I think Duke can have one of the strongest entrepreneurial communities in the world. Are we there yet? Well, not yet. But there's a tremendous amount of momentum that I saw build in just the past two years while I was getting my MBA at Duke. While leading Duke's 10th annual business plan competition, the Duke Start-Up Challenge (DSC), last year, I witnessed a near doubling of participation on campus in just a single year. The interest on the ground was clearly there and building rapidly. But now that I'm an alum, I'm looking back and wondering ... how do we rev-up the Duke entrepreneurial community even more?
I read a great article by Daniel Isenberg, a professor of management at Babson, called "How to Start an Entrepreneurial Revolution" in the June edition of the Harvard Business Review. Isenberg outlines nine prescriptions for governments that want to create entrepreneurship ecosystems in their countries. Although he was focused on governments and countries, I thought the prescriptions he outlined were just as applicable to smaller organizations, in this case Duke.
So, I took a stab at outlining nine prescriptions to build the Duke entrepreneurial community, leveraging Isenberg's and including a relevant quote from the article for each. I'd love to hear what you think! Without further ado, here they are:
1. Stop emulating MIT and Stanford
The nearly universal ambition of becoming another Silicon Valley sets governments up for frustration and failure.
MIT and Stanford have in many ways set the gold standard for generating successful entrepreneurs, but they also evolved under a unique set of circumstances that could not be fully emulated by Duke. Ingredients like the open California culture or the close physical proximity that Stanford has with Silicon Valley or MIT has with Route 128 just aren't all there with Duke. In particular, despite what people say about RTP being a magnet for talent, most Duke grads leave Durham. That was the biggest complaint I heard from investors in RTP, particularly when compared to other local schools like UNC and NC State. Folks come in to get their Masters and PhD's and then they move on to other places.
This isn't bad necessarily, just a very critical difference that should potentially be optimized for rather than fixed. How do you optimize? Well, go where the Duke grads go and build relationships in those communities. You'll end up with a community that is much more virtual and distributed (mini-communities in each city), but one that is much more natural for its members. I think DukeGEN is absolutely brilliant in this regard. The LinkedIn groups and local happy-hours in each city work really well.
2. Shape the community around local conditions -- healthcare & life sciences in RTP, IT in SF, ...
The most difficult, yet crucial, thing for a government is to tailor the suit to fit its own local entrepreneurial dimensions, style, and climate.
I've already touched on this in regard to comparing Duke to other schools, but similar principles apply when looking within the Duke community. Duke alumni in San Francisco are very different from those in NYC. In RTP, you'll find a depth of talent in healthcare and life sciences, but not as much in IT. So cater to the local interests. This is kind of obvious, but actually requires a lot of support from each of the niche interest groups or local communities.
This is something we started to do with the DSC last year. We added two new tracks - Energy & Environment and Women Entrepreneurs - to respond to the demand coming from students on campus and we recruited student representatives (DSC Ambassadors) that had credibility (and networks) within those interest areas to help us effectively reach those smaller communities. The challenge with this is finding an appropriate balance between achieving critical mass and being overly fragmented.
3. Engage students and alumni from the start -- student and alumni-led organizations
Government cannot build ecosystems alone. Only the private sector has the motivation and perspective to develop self-sustaining, profit-driven markets. For this reason, government must involve the private sector early and let it keep or acquire a significant stake in the ecosystem's success.
Continuing the analogy, make the following replacements in the above quote -- "government" = "Duke administration" and "private sector" = "students and alumni". Having been a student leader myself, I'm obviously a little biased here, but I think the only sustainable way to build a community is for the community to self-organize with the support of the administration -- rather than the other way around. That means that initiatives on campus should primarily be student-led and those around the world should be alumni-led. This builds ownership, ensures that there is a real pull from the community (rather than things being pushed upon them), ensures that the community reflects the current interests and needs of its members, and most importantly ensures that there is leadership developing in those smaller communities to help align things with the broader community.
One of the draws of the DSC for me was that it was student founded (in 1999) and student-led for the 9 years leading up to when I took it on. DukeGEN, similarly, was formed from discussions between alumni and faculty. I think it's a great model and one that can continue to be leveraged. It requires leaders to step-up, though, to get the ball rolling, so I would argue that no initiative should be taken on unless you can get someone from the community itself (e.g. local city, niche group on campus, etc.) to take ownership of it.
4. Favor the high potentials -- quality over quantity
The reallocation of resources to support high-potential entrepreneurs may seem elitist and inequitable. But especially if resources are limited, programs should try to focus first on ambitious, growth-oriented entrepreneurs who address large potential markets.
The basic idea here is to focus on quality first rather than quantity. We struggled with this at the DSC. Should we spotlight more teams in the main events to "spread the love" or should we keep those events small with only the best of the best? I think the answer here, particularly at the beginning, is to keep things small and high quality. Fewer DukeGEN events with more people are better than more events with just a handful. Fewer entrepreneurs pitching at the angel pitch events with vetted, high quality ideas is better than more entrepreneurs pitching with potentially watered down ideas.
This is important in a couple regards - 1) you're highlighting the winners (more on this in the next prescription), and 2) you're setting a high bar and making things difficult (more on this in prescription 7). I would argue both of these help build self-esteem, which is critical in building identity and cohesion in the community.
5. Get a big win on the board -- Mint.com
It has become clear in recent years that even one success can have a surprisingly stimulating effect on an entrepreneurship ecosystem - by igniting the imagination of the public and inspiring imitators.
I heard recently that almost every company that pitched at the YCombinator Demo Day last week mentioned two things - 1) game mechanics, and 2) Mint.com. As Isenberg mentions, success both fuels the imagination and inspires imitation (in a good way). These types of stories reduce the belief in artificial barriers to starting a new company, belay fears of failure, and show the rewards that can result from taking on risk.
It's important to celebrate (or even overcelebrate) these types of successes. We certainly tried to do that in last year's DSC competition. Aaron Patzer was our keynote speaker for the Grand Finale event in April and afterwards I heard from many people that said they were "inspired" by his story. He was also one of the judges at the Bay Area angel pitch event. It takes longer for stories to get stale than you think, so I think saturating your communication channels is a good start. At the same time, they do eventually lose their novelty. What to do then? Fortunately even small and medium successes have an impact on people. So keep overcelebrating every success!
6. Tackle cultural changes head-on -- failure is OK!
Entrepreneurs learned that it was possible to fail and regroup to try again. "If you wanted to be respected and taken seriously, you needed to be a founder with a stake in a company trying to do something".
It's extremely difficult to change deeply ingrained cultures. Duke is over 150 years old and is one of the most selective institutions in the US to get admitted to. From meeting students from all over campus, I was impressed at how bright the students at Duke are. It takes a straight-A, super over-achieving person to even get admitted. The downside to this is that many of these students are not comfortable with professional failure. Why? Because to get in they rarely failed. Exacerbating the issue, at a cost of over $50k per year, students (or more accurately their parents) are investing over $200k to finish a degree. You think parents are eager to see their kids gamble their educational investment on a crazy start-up idea (more on this in prescription 8)? It's more of a breeding ground for doctors, lawyers, investment bankers, engineers, and consultants than it is entrepreneurs. So what do you do about this? I think 1) you have to deal with the stigma of failure head-on (instead of avoiding it) and 2) you have to leverage media.
Celebrating your successes is important (as previously discussed), but you have a real starting problem if students have a stigma around failure (i.e. it's difficult to get them started when the task seems so daunting). A simple solution to this is to make failure OK. Instead of asking, "are you up for the challenge?", we should be asking "have you had your first failure yet?". In addition to all the inspirational and skill-building content we share through Duke media channels (e.g. DEES talks on "Entrepreneurship 101", "How I started a Life Sciences Company at Duke", etc.), we should also be highlighting the failure process and more importantly how you deal with that emotionally as an entrepreneur. I'd love to see a talk entitled "Have you had your first failure yet?", or "How to deal with your first entrepreneurial failure (because it will happen often and that's ok)". I think given the unique cultural starting point at Duke, this type of content would be really valuable.
And there are lots of media channels that could be perfect for this type of discussion. There are many forums to support live discussion on this topic, including P4E, the One Day Start-Up, DSC info-sessions, DEES networking hours, the Entrepreneurship Symposium, and others. I can even imagine a social media competition called "Share your failure story with your classmates" that could put a funny spin on the topic. DukeGEN profiles or Duke Chronicle articles could also include this spin as well. Particularly if these stories have a happy ending (e.g. I failed miserably three times but then built this great business later), I think this could be a useful approach to changing the culture at Duke.
7. Stress the roots -- make it difficult
Just as grape growers withhold water from their vines to extend their root systems and make their grapes produce more concentrated flavor, governments should "stress the roots" of new ventures by meting out money carefully, to ensure that entrepreneurs develop toughness and resourcefulness.
Starting a company's not easy. Why should school be any different? The bar should be set high for Duke entrepreneurs to get money or resources from the university. This prescription is related back to prescription 6 of favoring the high potentials. If you give money or resources too freely, you may stigmatize the recipients of it as being less capable. It lowers both the self-esteem of the entrepreneurs and the reputation of the Duke entrepreneurial community.
The most obvious places to apply this prescription are to competitions - the DSC and angel pitch events (e.g. New York). I think that's already happening. I could also see this being applied to DUhatch as well. Isenberg talks in the article about how incubator programs have for the most part been unsuccessful in generating meaningful start-up success stories. Even the well conceived and well managed ones can take up to 20 years to show results. So keeping the input to these initiatives high quality is critical to ensure they have the desired impact.
8. Don't overengineer clusters; help them grow organically
"Government ... should reinforce and build on existing and emerging clusters rather than attempt to create entirely new ones.... In fact, most clusters form independently of government action - and sometimes in spite of it. They form where a foundation of locational advantages exists. To justify cluster development efforts, some seeds of a cluster should have already passed a market test...." - Michael Porter ("Clusters and the New Economics of Competition" - HBR)
This is related to prescription 3 of engaging students and alumni and supporting and reinforcing their efforts rather than pushing them artificially. I think the types of communities that spring up in San Francisco, New York, Boston, and other places are natural. Applying this to the Duke campus, you see lots of entrepreneurial activity come out of the business school (Fuqua), engineering school (Pratt), and arts and sciences (Trinity). There's a natural pull from those parts of Duke. But Duke's a big place, right? Why can't we create more clusters?
We made a concerted effort this past year to reach out across campus to help draw in students from every discipline. The effort definitely worked as we increased participation. But it turned out that there were places that just weren't natural. You might think that the med school, for example, would be a good place to look given the strength in health care at Duke. As it turns out, though, it just wasn't natural. Students were there to become doctors, not entrepreneurs. So, in this case, fishing where the fish are actually does make sense.
9. Reform legal, bureaucratic, and regulatory frameworks -- make failure ok, shield students from their parents, and four years means a lot of chances
Extensive research points to a number of reforms that have a positive impact on venture creation: decriminalizing bankruptcy, shielding shareholders from creditors, and allowing entrepreneurs to quickly start over.
We'll obviously have to continue the analogy here to make this prescription applicable to Duke. Let's take each suggestion in turn and see how it could be applied:
- Make failure ok -- Given the cultural context of Duke and the stigma around failure, this is the equivalent of decriminalizing bankruptcy. You have to get students comfortable with professional failure. See prescription 6 for a more detailed discussion of this.
- Shield students from their parents -- Who's financing a Duke student's education? Their parents of course. And in this context, we can say that the "creditors" are the parents (the ones that don't benefit from upside) and the "shareholders" are students (the ones that do share in the benefits of upside). Investing $200k, parents are naturally going to be risk-averse investors. They'll be pushing their kids into becoming lawyers, investment bankers, and consultants. So how do you shield students from their parents? You could do things like grade non-disclosure, which is always a hot topic. But I doubt you could really ever fully shield grades from parents. This is a tough one actually. What do you think? Any good ideas here?
- Provide multiple chances -- The fortunate thing about school is that you literally have years to try stuff out. Undergrads have four years at Duke. That means four full DSC competitions. Four shots to apply to DUhatch. Four shots at a lot of things. So I think this one is inherently built into the structure of school.
What are your thoughts?
These were my thoughts on how we could build up the Duke entrepreneurial community. But what are yours? I'd love to hear what people are thinking on this topic.