What does Entrepreneurial Success Look Like?
In the business world, privately held companies valued at $1 billion or more are known as unicorns. Like unicorns, the billion-dollar startup was once only a myth. Now, all that has changed.
Fortune now publishes “The Unicorn List” that includes 174 unicorns. Uber tops the list, with Airbnb, Snapchat, and Pinterest also in the top 10. The Wall Street Journal also publishes a dynamic “Billion Dollar Startup Club” graphic that shows unicorns with their current value and region of origin – Uber’s current $68 billion valuation is by far the highest of the group.
Some rankings use just one criterion, such as venture capital funding to measure success. Although not necessarily the best measurement, it is an easy, publicly available figure, and there have certainly been unicorns that have failed. But, should valuation or the ability to raise money be the only measure of success?
What about the important success factors such as profitability, revenue, job creation, and even intangibles such as social good – giving back to the community or the world. The combination of these metrics provide a more holistic view to measure success.
MIT has been measuring entrepreneurial success for years, and our figures take into account job creation and revenues. According to our last update, companies founded by living MIT alumni have created 4.6 million jobs and generated nearly $2 trillion in annual revenues – that’s about the same as the GDP of the world’s 10th largest economy.
While the trajectory of the unicorns is impressive, a great number of unicorns aren’t profitable. Many startups and entrepreneurs have focused on “growth at all costs,” often operating at a loss to grab market share. It’s not a surprise to learn that some unicorns are terrified when they have to think about profits for the first time. (For more in-depth analysis, check out this blog post by well-known venture investor Bill Gurley.)
All of these issues are things that we think about deeply here at the Martin Trust Center for MIT Entrepreneurship. We certainly want the startups that we help launch to be successful, not just in venture capital raised or achieving unicorn status. More importantly, we want that success to be sustainable and we want the entrepreneurial skills that we impart to be deeply rooted.
Think about trees for a second. Yes, much less magical than unicorns, but a tree has deep roots, a solid foundation, and branches that grow over time. We believe that with the tools that we provide to our students: from the proven framework of courses; to state-of-the art facilities; to advisory services; to our own delta v student venture accelerator, we are planting the seeds to help that tree grow. Obviously, drive and passion are important characteristics of successful entrepreneurs, but we know that entrepreneurship can be taught with a systematic, disciplined approach.
In fact, learning solid entrepreneurial skills might be even more important than launching a successful first startup on your first shot. How does MIT produce so many successful entrepreneurs? We believe it’s all about planting a tree, rather than chasing a unicorn.