Thoughts on Current State of Entrepreneurship at Penn State

Posted: June 15th, 2010 | Author: | Filed under: posts | Tags: , , , | 12 Comments »

Recently, an alum interested in supporting entrepreneurship at Penn State asked me for my thoughts on the current state of support for student entrepreneurs. Given my involvement with the Lion Launch Pad, an accelerator for students at Penn State that I co-founded, this is a topic that I have a strong interest in.

I have a much longer post on ideas to help support student entrepreneurs that I’m working on, but for today, I’m just going to stick to the current state.

I wrote a summary of the various groups, individuals, and programs at Penn State that I was aware of, which are involved in supporting student entrepreneurship in various ways. That document is embedded below.

If you’re an entrepreneur at Penn State, or even just someone interested in entrepreneurship, I would be very interested in your feedback and thoughts on the programs listed, along with my thoughts.

From the document:

Key Strengths:

  • There are a number of programs on and around Penn State’s campus that are dedicated to helping students explore and succeed in entrepreneurship. These include both academic and business resources. If students know where to look, there is generally something that can help get them moving in the right direction.
  • Penn State has both a history of entrepreneurial success and some recent entrepreneurship success stories. This is in addition to a fantastic resource in its alumni base, spread out across all areas of business.
  • The past several years have seen huge growth in programs for supporting early- stage entrepreneurs. No longer is there a gaping void between idea and venture capital funding. Entrepreneurs have a number of programs beyond Penn State to turn to and benefit from.

Key Opportunities:

  • Despite the large number of available programs, unfortunately, the entrepreneurship landscape is heavily fragmented and resources are not integrated. Consequently, students interested in entrepreneurship use their time looking for the necessary resources rather than taking advantage of them.
  • There is an issue of general awareness. Without high profile recent wins, there is a limited number of students who consider entrepreneurship as a viable career path or application of their ideas/creativity. Furthermore, students are seldom aware of academic entrepreneurship programs beyond their college/major.
  • The third section of this document provides a highlights of the recent growth in external programs for early-stage entrepreneurs – there is a large opportunity to align with these programs and incorporate their best practices.
  • Penn State’s alumni base is a tremendous resource, yet, unfortunately, it is difficult to access and leverage. There is an opportunity to structure this resource more effectively, thus benefiting all Penn State entrepreneurs.

Existing Programs

For details about the existing programs, along with some thoughts as far as how to improve upon the current state, please read the full document and leave your thoughts and reactions in the comments!

You can download the document in PDF format.


Can We All Succeed?

Posted: May 17th, 2010 | Author: | Filed under: posts | Tags: , , , , | 7 Comments »
There's more than one route to success

The list of startup accelerators I’ve been cataloging has grown larger than I expected. We’re now up to 93 programs, in many corners of the world.

I think it’s fantastic that there are many people working to encourage entrepreneurship. It’s wonderful for the aspiring entrepreneurs and an extremely positive development for the innovation that drives our economy.

There’s another aspect to this growth that I’ve been discussing with several accelerator alumni and other entrepreneurs recently, though. That is: I wonder, though, if aspiring entrepreneurs are getting the right message about what ‘success’ is, as people rush to inspire and motivate these business moguls of tomorrow.

There seems to be an unstated message that success for entrepreneurs in today’s world is to raise a six figure VC round and scale your business to millions and millions of users. Funding = validation and its build a massively scalable business or fail fast. As a culture, we’re captivated by the outlier success stories – it clouds our visions. Really difficult challenges become simplified in our minds to make the impossible seem within reach. Things like: “After all, it’s only a matter of fine tuning your user acquisition formula and then just dumping gallons of virality fuel on the fire…” (Simple, right? — Because money burns really well!)

Seeking validation from investors by way of filling the bank account with other peoples’ money becomes the goal. Right from the get-go, entrepreneurs are planning how they can go from 0 to 1,000,000 rather than 0 to 1,000. My friend, DJ Stephan, Chief Marketing Officer for Notehall.com, likes to say “It’s like setting off to build the next Empire State Building when you haven’t even even looked at the construction plans for a one-story house.”

Now, to be fair, no entrepreneurship professor, speaker or mentor I know or have heard of has ever stood up and defined success like that. But just look at the headlines that are being featured. These are the role models that entrepreneurs are watching.

$2m to Newsy in series A round. $3.6m to HelloWallet in series A round. $6m to WordStream in series B round. $7m to Critero in series C round. $23m to Invidi in series D round. And that was just in one week.

Building a so-called “lifestyle business” is a dirty word, apparently. (So much so that Josh Kopelman put out a call for a new term.) I’ll use sustainable business.

I get it. Building a business that doesn’t sell for hundreds of millions of dollars to Google isn’t as sexy as one that does. It isn’t the splashy news that TechCrunch wants to feature. It isn’t as cool a story to tell your friends.

Is that ok?

A sustainable business that brings in more modest revenue is still a driver of innovation and economic development. It still can beget the entrepreneur life-changing money. Perhaps more importantly, it gives them experience and a success to someday parlay into another venture. It keeps them in the entrepreneurship game, rather than putting it all on the line, burning out, and not giving it another go.

And the probability of success is higher. It is likely easier to figure out how to create a useful business for your 40,000 fellow students than 400,000,000 Facebook users. And once you figure out how to make modest money from one market, it doesn’t necessitate putting all your chips on the table to see if you can turn on virality faucet.

It’s not that it’s wrong to aim for the stars. But after evaluating that option and finding that it might not be fully baked, it should be ok to aim for something more reasonable and to have that success celebrated.

There are only 600-some venture capital deals per year in the US.1 Assume that a percentage of this activity is series B/C/D financing, leaving only a portion of these deals for seed-stage / series A investments. Let’s assume 50% are seed/series A, to be generous — so, 300 VC deals for new ventures. Now, I realize that not all of the 93 accelerators on the list are in the US nor are all companies in the accelerators VC-fundable and not all of these VC deals go to accelerator-launched startups, but if they were, that would be ~3.22 deals per program. Assume each program has ~10 startups. So, on average, that’s 7 startups that aren’t getting funded, per program. The real number is actually much, much bigger. Are these entrepreneurs just going to give up and go home? If they define success as raising money, they might as well. Even if you include angel deals, there is not enough dealflow for each company to define success as finding follow-on funding.

Sometimes I feel like with the age of tech startup businesses, the focus is exclusively on building a product that people want. Entrepreneurs forget first and foremost that they are setting out to build a business. As in something that generates money. With not enough “Other Peoples’ Money” to go around, some of these companies are going to have to push the envelope and actually create businesses that generate revenue from day one.

Fortunately, there is more than one way to build a company than to focus on raising VC funding. Let your startup evolve and see where it goes. If VC funding is the right way to go, great. But just because you don’t build a company that fits with the pattern VCs are funding, it doesn’t make you any less of an entrepreneur. Let’s make sure we define success appropriately.

Entrepreneurs know in the back of their heads that raising funding is unlikely. Still, the temptation is there to keep telling yourself that the metrics don’t apply to you. With the number of accelerated companies seeking follow-on funding, the writing is becoming more plain on the wall. If entrepreneurs knew up front that building a VC-funded rocket ship wasn’t feasible, would they still think it was worth the long hours, the lack of pay, the risk, to build a successful business that is a bit smaller? Enough to get started?

I hope so. And I hope that the mentors in the 93 startup accelerators around our world are conveying that message. The message that explosive growth powered by VC rocket-fuel or smoldering ruin aren’t the only two options in entrepreneurship. After all, we can’t all be in the first group – another direction is perfectly ok, too.

  1. Number of software-only VC deals in 2009 based on the PwC MoneyTree Q4/full-year report was 619.

Startups Afterschool for high school students in Philadelphia, and the first two steps for inspiring entrepreneurship

Posted: April 21st, 2010 | Author: | Filed under: posts | Tags: , , , , | 1 Comment »

In January, Thomas Friedman wrote the following in his NY Times column:

“Obama should launch his own moon shot. What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of ‘Start-Up America.’”

I agree that an entrepreneurial spirit has been key to America’s growth to this point and that we need to make sure that entrepreneurship and innovation continues to be a critical focus. And that starts with inspiring our students to take an interest in entrepreneurship and see it as something feasible and achievable. That was why I was excited when I spoke to a high school class of aspiring entrepreneurs last week.

A team of teachers and entrepreneurs launched a program that’s running at the Science Leadership Academy this spring in Philadelphia, called Startup Afterschool. While their classmates are interning at established firms, this class of students takes a few hours each Wednesday afternoon to work on their social entrepreneurship ventures. They hear from current entrepreneurs and investors, consider markets and business models, and work on their pitches. As an entrepreneur who got my start creating products and companies in high school, I think this is a fantastic opportunity to expose students to entrepreneurship.

My enthusiasm for the program goes beyond my high school entrepreneurship experience, though. From my work helping to build the Lion Launch Pad program at Penn State, I’ve come to find that much of the current work around increasing entrepreneurship goes into building programs to help entrepreneurs move their ventures forward. Tweaking their business models, figuring out market testing, and refining investor pitches – the efforts are focused around businesses that already, in one form or another, exist.

But where do these ventures come from? In talking with students, trying to figure out how to grow the Lion Launch Pad program, I’ve realized that to truly inspire entrepreneurship, those efforts are too high level and the focus needs to drop down a few levels. Ideas are everywhere – in class, in the dorm room, or elsewhere. Some ideas have potential for new ventures or products, others don’t. Yet, it takes some self awareness and practice to realize that when you have these ideas, that they’re the identification of a pain in the market and that there could be potential for new venture creation. However, unless you’re searching for ideas or get lucky, too many of these ideas are just dismissed. And if the person with the idea realizes that the idea might have potential, where do they turn? There are actually a lot of resources available already, but it usually takes a lot of legwork to figure out who can help and where to look.

So, I have come to the realization that if we’re really truly going to work on inspiring and encouraging entrepreneurship, we need to go to focus on these issues. We need to help expose students to entrepreneurship and show that it is indeed feasible to take an idea and turn it into a new business. And that other students who sat in a seat nearby did just that, either while a student or not long after graduation – showing that it is feasible for a student to take an idea and create a sustainable new company. Then, the second part of this is to make sure that there is a centralized “clearinghouse” of entrepreneurship support, so that when one of these students walks in the front door, there’s someone to point them in the right direction, someone who knows where all of the resources are, so motivation and energy aren’t lost searching for the programs that exist to help. And this “clearinghouse” needs to have a high enough profile that students actually realize that it’s there. Many universities will tell you that they have programs to support entrepreneurs – yet the students with the ideas don’t know where to turn.

Kartikeya Bajpai, a graduate student at Penn State’s College of Information Sciences and Technology, is headed to Kenya this summer to conduct research for his dissertation focused on the roles of social networks in helping disadvatnaged youth develop an entrepreneurship mindset. We had a conversation about his research project, which I find very interesting – it looks at how youths need access to social networks for advising/funding/technology, yet many of these networks are closed to disadvantage youth. Certainly, social networks and communities are very critical in the success of entrepreneurs – you need communities for advisors and mentors, along with communities to serve as markets/customers for the eventual product or service. So, for young entrepreneurs to have these social networks and to be able to tap into them is important for their success. However, I spoke with Kartik about what I just discussed above – that, in my opinion, the two things that must be addressed first, before you should worry about the rest of the support infrastructure, are (1) figuring out how to encourage an awareness of entrepreneurship in general, so that ideas with potential are recognized and (2) an awareness of where to turn for the support needed to take the next step in the venture creation process.

At the high school level, I think a program like Startup Afterschool is ideal and is working towards these two critical elements. The program provides the exposure to entrepreneurship and a high level overview of what the new venture creation process is, along with some hands-on experience with it. Next fall, they’re launching the program at five schools across Philadelphia. I think it’s fantastic that a program like this exists for high school students and I hope that we see a growth in similar programs elsewhere. In the meantime, I look forward to continuing to work with the program to do what I can to help it reach its objectives of demonstrating the importance of entrepreneurship to students and setting them off on a lifelong journey of innovation.

What efforts to encourage student entrepreneurship have others seen? What works well?


Are We Actually Creating Startups Through Business Plan Competitions?

Posted: April 14th, 2010 | Author: | Filed under: posts | Tags: , , | 6 Comments »

As a recent judge for Temple University’s ‘Be Your Own Boss’ business plan competition and having advised the winning team for Penn State’s IdeaPitch competition, I was afforded the perspective of seeing both ends of the typical higher education business plan contest. As a result, I’ve been thinking a lot about business plan competitions recently. In short, it’s very clear that judging a team’s ability to put together a business plan versus creating a sustainable business are two very distinct things.

Vivek Wadhwa has some very interesting commentary on the subject on TechCrunch from November.

First, the good — most of these competitions are run under the auspices of helping to inspire entrepreneurship. Wadhwa says “This is not to say [I think] the contests are bad. [T]hey educate students in entrepreneurship and motivate them to come up with interesting ideas.” Also, here’s a quote from the MIT $100K’s site: “The MIT $100K Entrepreneurship Competition is a year-long educational experience designed to encourage students and researchers in the MIT community to act on their talent, ideas and energy to produce tomorrow”s leading firms.” For sure, motivating students to explore entrepreneurship is a good thing (and one that I put a lot of effort into!!).

However, I think that if you’re going to do something, you should do it in the most effective way possible, especially with the resources, publicity, and sponsorship dollars at play here. But, instead, business plan competitions are tired, old and out-of-date. And, for an excellent pairing, you have, of course, the criticism that the results are rather dubious“¦

Instead, this NY Times blog post gets to what I think the real root cause of the issues with most competitions: “”¦Kirstie Chadwick, a tech entrepreneur and director of the University of Central Florida”s Venture Lab, fears that the myriad business plan competitions and related events cropping up around the world are less about helping start-ups and more about schools and other competition organizers ‘keeping up with the Joneses.’” Indeed – the huge prizes that are awarded make for great PR, not just for the teams that participate, but for the schools. (“Look {insert name of prospective student here}! See how much money School X is giving to these entrepreneurs?! This is certainly the right place for you to learn that trendy thing called entrepreneurship!”)

But setting that aside – if a school really wanted to create some buzz, what about launching an initiative that actually helped students become better entrepreneurs, rather than just write good business plans?

The seed-stage startup accelerator model seems to work. Just look at the TechStars results. Y Combinator and other results are here (click through the tabs).

Instead of giving a huge chunk of money to the one winning team, what about setting up a university-wide program to funnel teams with ideas into an accelerator-style program? Give each qualified team a little bit of funding for the semester and have them go out and prove their idea is feasible. But don’t just drop them off into the deep end – connect them with the mentors and resources that they need to be able to do this successfully (I bet you that most don’t know where to turn with their ideas). Explain ghetto testing, MVP, and (please! get these students out talking with customers!) customer development.

To be fair, some business plan competitions do connect the teams competing with mentors and other resources. Certainly an event with as much press as the MIT $100K event also attracts a lot of nice PR for the winning companies (though there are reasons to not want this).

However, even the teams that do win come out of the typical business plan competition without a clear understanding for how they should move forward. I think this is a tragic missed opportunity. Let’s get rid of the old model, and stop wasting those hard-earned sponsor dollars – seize the opportunity and use a model that actually can help these bright motivated students become entrepreneurs.


Penn State Entrepreneurship Success

Posted: April 6th, 2010 | Author: | Filed under: posts | Tags: , , , | 1 Comment »

In the last month, I enjoyed having the opportunity to advise a couple of Penn State teams in their entrepreneurial pursuits. It was exciting to talk with other Penn Staters interested in turning ideas into sustainable ventures and be able to share some thoughts with them.

I was happy to see that of the students that I was advising, one team was recently accepted into the DreamIt Ventures program and another team won the Penn State IdeaPitch competition (the university-wide business plan competition)! As an added “bonus”, the team winning the IdeaPitch competition was from the College of Information Sciences and Technology.  Congrats to both teams!

I’m looking forward to watching Penn State’s leadership in entrepreneurship education continue!