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Startup 101: More Universities Are Trying To Figure Out How To Teach Entrepreneurship

This article is more than 8 years old.

As Suzanne Sepe arches over the kitchen counter in her New Haven, Conn., home, grinding black pepper on grass-fed lamb drizzled with yogurt cilantro sauce, Yale Law student Khalil Tawil interrupts. “Try this,” he says, producing a Ziploc bag of fragrant coriander, cumin and cloves from his backpack. “My mother’s Lebanese spice mix.”

The offering seals their business transaction like a handshake – Tawil, his Yale Law classmate Jason Gilliland and Yale undergrad Hallie Meyer are co-founders of Umi, named after the Arabic word for “mother,” a startup that delivers home-cooked meals made by local cooks, many of them immigrants, to residents of New Haven. Sepe was among the first recruits to the startup, which is housed in an incubator operated by Yale.

Yale’s Entrepreneurial Institute awarded Umi $15,000 of seed funding, as well as office space alongside nine other student startups in New Haven. They reside in a single room with whiteboard-lined walls where students sprawl on couches with sound-canceling headphones coding on their laptops and where their meals are catered free of charge.  Since 2007, Yale’s Entrepreneurial Institute has incubated more than 90 startups and raised more than $100 million in investment funding. Startups like Umi represent the practical component of the school’s growing entrepreneurship programs, which saw the addition of seven new classes in the last academic year alone, keeping in step with a larger trend spanning universities nationwide.

The University of Michigan was the first to introduce a course in entrepreneurship in 1927, followed by Harvard Business School in 1947. There are now more than 2,700 entrepreneurship programs throughout the country, many offering courses in hiring, managing assets and cash flow, designing products, computing, creating legal structures and other challenges of starting a business. But the definitions of entrepreneurship at these schools can vary widely, and there is no consensus on how entrepreneurship should be taught as an academic discipline -- or even if it can be taught.

One reason is that there are no authoritative textbooks on the subject  -- although the “Lean Startup Method” a term coined by Eric Ries in his 2011 bestselling book has been adopted widely by proponents of entrepreneurship. Ken Jones, director of the Wolff Center for Entrepreneurship at the University of Houston, says he has been asked three times in the last month alone to write a textbook. “There is no unified, canonical way of teaching entrepreneurship,” says Kyle Jensen, director of entrepreneurship at Yale’s School of Management. “It’s not like chemistry or physics or English or some kind of discipline that has a multi-hundred-year tradition of scholarship.”

Thanks to its longtime partnership with Silicon Valley, Stanford has been the acknowledged standard-bearer for entrepreneurship education. In fact, 17% of its business school’s class of 2014 became entrepreneurs, according to university statistics.

Stanford’s undergraduate course catalog boasts lectures from industry professionals who commute from the Valley: for example, Sam Altman, president of heavyweight incubator YCombinator, taught “How to Start a Startup” last year and Peter Thiel, Silicon Valley mogul and venture capitalist, taught “Startup” in 2011 – despite also offering a $100,000 fellowship encouraging students to drop out of college and pursue entrepreneurial ventures.

Most universities are not trying to replicate Stanford’s exact model, in part because they are not surrounded by the same business ecosystem. Instead, they define entrepreneurship as “more of a mindset and less of a job title,” says Mung Chiang, chairman of Princeton’s Entrepreneurship Advisory Committee. Yale’s Jensen balks at the idea that the university is a factory for startups like Umi. “As a liberal arts institution, we teach people how to think critically,” Jensen says. “It is not vocational. I would never say I am trying to build people to go to Silicon Valley.”

Even as universities try to figure out how to teach entrepreneurship, student demand is outpacing institutional resources. Entrepreneurship classes at Yale’s School of Management are among the largest lectures it offers. “Certainly, we do not have as many courses as we should,” Jensen says. “We do not have the offerings that the student populace demands and would take.”

Similarly, all of Princeton’s classes in entrepreneurship have waiting lists for admission. The most popular course is “High Tech Entrepreneurship,” which has been taught for more than 31 semesters to more than 1,700 students. While some schools, such as the Massachusetts Institute of Technology, have had startup incubators since the early 2000s, Princeton’s incubator is racing to catch up, just opening its doors last month as part of an overhaul of the school’s entrepreneurship resources. The university has also pledged to build an alumni network of entrepreneurs and to offer a certificate program in entrepreneurship.

Kartik Hosanagar, a professor at the University of Pennsylvania’s Wharton School, says the school’s informal entrepreneurship advising channels were non-existent as recently as five years ago. Back then, he says, he did not have enough office hours to meet with every student seeking informal business advice – which is why they often joined him on his walks home at  night. “The reason why I found myself in these conversations is because the demand for practical entrepreneurship has exploded,” he says. “Now, it has become clear to various schools that, to be relevant to a sufficiently high number of top students, they have to focus on practical entrepreneurship.”

Both Sherwin Greenblatt, head of MIT’s Venture Mentoring Service, and Chiang of Princeton’s Entrepreneurship Advisory Committee advocate that students “learn by doing.” Still, the question of how to balance practical entrepreneurship with academic values remains a quandary for many educators. Pumping out student startups, raising venture capital and engaging in job creation produces marketable “vanity metrics” for universities – but perhaps at the expense of mentorship to aspiring student entrepreneurs, says Bill Aulet, managing director at the MIT’s Martin Trust Center for Entrepreneurship.

One problem with over-emphasizing a university’s role in sponsoring student startups can be the potential conflicts of interest. As MIT Ph.D candidates in the early 2000s, Jensen and his classmates knew that the fates of their fledgling startups would largely be determined by a single professor. That “kingmaker,” as Jensen referred to him, held the keys to connections, university grants and venture capital funding that could make or break students’ companies. Jensen has instituted an agreement at Yale that none of the staff or faculty can invest in students’ startups. “My mentorship is for the students, not the company,” he says.

Before becoming an advisor to student startups at MIT’s Trust Center for Entrepreneurship, all volunteers must sign a conflict of interest agreement, pledging that they will not “become financially involved with entrepreneurs they are currently mentoring nor take an operational role in their ventures.” Advisors who violate the policy can be dismissed. “We’re not investors, we’re educators,” explains Aulet, the center’s director.

Stanford also has a conflict of interest agreement barring faculty from investing in the companies of current students or postdoctoral fellows, but the university does make institutional investments in companies born on its campus. In 2013, Stanford founded a nonprofit investment fund, “StartX,” with capital from Stanford University and Stanford Health Care budgets. The StartX fund has seed and series A investments ranging from $50,000 to $3.6 million in more than 100 companies started by current or former students, according to Stanford’s communications office.

Wharton’s Hosanagar says he abides by a conflict of interest agreement, but that agreement only covers current students. He has made angel investments in about half a dozen startups started by nine of his former students. Wharton itself does not seek equity when offering grants to student startups, hoping instead to provide valuable resources that will draw more talented students to its campus.

At Yale, Gilliland, Meyer and Tawil believe classroom education could not have prepared them fully for the challenges of starting Umi. Prior to Umi, Gilliland co-founded an outfitting startup in India and worked in private equity. Tawil, also pursuing an MBA at Harvard Business School, was an infantry officer serving three deployments in Afghanistan.

Now they debate how dressing should be packaged to prevent a berry and spinach salad from turning soggy before delivery. “This is what I think about all day,” Tawil says, laughing at himself.

Aside from the hundreds of minute decisions they make to keep Umi's business running on a daily basis, the cofounders are also deeply concerned with the culture of their work environment. They are ultimately accountable both to their customers and their employees.

“We are building an environment where people want to be there, motivating people to come on board when we can’t pay them, building a culture from the bottom up,” Tawil says. “That is enormous responsibility.”

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