mbaMission Founder and President Jeremy Shinewald recently connected with Jodi Gernon, director of the Rock Center for Entrepreneurship at Harvard Business School [HBS], to discuss some of the latest trends in entrepreneurship among MBA students in general and at HBS in particular. Read on to learn about the various resources available to aspiring entrepreneurs at HBS, including an incubator, notable professors and courses, business plan competitions, and experienced on-campus mentors.
mbaMission: Thank you so much for talking with me today, Jodi. Why don’t you start by telling us about your journey to the Rock Center for Entrepreneurship?
Jodi Gernon: Sure. I guess I kind of found entrepreneurship about five years after graduating from HBS. I have an engineering undergrad and worked for GE between undergrad and business school, and then I graduated from HBS in 1991. And when I was at business school, I actually said, “Oh, I want to try to explore something a little more creative,” so I started looking at some companies like Pepsi and actually went there for a while. I was able to get a taste there for the more creative types of opportunities, and then after Pepsi, I decided to go back into more of a health care–related field, which is where I had come from. I always said I never drank a lot of soda, so I decided to go back into that realm.
From there, I worked in health care but missed the creative piece, and after a couple moves, I ended up at a start-up called Physicians Online, which was really the ideal place for me to combine both my creative interests and my consumer interests with my health care interests, and it was in a start-up. So I got the start-up bug at that point. I loved the energy and enthusiasm and fast-paced nature of a start-up, and from there, I continued to get a great appreciation for what it’s like to be in the start-up world. After my husband and I moved again, I ended up at a couple of other start-ups, Physicians Online and then Mediconsult—both were acquired by WebMD—and then MotherNature.com, which IPOed. And that’s really the history of my early start-up experience.
After MotherNature.com, I started doing more consulting to the founders of start-ups. And one of my first companies was a venture-backed company called Revenio which was a CRM [customer relationship management] company. I was part of the founding team and helped refine their value proposition and define their product characteristics. I was also raising kids at the time, so I just continued to either consult to or mentor start-ups. And after moving to Toronto and back, and trying to start my own company, which I decided to pivot away from, I came to the [Arthur] Rock Center [for Entrepreneurship], where I could apply both my founding experience and all my other start-up experience to helping students who are trying to start their own businesses.
mbaMission: Sure. So entrepreneurship is pretty hot right now, and of your Class of 2013, roughly 7% of students—so, ballpark, close to 70 students or so—started their own ventures. Would you say that is a lot?
JG: I think that’s a lot. I think the number I heard was 9% of this past class [Class of 2015], and that was up from 7% in 2014. I think it reflects the Millennial generation’s desire be their own bosses and have a significant impact on the world. So we’re seeing demand for it, and we’re providing the resources and support and programs to help meet that demand. I just think it’s reflective of a lot of students who really want to run their own companies. However, we are not seeing a major surge in start-ups like we saw in the late ’90s. It has been a steady and healthy growth.
mbaMission: Is there a target percentage as far as the proportion of students you want going into entrepreneurship? As in, would the Rock Center like to see more students starting their own businesses?
JG: No, I don’t think that’s what we’re about. We’re about fostering those students who are interested in doing that. HBS approaches this whole idea of entrepreneurship as a great way to teach innovation, whether people go off and decide to run their own company or go into a larger, more established company, they can apply some of the learnings they’ve gained about entrepreneurship at HBS into an existing environment. We talk a lot about the whole process of making sure you have a value proposition that really solves a problem and that outlines the problem and the solution and the product/market fit. And we also talk about how you differentiate yourself from others and how you can take your idea or product to market and test it, in a way, so that you can fail quickly—which is a mantra on the West Coast—and learn from it. Everything we teach can be applied in many different work situations, not just at a start-up.
mbaMission: Right. So this may be a potentially sensitive question, but you’ve got a rival across the continent that has about 17% of its graduates starting businesses. How do you explain that disparity? Does that program just attract more entrepreneurial students, or does it perhaps foster entrepreneurship better? Is it simply a matter of different interests? And is geography an advantage or disadvantage?
JG: No, that’s okay. [The] Stanford [Graduate School of Business] is in a very unique environment—that whole West Coast environment, where money is flowing very rapidly. People there have a different approach to investing, so students are given more access to funding much faster out in California. I would have to say that is absolutely true, whereas on the East Coast, you’ve got investors who want to see more traction before investing but are still putting the big dollars into investing. It is also important to note that Poets and Quants came out with a list in 2015 of the top 100 companies in the past five years that were funded with more than $2 million, and HBS had 42 companies, versus about 32 for Stanford. Considering our average percentage of students who go into entrepreneurship at about 8% versus Stanford’s 17.5%, HBS is doing pretty well at generating businesses with high potential.
So am I surprised at those numbers? No, because I think Stanford’s known as a place to go and start companies, but HBS, in the past five years, has made some significant increases, in large part because of the programs we offer.
mbaMission: I want to talk about those programs in a second, but first, does the Rock Center engage with the admissions department at all to ensure that more promising entrepreneurial applicants are coming to campus?
JG: We participate in the student interview days, where we give a presentation outlining our programs. So we talk about what those programs are, what kinds of things we do, and the alumni that they [students] have access to. Something like 25% of venture capitalists are HBS grads, and we definitely point those things out and highlight some of our more recent successes, especially in the area of women entrepreneurs. We also are asked occasionally to speak with students who have been admitted to both HBS and Stanford, and we pretty much give them an understanding of how the two schools are different—they need to then decide which school’s culture and atmosphere meet their own interests.
mbaMission: So let’s talk about some of the programs that are available through the Rock Center, such as the New Venture Competition. What can you tell us about how students would enter that competition and what happens after that?
JG: Sure. That’s definitely one of our flagship programs. We get more than a hundred teams, which is pretty significant, that apply or decide to go on this year-long journey. The whole focus is to encourage students to try out presenting an idea or a concept or a business that they’ve started and to use this opportunity to get extensive feedback and work on the opportunity in a very rigorous and supportive environment. And we really give them help and understanding on issues like how do you go about doing market research to ensure your idea is viable? We also give them something we call a Baker Bootcamp. We have a knowledge and learning services group with amazing databases and resources to basically go and find information on market size and competitors and do all that kind of analysis to show that there is a market and how you’re different from your competitors.
We also provide legal clinics on all the questions you have to have answered. How do you incorporate yourself? How do you develop an equity agreement with your founders? How do you go about looking at getting funding or angel funding? And then we have a series of pitch clinics where students can get up and present their ideas to investors who can give them feedback—verbal feedback and written feedback both—that allows them to really refine their ideas and learn to be more effective in their presentation. So all these students, whether they win or not, get that kind of attention if they ask for it, and they all have access to those programs. That’s why we like to call it a journey.
And eventually we get to Super Saturday, where we have 140 judges come in and sit in different panels of four to five judges and give these students even more compelling feedback on their ideas. We had a group last year, RapidSOS, that went through the whole process, and that kind of feedback helped support them in winning both the New Venture Competition and the President’s Challenge for Harvard, plus the MIT challenge [the MIT $100K Entrepreneurship Competition]. I think they actually won a variety of other challenges as well.
So we have three winners of the competition, but so many students go through the program, and a lot of times they’re first-year students who come back in the second year and make it even further and will be very seasoned presenters by the time they get in front of potential investors.
mbaMission: And there’s an alumni version of this as well, right?
JG: Yes. We have 14 different regions around the world where this is held, and each region sends a regional finalist to the New Venture Competition finale in April. With the New Venture Competition, we also have a social enterprise track in addition to a business track and an alumni track. The business track is purely about a for-profit business that’s out there to become a profitable venture. And then you have the social enterprise track, which we find is kind of getting murky with respect to the business and the social aspects, because students are looking for things that have significant impact but can also be self-funded in a way that they can just feed money back into the business to support social ventures. And you have the alumni track.
mbaMission: On the school’s Web site, I see roughly 20 courses in the second-year elective curriculum that are related to entrepreneurship. Can you tell us about any particular standouts and explain a little why they are so popular with students?
JG: Well, one of the most popular classes is “Founder’s Dilemma,” which was created by Noam Wasserman, based on his book and research, and that program is taught by Shikhar Ghosh, who is a senior lecturer here. He has a tremendous amount of people wanting to take his class, and he was one of the founders of Open Market. He was also chairman of the Mass Technology Leadership Council and has founded quite a few different companies. That’s definitely one of the most popular classes. And then we have Tom Eisenmann’s class on “Product Management.” He takes a select group of students and guides them through the whole process of coming up with an idea and doing the customer discovery and launching the product and making sure they’re testing for a minimally viable product. That’s an extremely popular course, and it very much corresponds with some of the programming that we do.
Probably another one that’s really popular is Bill Sahlman’s “Entrepreneurial Finance” course, which is always oversubscribed—he could probably add four more sections. He’s a very engaging teacher with a lot of history who’s been here for almost 30 years and has seen a lot of different companies get started. The last one I would mention is Jeff Bussgang, who’s also a senior lecturer here and teaches the “Launching Technology Ventures” course, which is another way oversubscribed course that every student wants to take. And for all these courses, they bring in different case protagonists and people who have gone on to develop very successful opportunities.
mbaMission: Great. Can you talk a bit about the Entrepreneurs-in-Residence program? For example, how do students gain access to such accomplished mentors, and are these entrepreneurs really able to dedicate significant time to the program?
JG: Sure. The Entrepreneurs-in-Residence program is a tremendous program, and people who are selected as Entrepreneurs-in-Residence [EiRs] are actually appointed by the dean. So they really need to take the role seriously. What they are required to do is hold a minimum of four hours of office hours here on campus each month, and many actually go beyond that. They’ll have the four hours, plus they might Skype with students, or if they’re in for the day, they’ll have office hours all day long. They really are here. They’re on campus. The students—not just HBS students, but all Harvard students—have access to them, and they just love giving back and helping these students become more successful. In many cases, I should say, the EiRs will co-teach a class with a professor as well. That’s actually how Jeff Bussgang and Shikhar Ghosh both got started. They came in as EiRs and started teaching some classes and helping with research.
mbaMission: So they enjoyed it and decided to stick around?
JG: Yeah. They’re still doing what they’re doing outside of HBS, but they come in and teach these classes, too. And we really encourage our students to go to the different EiR events. We have a big kickoff event with our EiRs and our staff, and we learn a lot from them as well. And many of them also work with our Rock Accelerator Program and work with some of our teams that are much further along in their idea development, providing feedback there. They will be mentors to some of the teams, and they provide a lot of feedback to us on how to refine our programs.
mbaMission: Another really interesting program I saw that you offer is the Rock Summer Fellows program, which offers grants to aspiring entrepreneurs so they can sustain themselves over the summer. How many fellows are typically accepted into the program, and can you give a few examples of successes that have emerged from that program?
JG: Oh, sure. We had 85 students take advantage of the Rock Summer Fellows program last year.
mbaMission: Wow! That’s amazing.
JG: Half of those were interested in founding a company, and the other half were students who wanted to join an early-stage start-up. The students founding companies are actually eligible for up to $7,200 to offset expenses while they do their research and build their products over the summer. And the students who were joining early-stage start-ups received up to $7,200 in matching funds as well. In those cases, we asked the start-up to provide funding to the students, but we would go up to $7,200 in matching funds. The whole idea is to support students who want to try different programs or opportunities. The time between their first and second year here really allows them a chance to do something outside their comfort zone, and the school is really committed to providing students with the opportunity to take advantage of those types of things.
We also have programs in cities where we have a good concentration of Rock Summer Fellows, such as New York, Boston, and San Francisco. We’ll have social hours with them and connect them with mentors in those cities so that if they have any issues or questions, they can be in touch with someone they can work with.
mbaMission: Got it. We talked a little about how entrepreneurship is hot right now and finance was hot for a while. Do you think MBAs ride these kinds of industry waves? Are we just in the midst of an MBA entrepreneurship bubble rather than a broader financial bubble in certain parts of the country?
JG: You could say that that might be the case. I was talking to Hayley Barna, a founder of Birchbox, and asked her that question—“What do you think?”—and she said, “You know, Jodi, we started our company when the market was down.” It was after 2010 when she was at business school, and the job market had really tanked, and at that point, she and her partners were like, “Look, we’ll start a company.” I think it’s really interesting. Will there be people who say, “Maybe this isn’t for me?” Absolutely! But I think that in times when the market has really tanked, people tend to want to look for alternatives to traditional jobs. So they will look to starting their own company. It could die down after a while, but I think that people are seeing that there’s tremendous opportunity to write your own career path with entrepreneurship. I think there’s also been a big emphasis on the idea that failure isn’t a bad thing, so people are willing to risk things more in a way that’s “How do I learn from this if it does go south?”
But I think it’s interesting. You hear this out in San Francisco, even. The people are saying, “Is the bubble about to burst?” And Tom Eisenman, one of our faculty chairs for the Rock Center, says, “There’s always a bubble lurking out there.” It’s just how you manage through those bubbles or those bursts, I guess.
mbaMission: Right. I believe there’s never a bad time to launch a good idea, but I also think there are some companies out there that aren’t real companies and will likely fall apart in the next little while.
JG: Sure. I think what we see are students coming in with these bright eyes, thinking, “Hey, I want to start a company.” And they may be excited about the allure of starting a company and what that means, but when it comes down to it, the students who understand that it is hard work beyond anything they’ll ever have to do but are not deterred by this—those are the ones who are going to continue. Some of those students realize that they’re totally up for the challenge, but others might just say, “You know, it sounded good, but it’s not really for me.” And that is totally fine with us.
I think when you come here, you get that exposure, and you understand what starting a company is all about. We give students a chance to really try it out and go down that rigorous path—or journey, as we say—and it helps them make a decision whether it’s right for them or not.
mbaMission: Absolutely. So, to wrap up, is there anything you’d like people to know about the Rock Center that we haven’t covered?
JG: Well, one of the programs we briefly mentioned but that I would really emphasize is the Rock Accelerator Program, which is an incubator program here at HBS for students who really show promising business ideas and have put together a team. We actually give them funding to take their business to the next level. There is no equity involved or anything, but the whole idea is that we give them funding and a lot of really deep support to make sure that they can at least be successful. That program has only been around for about three or four years, and we’ve had 85 students or teams come through it, and they’ve gone on to raise more than $31 million in those three years. And 41% are still working on their start-ups. So that’s a pretty significant effort that’s happening.
Another thing that we’re really focused on these days is that while you’re here at HBS, it’s great and everything, and you get a lot of access to resources, but we found that our alumni are really interested in keeping that connection going and finding other HBS alumni who are going through the same kinds of challenges. So we launched a program for alumni that’s called Rock 100, which is really focused on unlocking the power of the HBS network and helping founders connect with each other. We like to say that we’re not just supporting you when you’re a student, we continue that support into the alumni world.
mbaMission: Right, fantastic. I really appreciate your time. Thanks so much.
JG: No problem. Thank you.