relates to technology that is licensed by MIT to the outside world. But it turns out that the TLO staff play a much bigger role; they counsel and coach many students and faculty. We've been finding a lot of information that is beyond our original expectations of the study.
5. You recently launched MIT Sloan's new Entrepreneurship and Innovation (E&I) Track in the MBA Program. How do you apply research findings to the development of curriculum?
We now have very strong research-based evidence that the most important thing about success is not the entrepreneur alone, but rather the team of entrepreneurs that together form a company. I would say that individual entrepreneurs don't win. Teams of entrepreneurs win. That is a very important, argumentative statement. Because there is a lot of lore … the Horatio Alger stories … all talking about the heroic, young American individual. We've just completed the second year of the new Entrepreneurship and Innovation track inside the MIT Sloan School MBA program. A quarter of the incoming class of MBAs are in the E&I program. If you look at the requirements of the E&I curriculum, one of its most important elements is that the participants must complete three team project courses. Each of the classes relates to entrepreneurship in a different way, and most of them force the students into mixed teams of MIT Sloan students and MIT engineering and science students. We're putting together teams that include students who are interested in marketing and management with students who are interested in scientific discovery and technical problem-solving. In doing this, we are dramatically increasing the likelihood that these young people are going to come together in strong teams with unique ideas and diverse capabilities, and are likely to be much more successful when they get out of here.
6. You teach a unique course in the E&I program called Introduction to Technological Entrepreneurship.
During their first semester at MIT Sloan, the MBA students go through a core curriculum. There is no flexibility. But we wanted to have a first semester core course in entrepreneurship, just for the students entering the E&I track. We were permitted this exception to the rule. The objective of the class is to build a unique cohort. We are trying to get the students to identify with each other and to understand that everyone else in that classroom is dedicated. They are all willing to put in extra hours and take extra courses to focus on entrepreneurship. We are saying, “The group of people in this room is a group that you are going to get an opportunity to live with and get to know for the next two years and maybe beyond.” I also want the students to meet other people at MIT who are related to entrepreneurship. I bring in the head of the licensing office, the director of the Media Laboratory, the head of the Venture Mentoring Service. I recruit the leaders of MIT's most significant entrepreneurship-linked organizations to come in and meet with the E&I student group. By the end of the first semester, the students have a sense of all the different parts of the whole entrepreneurial ecosystem. Now, they have contacts to whom they can send an e-mail and say, “You said this when you spoke to my E&I class and I'd like to follow up on it. Can we meet to discuss it?”
7. You end the class with a field trip, of sorts?
Yes. We finish the semester with what I believe is a phenomenal activity. We spend the first week of January as a group in Silicon Valley. It is an absolutely intensive week. Working through venture capital friends in Silicon Valley, we get a half dozen of the major VC firms to open up to us their portfolios of investments. We get the information in advance during the first semester. Our students go through the portfolios and organize themselves into small groups who are interested in certain companies. Then we spend the week in Silicon Valley visiting these companies in carpool-size clusters, hearing about their investments, their approaches, how they emphasize things. By the end of the week, the E&I students are so excited and so intrigued by the number of companies they have visited, the contacts they have made, and the lessons they have learned. They learn an infinite amount and come away so motivated and with such a high level of cohesiveness. I think what we are able to accomplish in terms of educational objectives is dramatically different from what the students encounter in the regular, routine classroom environment. It is an exciting new way to learn about entrepreneurship at MIT.
8. In what industries do you see the highest prevalence of start-up firms?
The most consistent area of new company formation coming out of MIT and the area that has shown the greatest amount of steady growth is software. We are seeing 30 to 40 percent of new companies started as software companies. There are also additional IT companies related to the Internet, hardware devices, and computer devices. The second traditionally hot area is medical companies. I say “medical” as opposed to “biotech,” because these are very different areas. The first area is medical devices: instrumentation, tools, and diagnostic techniques. A lot of these companies come out of projects of MIT and its affiliates, such as teaching hospitals in Boston. Many areas of MIT are tightly tied in with the teaching hospitals, especially the several Harvard teaching hospitals. A lot of research is going on in various MIT departments, such as electrical engineering, with colleagues who are physically at Massachusetts General Hospital. That shows up on the MIT campus as projects that students hear about or learn about in one way or another, so you gradually see a lot of activities in medical things moving forward. Biotechnology is a different ball game. Biotechnology doesn't happen in a hospital. Biotechnology happens in a biology or chemistry or physics lab, and is more likely to happen on the MIT campus or next door at the Broad or Whitehead Institutes. Both of those research centers focus on the genome and biotechnology.
9. Where do you see the most new opportunity for MIT students?
For the past two years, students have been running toward energy. In response to this, last year we started two new energy classes, Energy Ventures and Energy Strategies. Energy Ventures gets students into teams working with professors from across MIT who are doing research projects that have something to do with the energy field. Clean energy is huge. But there are also energy projects focused on efficiency, better drilling, and different kinds of transportation. Energy Strategies, the companion course, is an academic course teaching students about the whole energy field. How do you analyze and compare one form of energy to another? What are the critical issues to look at? What is the performance history of electricity versus coal versus gas? The two subjects are taught back-to-back in the same classroom to encourage the students to take both. They can sit in the same classroom and learn intellectually about the field of energy and then get involved with a group of students trying to start something. But what's hot changes. If you looked five years ago, you wouldn't have found much energy activity taking place here. Today, it's huge. Ten years ago Internet research and startups were booming. I would hesitate to predict what you are going to find 10 years from today. You certainly could have continuing growth of energy projects, but I doubt it. I have seen over the years that areas of attention come and go.
10. Global commercialization is often critical to the success of a new product or technology. What is happening with the global expansion programs at the E-Center.
Many years ago, one of our first courses was Entrepreneurship Lab, or E-Lab. It is a team project course where we work with local, early-stage companies. We recruit the CEOs to work with teams of MIT students for a semester-long project on a problem that keeps that CEO up late at night. E-Lab has been a very big, popular course. Two of our faculty members, Rick Locke and Simon Johnson, had developed a course called Entrepreneurship Without Borders, an academic course that looked at the issues involved in starting companies outside of the United States: taxation, regulation, availability of skills, labor laws, and financing opportunities. They merged that with E-Lab and formed G-Lab, Global Entrepreneurship Lab. We start the course halfway through the fall semester and get the students looking at the issues and opportunities in different countries. During January IAP they move overseas in teams for three-week internships in target companies everywhere in the world. G-Lab is now our most popular entrepreneurship subject.
We finish the course in the first half of the spring by having students conclude their reports on the company, compare them with each other, and discuss what they learned from what they did. We have a much larger number of companies available to us than we can possibly staff with students. We now have close to half of all of the MBAs taking G-Lab during their first or second year at MIT Sloan. This is a huge undertaking. At MIT Sloan we can truly say that the typical student is having an international entrepreneurship experience in a team setting in a foreign country. There is no other school in the country that can make that kind of claim. It's a wonderfully unique experience. It also results in a significant number of summer job placements, and some of the students end up with career placements.
11. What is the MIT Global Startup Workshop?
There is a proliferation of business plan competitions around the world, but the MIT Business Plan Competition is the granddaddy. We started before other people did and we built prestige and experience around it. Ten years ago, the student group running the MIT competition decided that they had so many inquiries from people at other institutions, that they should hold a workshop at MIT to teach students at other universities around the world to do the same thing. It's called the MIT Global Startup Workshop. It was a success and there were many governmental and university sponsors from other countries who were interested in sponsoring workshops in their countries. So now it's held in a different country each year. The workshop gets a couple hundred students from different universities from around the world. We are essentially training our competition, but we don't see it as competition. We see it as the kind of thing we should be doing to exert leadership on a global basis in the area of stimulating entrepreneurship. The students get to meet entrepreneurial colleagues from around the world. It's a very important part of the globalization effort, and it doesn't show up in any course. It shows up in the individual experiences that the students have.