MIT Boosts Resources for Entrepreneurs as Startup “Fever” Rages

[Editor’s note: This is part of a series of stories examining entrepreneurship on MIT’s campus and beyond.]

[Corrected 10/4/16, 9:33 am. See below.] In 1901, 40 years after the Massachusetts Institute of Technology was founded, alumnus and inventor William Nickerson co-founded the company that would become Gillette. MIT graduate William Shockley co-invented the transistor in 1947 at Bell Telephone Laboratories. In 1957, MIT Lincoln Laboratory veterans started Digital Equipment Corp., which built some of the first minicomputers.

Yet the first entrepreneurship class wasn’t taught on MIT’s campus until 1961.

It was called “New Enterprises” and was taught by MIT alumnus and successful entrepreneur Richard Morse, says MIT professor Ed Roberts, who has studied the Institute’s entrepreneurial impact for over 50 years.

Since then, MIT-trained entrepreneurs have created thousands of companies. And the research university has gradually built up an immense (some might say fragmented) support network on its Cambridge, MA, campus for nurturing the next generation of company builders. MIT now offers 60 entrepreneurship courses; around 20 student entrepreneurship clubs; over 10 organizations and programs dedicated to providing resources and guidance to aspiring entrepreneurs (see table later in this story); a handful of entrepreneurship prize competitions and hackathons; and a culture of actively encouraging entrepreneurship—which hasn’t always been the case, some campus leaders say.

“Companies were spinning out of MIT forever,” says former MIT Technology Licensing Office director Lita Nelsen, an MIT alumna who retired from the office this year after three decades working there. Over the course of her career, the school’s approach to supporting entrepreneurship evolved from “incidental to purposeful,” she says.

It wasn’t until the past decade, some MIT officials and outside venture investors say, that students’ interest in startup activity and the supportive attitude toward such endeavors on campus—particularly from administrators—reached their current heights.

When MIT senior lecturer Bill Aulet was working toward a master’s degree in business and entrepreneurial marketing at MIT around 1993, he wanted to hold a panel discussion on campus featuring three successful entrepreneurs. But he got pushback from MIT administrators, who told him to “tone it down,” he says. “They would not sponsor it and did not want it on campus,” Aulet says.

He says campus leaders feared upsetting big companies like IBM, where Aulet had worked for 12 years, because events like the one he was planning might “tempt the employees they sent here to leave the womb and become entrepreneurs (like I did),” he writes in an e-mail.

“At an administrative level, there wasn’t a lot of love for entrepreneurship,” he says.

Bill Aulet

Bill Aulet

After his one-year program, Aulet went on to help start two companies and help turn around a third, before returning to MIT. He’s been a senior lecturer for a decade and has led the Martin Trust Center for MIT Entrepreneurship for seven years, succeeding long-time managing director Ken Morse. During his tenure at MIT, Aulet has watched administrators’ demeanor toward entrepreneurship change dramatically from when he was a student. “It’s been a progression, but it really picked up, I would say, over the past six or seven years,” Aulet says, adding that the shift wasn’t his doing. “It’s just because it’s become a very hot topic, entrepreneurship. They saw what was going on.”

Playing to the “Tech Revolution”

There are bigger trends at work here. The 2008 financial crisis and ensuing Great Recession led to widespread job losses and pushed more people to create their own jobs by starting new companies. At the same time, Apple’s iPhone ushered in a new mobile technology era and a boom in tech startups that have raked in billions in venture capital and exits. More of the nation’s brightest graduates began choosing Silicon Valley over Wall Street.

In response, leaders at MIT and higher education institutions around the country have beefed up their campus entrepreneurial resources. Xconomy has chronicled such efforts, which are often championed by top university leaders.

For example, University of Wisconsin-Madison Chancellor Rebecca Blank—a former U.S. commerce secretary—made entrepreneurship a key piece of her agenda and has supported initiatives such as new startup accelerators and workspaces on campus. Former University of Washington President Michael Young aggressively pushed commercialization of campus research in recent years, and the school has also built closer relationships with industry, such as opening a collaborative research center that puts students alongside Boeing engineers. [An earlier version of this paragraph incorrectly referred to Young as the current UW president. We regret the error.]

Meanwhile, Stanford University has also made moves in recent years to enhance its offerings for prospective entrepreneurs. Stanford students founded the nonprofit StartX accelerator in 2009, but it didn’t have formal ties to the university until 2013, when the school and its affiliate hospital pledged $3.6 million over three years to StartX. The university also formed a small startup investment fund with the accelerator.

And Harvard University has tried to bolster and unify its entrepreneurial activities under the Harvard Innovation Lab, which was launched in 2011 and supported by the university’s president, Drew Faust.

At MIT, President Rafael Reif has also pursued new entrepreneurship efforts since he took the helm in 2012. Those include launching the MIT Innovation Initiative in 2013, which in part aims to better connect campus student groups, programs, and centers focused on entrepreneurship, as well as help create new educational programs, research initiatives, and physical spaces. The results so far include an entrepreneurship and innovation minor (for undergrads) launching in the fall; a 200,000-square-foot nanotechnology research and fabrication building currently under construction; and StartMIT (launched in 2014 as Start6), a two-and-a-half-week course that exposes students to startups and helps them refine their innovative projects.

Krishna Gupta, an MIT alumnus and managing partner with Boston-area venture firm Romulus Capital, sees universities’ flurry of investments in innovation and entrepreneurship initiatives as a bid to compete for the best students.

“Everybody is caught up in this fever,” Gupta says. University leaders are saying “we want to be part of this tech revolution. I think MIT is sort of playing to that.”

The Institute’s latest move is a renovation and expansion of the Martin Trust Center office. The center—founded in 1990 by Roberts, the long-time technology management and entrepreneurship professor—is open 24/7 to students from any discipline working on projects and startup ideas. It was often “bursting at the seams” in its former configuration, says Greg Wymer, the center’s marketing and communications manager. He declined to share how much was spent on renovations, but the 10-month project was clearly a significant investment.

In addition to tacking on more space and amenities (see photo below and this photo slideshow), center officials wanted to make it look and feel like a real-world startup office, says Tommy Long, the center’s chief of staff. “Our old space was great but did feel like work spaces and study rooms,” Long says. “There was quite a bit of uniformity. We’re trying to switch that up.”

Photo by Jeff Engel

Photo by Jeff Engel

To get ideas for the redesign, the team visited accelerators, co-working spaces, and offices of startups and big tech companies, says Trust Center program coordinator Renee Lawlor.

The Trust Center avoided most of the cliché trappings of tech startups—there are no foosball or ping-pong tables. “And everybody shot down my demands that there be a hammock,” Wymer jokes.

The refurbished Trust Center does evoke a startup vibe, despite being housed in an academic building (MIT Building E40 at 1 Amherst St.). The open desk space, quirky but comfy furniture, walls that can be used to doodle notes or sketch out math equations, and café area for spontaneous creative discussions—all of those things have become staples in today’s tech startup offices and incubator spaces.

“A lot of our students want to start companies out of school,” Long says. “We wanted to give them a little bit of a taste of what a startup environment is like.”

Entrepreneurship Is a “Disease”

Gupta, the venture capitalist, says MIT has always been a “hub of entrepreneurship and startup culture,” but forming or joining a startup is more popular these days than when he was an MIT student from 2005 to 2008. “Half of my class or more still went into finance and consulting,” he says. “It was only after ’08 that that changed.” He adds, “It’s a cyclical thing.”

Lita Nelsen

Lita Nelsen

Lita Nelsen’s experience underscores that point. When she was getting her MBA at MIT’s Sloan School of Management in the late 1970s, most of the courses were geared toward “finance theory” and working on Wall Street or at Fortune 500 companies, she says. Few classes were focused on entrepreneurship, which disappointed her. (Nelsen’s first job after graduating from MIT in the mid-1960s was as a chemical engineer with her professor’s spinout company, Amicon.)

“But as the technology part of MIT started to be known for these companies spinning out and starting to influence even the development of the region, the MBA students started self-selecting to come to MIT for technology-based entrepreneurship,” she says. “And the Sloan School responded, and now the entrepreneurship and innovation track of the MBA program is by far the most over-subscribed.”

Another sign of the explosion of interest in starting companies: increased demand for the MIT Venture Mentoring Service, a free service that pairs volunteer business mentors with entrepreneurial students, staff, faculty, and alumni. In 2005, 83 people applied to the program, says Roberta McCarthy, the organization’s operations manager. That number grew to 132 in 2010, and 230 last year. In response, the VMS has boosted its fleet of mentors by a commensurate amount, McCarthy adds.

Yet, with any cycle comes a downturn. We’re probably at the zenith of the current startup zeitgeist—or perhaps just past it.

“Entrepreneurship” has turned into a buzzword, says Louis Goldish, a senior venture advisor with the VMS. There are plenty of companies being started that “do not create value” and many aspiring entrepreneurs who probably aren’t cut out for it, Goldish says.

“I believe entrepreneurship is like a disease—either you have it in your genes or you catch it from somebody who does,” Goldish explains. “I fear we’re trying to turn some people into entrepreneurs who have neither the genes, or the disease” won’t take, he says. But that’s not necessarily a bad thing, he adds. “I really believe that if somebody has the urge to do it, and can pay the bills, they ought to.”

MIT has always had a culture of nonconformity, Gupta says, but he worries the increased emphasis on entrepreneurship is moving toward conformism—the idea that “if I want to get ahead in life, I have to start a company.” (It’s a common sentiment among venture investors that there are too many me-too players and too much noise.)

Students today are “all running after internships in tech or starting companies or being part of [startups],” Gupta says. “What I would love to know, and don’t have stats on, is how many survive.”

Part of the reason for the rise of startup culture is how quickly tech companies can be launched. It’s much easier for MIT students, faculty, and staff members to turn their ideas into businesses these days, thanks in part to the various places they can go for help. But the downside is “it can be frustrating for people trying to identify those resources,” McCarthy says.

Malena Ohl, a graduating senior who studied chemical and biological engineering, co-founded a healthcare technology company, Stello, with fellow students during an MIT hackathon a year ago. She says her company received assistance from several entrepreneurship programs on campus, including the Venture Mentoring Service, the Trust Center, StartMIT, and the MIT Sandbox Fund. The Institute’s entrepreneurial groups seemed disorganized when she arrived on campus four years ago, she says, but things are “definitely improving a lot.”

MIT Entrepreneurship Organizations
A sample of key campus resources:
MIT Technology Licensing OfficeManages patenting and licensing of intellectual property created on campus and helps spin out companies. Existed in its current form since 1986.
Martin Trust Center for MIT EntrepreneurshipFocused on entrepreneurship education and providing expertise, connections, and a workspace for entrepreneurial students. Founded 1990.
MIT Venture Mentoring ServiceA free service that pairs volunteer business mentors with students, staff, faculty, and alumni working on startups. Founded 2000.
MIT Deshpande Center for Technological InnovationProvides research grants and other help to MIT faculty. Founded 2002.
MIT Media Lab Entrepreneurship ProgramHoused within MIT Media Lab, the program offers several courses that aim to turn ideas and prototypes into commercial products and services. Founded 2006.
Bernard M. Gordon-MIT Engineering Leadership ProgramRuns courses and activities designed to help engineering students develop leadership, communication, and other skills that will be useful in future jobs with startups or in entrepreneurial initiatives at big companies. Founded 2007.
The Legatum Center for Development and EntrepreneurshipOffers a fellowship program, seed grants, research assistant positions, and events to support innovative ventures benefiting the developing world. Founded 2007.
MIT Innovation InitiativeHelps connect campus student groups, programs, and centers focused on entrepreneurship, as well as helps create educational programs, research initiatives, and physical spaces. Founded 2013.
StartMITTwo-and-a-half-week course that exposes students to startups and helps them refine their innovative projects. Founded 2014.
MIT Startup ExchangeThrough a database, events, and setting up meetings, it connects startups that have MIT ties with big companies scouting emerging technologies or potential partnerships. Founded 2014.
MIT SandboxProvides seed grants, mentorship, and educational activities for entrepreneurial students. Founded 2016.

The MIT Innovation Initiative is trying to make it easier to navigate campus entrepreneurship resources. And leaders of such programs already communicate and collaborate in some ways, McCarthy says. Her organization, for example, will refer constituents to other helpful campus resources.

“We try not to duplicate what other people do,” says Roman Lubynsky, the mentoring service’s program director. “We’re not competing.”

But there are some overlapping offerings between the various programs on MIT’s campus, their leaders say. And there used to be more competition between them, Aulet of the Trust Center says. But “today I think there is terrific cooperation between all of them,” he says. “We get together on a regular basis.”

It helps that the Institute doesn’t fund most of MIT’s entrepreneurship organizations, says Leon Sandler, executive director of the Deshpande Center for Technological Innovation, which provides research grants and other help to MIT faculty. That means campus entrepreneurship groups must fend for themselves with fundraising, but the silver lining is they’re not all fighting over the same pot of money. In recent years, the Deshpande Center’s annual operating budget has hovered around $1.5 million and its staff has remained about three people, but it oversees more grant projects now, Sandler says.

Teaching People to Fish

MIT’s decentralized support system for entrepreneurs is key, Romulus Capital’s Gupta says, because it allows startups to form and grow organically on campus—enabling would-be entrepreneurs, but not driving their activity. It’s a difficult balance to strike, but Gupta thinks MIT is doing a good job. “Look at the VMS; look at the Trust Center,” he says. “They are great resources that are not really trying to impose anything. They’re just trying to be available.”

Ohl, the graduating senior and budding entrepreneur, agrees. The campus resources enabled her startup to grow faster, she says, but the emphasis from administrators and faculty was still “firmly on education.”

“They even say, ‘We don’t pick winners. We want to establish you as a leader,’” she says.

Still, at least one observer sees campus entrepreneurship groups as a superfluous step in a young company’s development.

“Both MIT and Harvard tend to place their respective ‘entrepreneurship development centers’ at the center of startup conversations,” says Lux Capital partner Bilal Zuberi, who has lived in both Boston and the Bay Area and invested in startups in both places. “Stanford doesn’t work that way.”

At Stanford, Zuberi says in an e-mail, students and faculty are “more directly engaged with the broader startup ecosystem outside the campus, from entrepreneurs and startups in the area to VCs, angel investors, and key opinion leaders.” The result, he says, is “a more seamless and successful transition out of campus and into the real world.” (That culture, however, has also led to criticism of the university.)

In any case, it’s hard to argue with MIT’s history of spinouts and alumni starting companies after graduation, from big tech firms like Bose, iRobot, and Akamai Technologies, to newer startups like Accion Systems, Grove Labs, and Formlabs. As of 2014, there were more than 30,000 active companies founded by MIT alumni, employing 4.6 million people and generating nearly $2 trillion in annual revenue, according to an MIT study released last year.

But Aulet says startup formation can’t be the most important metric for administrators and leaders of campus entrepreneurship groups. Otherwise, the school would become more of an economic development engine than an educational institution, he says.

“We teach people how to fish,” Aulet says. “We don’t catch fish. That’s not our job.”

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