Should we be surprised that university entrepreneurship programs don't produce too many entrepreneurs?

The answer to any question in a headline is No. A recent article in the Globe and Mail talked about the poor results from grants Ontario gave to universities to build out entrepreneurship programs. It's the traditional gripes about university startup programs: too much money spent useless things (office space and 3D printers) or money spent on things that could be free (mentorship) and it's too difficult to track outcomes.

This problem is everywhere. Entrepreneurship is seen by the public and by the government as A Good Thing That Should Be Encouraged. Money is made available to universities to promote entrepreneurship, usually through the creation of a entrepreneurship support group inside a business school or the university commercialisation body. They run business creation workshops for students, review business plans, hold pitching competitions, and maybe they have some sort subsidised office space or angel seed money for the very best kids.

And after 4 or 5 years of this, the results are tallied up and they don't look good. There are a few academic spinouts, but but many of them might still be in the angel investment/VC investment phase with very little to show. If the entrepreneurship organisation is very good at record keeping, they might have a list of how many students they helped have gone on to start a new venture, but chances are also that these startups have low growth potential. So there's a re-org, new management is brought in, a new mission statement crafted. Wash, rise and repeat.

The problem with many university entrepreneurship programs is that we are measuring the wrong things. It's great if we embed entrepreneurship in the curriculum so much that students in all disciplines from STEM to Slavic Studies are prepared to identify a pain point and build a Minimal Viable Product while filling out their Business Model Canvas while watching a TED talk. But the fact is that recent university graduates are pretty poorly positioned to startup a growth-ready startup. Because they have little experience in any industry, they are poorly positioned to identify needs in industrial value chains or really anything beyond consumer products / apps. Studies have shown that the most successful entrepreneurs are generally in their late 30s/40s and have at least 10 years experience in the industry they're entering. They have the knowledge, the legitimacy, and the resources necessary to successfully create a new, fast-growing venture.

In this sense, it's kind of foolish for recently graduated students to jump into starting their own company the second they graduate. Some students who have been dreaming about running their own company for years will do this, and that's great. They have the initiative, flexibility, and orientation needed to be a great entrepreneur.

But for most students, this entrepreneurship was never their goal after they graduate. For these students, the majority of a university's student body, the point of entrepreneurship education is to plant a seed. Knowing that entrepreneurship is an option for them, knowing the fundamentals about what works in a startup and what doesn't can help a graduate who is 8 or 10 years into their career in an industry see an opportunity and decide to take the risk of going after it. Now they not only have the skills to start a business they have the inside knowledge and experience that gives them an unfair advantage.

The problem is that these startups will never show up in any analysis of the university's entrepreneurial performance. The connection is too long-term and too subtle to easily pick up. But I think these types of startups are the most important outcome of university entrepreneurship education programs. It's just a shame that we'll never be able to count them.

There's no solution to this. All we can do is temper our expectations for what an immediate intervention can do. A single program with a 3-year rolling budget won't make a university a startup factory. This kind of transformation is a decades long project involving long-term investments, changes to the way tenure and promotions work, and a complete reinvention of the university's culture and the type of students it creates. But what these programs can do is help create a more entrepreneurial population of graduates, even if they don't become entrepreneurs until long after they've graduates.

Kicking students out to get their work visas: Bad idea or worst idea?

The great thing about the end of the year, other than my birthday (better known as Christmas 2) is that governments try to release all their crazy policies while everyone is off enjoying the 'festive season' (better known as getting drunk). So I wasn't that surprised when I read that the Home Office is developing a new strategy of forcing all non-EU foreign students to leave the country before applying for a work visa. Let's discuss why this is a terrible idea. A university helps the regional and national economy by bringing in promising pupils, educating them, helping them gain technical and social skills, and then unleashing them on the economy as workers and entrepreneurs.One of the biggest economic contributions universities make to their surrounding regions is to attract and train skilled workers. All the cool research and 'academic spinoffs' are just added gravy, the true benefit comes from developing wicked smart kids.  Immigration policy should do its best to create pathways for foreign students trained in domestic universities to stay in the country. Universities aren't economic engines, their alumni are.

I also think that forcing a 4-month trip home would break the link between the student, the university, and the region. Let's imagine the optimum situation here: a brilliant student graduates and leaves the country to apply for a work permit. She has to give up her flat, sell or store all her furniture, and then move back with the parents. She goes out and applies for jobs and because she is brilliant, gets many offers and gets a work permit after about 120 days. Right there the university's home region has lost it's best claim to the student: she already lives there. Sure lots of students move after finishing university, but many students (particularly post grads) also set down roots in a place that encourages them to look for local work. This is especially true for entrepreneurs or people who want to work at startups who depend on their place-based social networks to find opportunities and jobs. This policy change will break these networks and bonds for every single non-EU student.

Second, it's pretty much admitting that the sole purpose of international students is to subsidize domestic students' tuition. I'm an international student / worker twice over: I'm an American but I did my undergrad and PhD in Canada and now I'm a migrant worker in the UK. As a student I knew that I was paying more than my Canadian friends, but at least I knew that Canada had some interest in keeping me after my studies. Maybe not as an undergrad (for some reason economic geographers aren't in demand in the Canadian labour market) but my PhD came with a permanent residency application stapled to it. I think changing the rules to basically say "thanks for the money, now why don't you go home and cool your heels for a few months while we decide if you can come back." would really change my view towards the university and the country.

Look, we all know that this change is being done for political reasons leading up to an election. Some idiots made an idiotic promise to minimize net immigration. But it's also important that every single idiotic consequence of these idiotic plans are raised and that the backers of these plans are forced to explain their rationales to a sceptical public.

Entrepreneurship and Independence

I just got back from the Independence and Entrepreneurship debate hosted by the University of Edinburgh Business School and MBM Commercial. It was a great event! This is such an interesting and important topic, and I'm glad that over 400 people were willing to spend an evening listening and thinking about it. Now that I'm back home with my scotch and my Game of Thrones, I've got a few thoughts on it. 1) I was somewhat disappointed by the composition of the panel. 6 people: 1.5 entrepreneurs, 3.5 economists / financial policy folk (one was half economist and half entrepreneur) and one MSP. Because of this, discussions of entrepreneurship took a back seat to discussions of fiscal policy. Not that those points aren't important, but that they're not entirely relevant to entrepreneurs. I was also disappointed that there were no women on the panel. Women make up about 40% of the owners of new firms. I was disappointed their voices weren't heard tonight.

2) The elephant in the room is that policy and tax regimes really don't really affect entrepreneurs. As I said in the last post, I've talked to a lot of entrepreneurs and not a one has mentioned being swayed by a small change in the marginal tax rate or the introduction of a new innovation policy. No one seemed to answer which UK policies are holding entrepreneurs back and which future Scottish policies could foster it.

3) Buuuuuuuut.......currency does matter. The panelists suggested that the costs of currency transactions between some future Scottish pound and the Pound Sterling would add about 1% to firm costs. I think this is a bit low when we're talking about smaller firms, who will bear the brunt of cross-boarder transactions. But, I honestly don't think it will come to that. This is the one question that really matters for entrepreneurs, but it' the one question that will not be answered before the vote.

Finishing up and starting again

I haven't posted for quite a long time, but I do have the best excuses in the world. I was busy defending my dissertation and interviewing for jobs! I'm happy to say that I defended successfully and am now a Doctor of Philosophy and even more importantly, I've accepted a position as Chancellor's Fellow at the University of Edinburgh Business School. I'll be working on the development of entrepreneurial ecosystems and the relationship to firm strategy in Canada and the dusky moors and wrens of Scotland (I'm still developing my Scottish accent). And now that I'm an official Expert in Entrepreneurship, I'd like to say how much I agree with this article by Melba Kurman about the dark side of entrepreneurship policy. In our constant desire to boost technology entrepreneurship, we often forget that there's a large population of people who really can't benefit from this kind of entrepreneurship: people without the human capital to start or work in high-tech firms, poor people without the savings to endure the wait for revenues to start flowing in or the low pay and high insecurity of startups; single mothers unable to work the long hours these kinds of startups require.

More than that, I think we also may over estimate the actual economic development created by these kinds of firms. In the extreme, you have startups like Instagram, which only had 13 workers when it was acquired for a billion dollars. The value of internet companies is in their IP, not their capital or equipment. Even in the most fortuitous circumstances, when an internet startup gets all the VC investment and angels and invitations to TED talks, they may be worth a lot of money but employ very few people and therefore have limited economic spillovers to the community.

There are exceptions to this. Miovision in Waterloo has all the sparkle of a UW technology spinoff (which it is), but employs a lot of people in manufacturing and maintenance, as well as in engineering and development. However, companies like this don't fit well into the existing accelerator to incubator to VC pipeline many technology entrepreneurship programs are implicitly designed around.