Open for business

ASEE Prism, Jan 2002 by Auster, Bruce

Despite the dot-corn bust-and tragic events of September IIentrepreneurship programs are alive and well at engineering schools across the country.

During the dot-com boom, entrepreneurship centers were a hot ticket: Students at many engineering schools were taught how to turn their science projects into start ups. Then the bubble burst. Has the entrepreneurship curriculum lost its pop, too? Hardly. Rice University was recently awarded a National Science and Engineering Center by the National Science Foundation; its specialty will be biological and environmental nanotechnology. What's unique is that as part of the new center, the NSF created a nanotech entrepreneurship program, which will be up and running by next year. Though it is not a big-ticket budget item, the entrepreneurship program is one way the NSF hopes to promote innovation. "It's not just for science's sake," says Steve Currall, the head of the Rice Alliance for Technology and Entrepreneurship. "It brings innovation to market, it benefits society."

In the wake of the tech market bust-and more recently, the stunning events of September 11-universities remain committed to teaching entrepreneurship, students are advancing novel technological solutions to age-old problems, and venture capitalists are putting their money on the line.

Yet the programs have changed-possibly for the better. Fewer students, for instance, are flocking to them. The Massachusetts Institute of Technology runs the best-known competition for business plans in the world; it is called the $50K, and for a dozen years it has lured would-be entrepreneurs who compete for the top prize and a chance to impress the venture capitalists who swarm the MIT campus each spring. Organizers of last year's contest were curious to see whether the collapse of the stock market dimmed interest in the $50K. So they ran the numbers. And sure enough: The higher the NASDAQ, the more entries-at the peak, there were some 200. When the NASDAQ dropped, so did the number of would-be entrepreneurs-last year there were just 135. "It has correlated perfectly the last five years," says Michael Parduhn, a second-year MBA student at MIT who is the lead organizer of the $50K.

But the drop off in entrants could be a good thing, according to those who remain. Who's abandoned the field? The gold-rush entrepreneurs, who flocked to the tech centers at the height of the boom, fled at the bottom-and, truth be told, aren't much missed. "We lost the students who were motivated by the wrong things," says Dr. Tina Seelig, the executive director of Stanford Technology Ventures Program, the university's entrepreneurship center. "This is a great screen for us. In boom days, we had students who were arrogant. Now we have people who are motivated by building something, not by money." That winnowing process has meant that even though there is less money for projects, worthier ventures are getting noticed. "People have sobered up a good deal," says Donald M. Spero, the director of the Dingman Center for Entrepreneurship at the University of Maryland's business school. "It's no longer possible to walk into a venture capitalist with a fancy idea and ask for $10 million. I think that's healthy. The old way sucked money from the real businesses."

Perfect Union

The logic behind engineering schools' teaming with business schools, after all, was to foster something more profound than just a selfish drive for money. "An entrepreneurship curriculum is especially valuable to engineering students because they actually have the skills to bring a product to realization," says Alex Liu, a master's degree student in electrical engineering at Stanford's Technology Ventures Program, or STVP. "By rounding out the world views of advanced engineering students, one creates a growing body of highly capable leaders who are able to conceptualize a product, develop it, market, and sell it."

It is hard to judge just how important entrepreneurial education has been to the national economy-not to mention whether it has fostered innovation among engineers. Most of the studies on the economic merits of the programs were conducted during the tech boom and offer an inflated view of their contributions. Still, for a time, the numbers were impressive. BankBoston studied the impact that a single school-MIT-had on the economy. It concluded that if the companies founded by MIT graduates and faculty members were an independent country, they would rank as the 24th largest economy in the world, with sales of about $232 billion. And according to a study sponsored by the Kauffman Center for Entrepreneurial Leadership, new businesses (which the study defines as those that are two years old or less) accounted for nearly all job growth in the U.S. during late 1990s economic boom. Even the student-run $50K competition has produced, in its brief 12-year life span, an impressive roster of alumni. More than 75 teams that have entered the competition over the years have started companies. Earlier this year, organizers estimated that those firms had created some 1,100 jobs and had a market value of some $10 billion. Many of the most successful companies-including Firefly, Lexicus, and Flash Communications-are not well known because they were acquired by the likes of Microsoft and Motorola.