When Mark Zuckerberg launched Facebook, the social networking site, in 2004, he was not quite 20 years old, and famously still a student at Harvard. Last year, Nick D’Aloisio, a 17-year-old from London, attracted $1m in investment for his Summly news app while studying for his A-levels (he sold it to Yahoo for about £30m in March this year). Entrepreneurially minded students are not a new phenomenon, but the trend is growing – and business schools are taking notice.
Andreas Pinkwart, dean of HHL Leipzig Graduate School of Management, says the recession has contributed to this changing mindset. “With the financial crisis, a reorientation process took place among our students, they started to turn away from the investment banks, preferring to work for consulting firms and/or in start-ups.”
The school asks students at the start of their masters in management programme to come up with ideas for new businesses, which they then present to the class in short “elevator pitches”. The exercise builds the students’ belief that they are capable of identifying a good idea, says Prof Pinkwart.
“Some years ago, one student with a strong sports background, for instance, came to HHL because he wanted to start his own venture. In his last year, he came up with the idea of a premium online sports shop [that is] now well on its way to becoming Europe’s number one [such] shop.”
Staff at Esade Business School in Spain have also noticed a change. As they prepare for the 50-strong third intake for Esade’s masters in innovation and entrepreneurship, they say the entrepreneurial spirit is growing, particularly among students from regions such as Asia and Latin America where previously it appeared weak.
The trend towards entrepreneurialism is a welcome development, says Olaya García Lancha, executive director of the school’s masters of science programmes in management: “The sooner [students] can shape their brains this way the better, as it is a way of life.”
García Lancha emphasises the range of advice now available to these students. “Before, areas of entrepreneurship weren’t too systematic – it was more about unique minds doing their own thing. Now, we give them the tools to finance or market a new business model,” she says. “We also challenge them to come up with innovative solutions to problems.”
One argument for starting this young is that you have nothing to lose. Thomas Astebro, professor of strategy and business policy at HEC Paris, points to the lower costs, comparing entry-level salaries for graduates with what they earn further on in their careers. “You can take a year off and won’t lose much,” he says. The students are also often single and still living with their parents, which saves money.
Prof Astebro believes, however, that students should not rush into a launch. “Research shows it is better to wait a couple of years and gain industry experience,” he says. He has noticed that students with no work experience usually come up with consumer-based ideas that are not necessarily the most profitable way forward.
The best ideas are often business-to-business, where there is less competition, he says, but students tend to focus on working with consumers directly, looking to sell products online, for example, based on their own consumer experience. “Imitation soon sets in and then it is a matter of who has more resources,” he says. “Students often don’t have many resources.”
Business schools can sometimes help with issues including office space and funding. At City University’s Cass Business School in London, for example, there is a £10m venture capital fund that finances a number of high-growth young businesses as well as providing incubation facilities and general support.
One student who has benefited from this fund is Jason Anastasinis, originally from Greece, who launched his travel business after struggling to find a job during the financial crisis. “I was in Greece for a couple of months and there was no motivation, no business attitude, with everyone anticipating the collapse. This was very difficult to deal with as a young person,” he says.
With support from Cass, he was able to employ three people in London and another four in Greece, running an online short-term rental website called TravelStaytion. “The fund really helped as the investment committee is specialised in managing start-up issues,” he says.
For students still inclined towards the corporate world despite having entrepreneurial interests, companies are rethinking their strategy. HHL’s Pinkwart points to the rise of the term “intrapreneurship” – taking an entrepreneurial approach within a larger company. “The lines between entrepreneurship and ‘intrapreneurship’ are blurring … and there are an increasing number of entrepreneurially minded teams emerging within corporations,” he says.
“More and more big businesses are open to corporate venturing by investing in companies they might incorporate later or promoting spin-offs of the parent company.”
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A sizzling starter: EMLyon’s incubator helped to fire up a French student’s grill business
Alexandre Carre launched his first business the summer he turned 18 and finished his baccalaureate. Importing grills from Spain to his home town in France, he went door-to-door selling them as an alternative to barbecues.
After shifting more than 2,000 units over four summers, he was ready to make his next move: designing a grill that could compete on the international market.
“I wanted to look at the product design in more depth,” says Carre, 25. “On the Plancha grill, you can cook a large variety of food thanks to a flat cooking surface, and clean it very easily.”
He enrolled on the masters in management course at EMLyon in 2010, bringing along a sketch of his grill design.
“I started from scratch,” he says. “I wasn’t able to invest much money as I was a student, but I had a lot of motivation to take things step by step.”
With support from faculty he was able to develop the product further and on graduating in 2011 he joined the school’s incubator, where he launched Verycook, a grill available in 10 different colours and sold in France, Germany and the UK.
Carre now has 12 employees and his own office space, where he plans to develop more products, such as a pizza oven, and to hold parties to help build an online community. He aims to create a web environment in which customers can share recipes and photographs.
This focus on the customer is reflected in his making Tony Hsieh’s book Delivering Happiness compulsory reading for his staff. He says the text shows the importance of having a close relationship with customers and how to achieve that – surprising them with a free delivery, for example.
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Feet first: A fitting solution
Badly fitting shoes triggered Timo Steitz’s interest in starting his own business. “I was confronted all the time with the problem of shoe sizes,” he says of a spell working for a shoe company in Germany.
The difference in sizes between brands, added to the confusion caused by international sizes, made Steitz realise there was a need for a fast and easy online service to help people choose the right size. It would also reduce the costs from customers returning unwanted shoes – a common and expensive problem with online sales.
The idea won the Swiss student a scholarship at Esade Business School in Spain, from which he graduates this November. Steitz co-founded ShoeSize.Me with four others two months into his course in September 2012.
Having spent the past few months testing, Steitz is grateful for the support provided by Esade that allowed him to develop his idea. “My initial idea was to create an app that measured feet; now, we have a whole platform,” he says. “Our key product is a tool we can incorporate into any online shop and charge per recommendation that leads to a sale.”
Steitz made use of Esade’s EGarage, a space designed to give students the environment and resources they need to launch a business. “I had about 50 students doing the test to measure their feet, for example. There was no other way I could have found that number of people willing to give 20 minutes of their time,” he says.