Risk-takers remain upbeat
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Entrepreneur Uri Pomerantz recalls his student days at Stanford Graduate School of Business. “I still remember my professor advising us that, at the end of your career, you’re unlikely to regret taking a calculated risk to achieve a goal, regardless of the outcome.”
Mr Pomerantz, who graduated in 2008, is among the one in six MBA graduates who launch their own company within three years of graduation, according to Financial Times Global MBA Ranking 2011/12 survey data. While many of these graduates embark on their own projects straight after graduation, others opt for more work experience before taking the plunge. “The latter learn how to become founders second-hand, building skills while learning how to avoid the typical pitfalls,” notes Noam Wasserman, professor of entrepreneurship at Harvard Business School.
Mr Pomerantz falls into this second group, having gained two years of consulting experience at McKinsey after graduation.
Last year he founded Bright Frontier Financial, a US financial services company that brokers lower-cost student loans. “By restoring a direct connection between borrower and lender and rewarding hard-working and creditworthy borrowers, we’re looking to build a sustainable way to fix college financing,” he says.
Despite the scale of this challenge, Mr Pomerantz is among the one in three MBA graduate entrepreneurs who defined their company outlook as “very optimistic” in a recent FT poll*.
The survey of more than 500 entrepreneurs who completed their MBA degrees in 2007 and 2008 confirmed the confidence of recent graduates who now run their own companies, despite challenging economic conditions. While fewer than half (47 per cent) are optimistic about the broader economy, 83 per cent are optimistic about their own company’s prospects in the coming year.
Confidence in the business climate varies significantly by region, reflecting the disparity between fast-growing Asian economies and their stagnating European counterparts. Entrepreneurs in Asia-Pacific, of which almost half are based in India, are relatively upbeat, with 57 per cent confident about the broader economy. Strikingly, 93 per cent of India-based entrepreneurs are optimistic about their own companies. In Europe however, while only 23 per cent of entrepreneurs are bullish about their respective economies over the coming year, 76 per cent of this group predict a rosy future for their own companies.
Timothy Bovard, adjunct professor of entrepreneurship at Insead, which has campuses in France, Abu Dhabi and Singapore, and whose alumni represent one in 10 of those surveyed – sees such optimism as an essential feature of the entrepreneur’s state of mind. “In taking such a leap of faith, there is a sense of controlling their own destiny that leads to this confidence”, he says. “Those who go on to make their ideas a reality will have jumped many hurdles and confronted much self-doubt along the way.”
Prof Bovard adds that, although the entrepreneurs may be pessimistic about the broader economy, they should have taken the current economic situation into consideration and consequently he would expect them to be optimistic about the prospects for their own companies.
In total 98 per cent of survey respondents said that their MBA was useful in preparing them to run their own company, with more than half describing their degree as “extremely useful”.
Mr Pomerantz’s confidence in his company’s potential has been largely underpinned by his experience at Stanford. “Something about the combination of the informal atmosphere, small class size and a general irreverence for the status quo inspires a lot of people to dream big,” he says.
Having never previously considered becoming an entrepreneur, two years at Columbia Business School equipped MBA graduate Jonah Zimiles to launch his own bookstore. “Despite having no retail or entrepreneurial experience, what I learnt from my professors and classmates gave me the confidence to seize unusual opportunities,” he says.
He emphasises the significance of his alumni network which supported his venture with advice and encouragement. His point is echoed by Mr Pomerantz. “Feedback and support from the alumni network has had a great impact – it’s been a very important tool for us.”
* The FT received 516 responses to a survey, conducted this month, of MBA alumni of the classes of 2007 and 2008 that set up their own companies