History and Development of the MIT Entrepreneurship Center [1]

 

MIT is among the pioneers in the teaching, research and practice of entrepreneurship, especially that based upon technological innovation. Its first entrepreneurship subject was “New Enterprises”, introduced in the 1960s. In 1990 Professor Edward Roberts ‘57 proposed to Lester Thurow, then Dean of the MIT Sloan School of Management, that he support the formation of a MIT-wide entrepreneurship program to serve not just MIT Sloan but the rest of MIT as well. Its goal would be to educate and develop those who will create, build and lead tomorrow’s successful high tech ventures. The proposed E-Center sought to increase dramatically and then provide central coordination and integration of MIT entrepreneurship classes and student activities. But unlike nearly all other university entrepreneurship programs at that time, which rested primarily on experience-sharing by entrepreneurs and investors, the proposed Entrepreneurship Center would follow the MIT tradition of “Mens et Manus”, the Latin for “mind and hand”. It had to connect rigorous scholarly pursuit of knowledge underlying entrepreneurial success with effective transfer of that knowledge into practice. Thus Roberts proposed a “dual-track faculty” of “tenure-track” academics and adjunct practitioners, linking entrepreneurial researchers with successful entrepreneurs and venture capitalists. His aim was to build an ambitious teaching program accompanied by direct coaching and mentoring of student would-be entrepreneurs. Academic faculty whose primary thrust is entrepreneurship but whose discipline base is marketing or finance or human resources, for example, would be jointly appointed to their underlying discipline group as well as to the Technological Innovation & Entrepreneurship (TIE) faculty group at MIT Sloan which would provide overall program coordination. In the past nineteen years this dual-track model has been adopted by almost all of the leading business schools for managing their entrepreneurship programs.

           

With co-sponsorship by MIT Sloan faculty across multiple disciplines, the MIT Entrepreneurship Center was launched with an initial Advisory Board consisting of prominent MIT entrepreneurial alumni, including Amar Bose ‘51 of Bose Corp., Ken Germeshausen ‘31 of EG&G, Bernard Goldhirsh ‘61 of Inc. Magazine, George Hatsopoulos ‘49 of ThermoElectron, Patrick McGovern ’59 of International Data Group, and Ken Olsen ’50 of Digital Equipment Corp.  At that time MIT still offered only one related class and had only one faculty member doing research in the field.     

        

In 1996 Kenneth Morse ‘68 became the first full-time Managing Director of the MIT Entrepreneurship Center, which was then given a small amount of space near the MIT Sloan classrooms. Filled with cubicles, desks and filing cabinets the physical space provided a wonderful home base for housing and nurturing a wide array of entrepreneurship-related clubs and activities, with immediate access to adult coaching and guidance, frequently including an Entrepreneur-in-Residence in addition to Ken Morse and staff. Jose Pacheco joined the E-Center as Program Manager in 2004. In 2009, Senior Lecturer and serial entrepreneur William Aulet became Acting Managing Director of the Center, and Professor Fiona Murray became Associate Director, furthering the “dual-track” vision and beginning the next phase of evolution of E-Center programming. 

 

Over time the MIT Entrepreneurship Center label has come to represent to many at and outside of MIT both the physical space as well as the broad-based MIT program of education and activities. The rapidly expanding MIT entrepreneurial program has contributed to a dramatic increase in the number and ambition of classes, clubs, conferences and the resulting breadth and depth of content and contacts that facilitate entrepreneurial behavior – some have called it a frenzy of entrepreneurship! In this brief historical review we track the milestones accomplished in each of these key domains of  the MIT Entrepreneurship Program.

 

Classes

Once underway the Entrepreneurship Center leadership began to create new subjects, attracted existing MIT Sloan faculty to teach them and, when authorized, recruited and hired both practitioners (Senior Lecturers) and academics (Assistant Professors and above) into the program. The sole original “New Enterprises” class was gradually expanded into two sections and then doubled again as student interest in entrepreneurship grew across the Institute. While never tabulated, the number of new companies produced by that subject’s MIT alumni is very high, including as examples such companies and graduates as MAST Industries, founded by Martin Trust ’58, and Genentech, co-founded by Robert Swanson ’69.  Jon Hirschtick ’83 and his roommate Axel Bichara ’88 both took “New Enterprises” and later they co-founded and sold a CAD company.  Jon went on to found SolidWorks, a pioneering company later sold to Dassault.

           

In 1993 the first new full time academic faculty member, Scott Shane, was hired into the MIT Entrepreneurship Program, kicking off the dual-track design and beginning to expand course offerings. His years of teaching experience and excellent research while at MIT prepared Professor Shane for later significant entrepreneurial leadership at University of Maryland and then Case-Western Reserve University. In 1994 the MIT Sloan School launched a series of educational-career “tracks” within its Master’s Degree Program. The MIT Entrepreneurship Center, collaborating closely with the school’s Technological Innovation & Entrepreneurship (TIE) and Marketing faculties, created the New Product & Venture Development Track, headed by Professor Drazen Prelec. NPVD, known by the students as the “Entrepreneurship Track”, quickly became one of the most popular tracks for MIT Sloan graduate students, demonstrating the rapidly growing strong interest in entrepreneurial studies and career paths. All of these “tracks” were dropped a few years later when a major change occurred in the MIT Sloan MBA curriculum, and not reinstated until 2006 with the birth of the MIT Sloan Entrepreneurship & Innovation Track (to be discussed later).

           

Soon additional entrepreneurship-focused tenure-track faculty were hired into various MIT Sloan groups, such as International, Human Resources, Technology and Innovation, Finance, and Marketing, with central coordination provided by the TIE group as earlier described. These new faculty hires included Professors Simon Johnson, Diane Burton, Fiona Murray and Antoinette Schoar. Additional senior faculty from within MIT Sloan have become actively engaged in teaching entrepreneurship-related subjects, including Professors Michael Cusumano, Richard Locke, Drazen Prelec and Steve Eppinger. Faculty from other MIT departments, including Professor Alex “Sandy” Pentland of the MIT Media Lab, have associated themselves with the growing entrepreneurship educational efforts. This strong base of full-time academic faculty were strengthened in 2007 by the addition of Visiting Professor Alan MacCormack and in 2009 by Visiting Professor Scott Stern and by the hiring of Matt Marx to join the MIT Sloan faculty in the area of technological entrepreneurship. A significant number of adjunct faculty were recruited, among the earliest being Russ Olive, John Preston, Joe Hadzima, John Akula and Barbara Bund. As the entrepreneurship program grew, many more Senior Lecturers were brought into the fold to bolster the dual-track elaboration. All these successful entrepreneurs and/or venture capitalists have been eager to share their insights and enthusiasm with the younger entrepreneurial aspirants. The important adjunct additions who headed up their own classes over the years included Dr. Noubar Afeyan, Howard Anderson, the late Alex d’Arbeloff, Shari Loessberg, Jonathan Fleming, Bill Aulet, Andrew Wolk, Ken Zolot, Peter Kurzina and Dr. Valentin Livada. At various times in the history of the MIT Entrepreneurship Center, both John Preston and Simon Johnson served as Associate Directors. By 2001 the number of entrepreneurship subject offerings had grown rapidly from just five in 1995 to twenty-one and the number of student registrants from all departments at MIT had jumped to close to 1500. And MIT students were supplemented in January by an increasing number of outside Executive Education students with the launch of the intensive Entrepreneurship Development Program, aimed primarily at regional and national development officers wanting to stimulate entrepreneurship in their own surrounds. Now in 2009 students across MIT enroll in more than thirty entrepreneurship classes of all sorts, with 76% of the enrollments coming from MIT Sloan and 16% from the MIT School of Engineering.

 

Academic Classes in Entrepreneurship

Over the years several new subjects have been developed and taught by regular MIT “tenure track” faculty, focusing upon their own PhD training and scholarly research. MIT educational philosophy emphasizes faculty transfer of their own research results into the classroom as quickly and practicably as possible. These classes include such titles as: “Designing & Leading the Entrepreneurial Organization”; “Entrepreneurial Finance”; “Managing Technological Innovation & Entrepreneurship”; “Corporate Entrepreneurship”; “The Software Business”; “Strategic Decision-Making in the Biomedical Business”; “Entrepreneurship Without Borders”; and “Competition in Telecommunications”.  Each of these subjects provides an underlying disciplinary basis for entrepreneurial actions in a given area. Other subjects also fall into this category.

 

Practitioner Classes in Entrepreneurship

Many of the new subjects that have been developed depend primarily upon the experience of successful entrepreneurs and venture capitalists. These expert practitioners share their real-world insights built up over years of work in aspects of entrepreneurship that lack much academic theory. Some of the subjects taught by our extensive part-time practitioner faculty members include: “New Enterprises”, the first course previously described that lays the groundwork for development of business plans for new companies; “Technology Sales and Sales Management”, “Law for the Entrepreneur and Manager”, “Early Stage Capital”; and “Social Entrepreneurship” and “Developmental Entrepreneurship”, two subjects that parallel “New Enterprises” but with a focus, respectively, upon the firm motivated by social problem-solving or upon the context of developing countries. Other subjects also fall into this category.

 

Mixed-Team Project Classes

No doubt both the theory-based and the practice-oriented subjects in entrepreneurship have had great influence on their students, as we have discussed. But intuitively we feel that the strongest impacts have derived from a cluster of project-oriented efforts, the third category of subjects that we have created over the years since the MIT Entrepreneurship Program began. In these classes the students organize in teams of four or five, preferably including participants from both management and science and engineering, to tackle real problems in real entrepreneurial organizations. Three subjects constitute the Entrepreneurship Program’s base in this domain but we seem to be adding to the Entrepreneurship curriculum one or more new subjects of this type every year. Our earliest subject here was “Entrepreneurship Laboratory” or E-Lab as it is well known. Students select from the problems presented by companies that are usually quite young and in the Greater Boston area, although we have violated the distance constraint on many occasions. The intent is to work on “a problem that keeps the CEO up late at night”! With the emerging company CEO as the “client”, the team devotes heavy time for the duration of a semester working on her or his issue, with class time spent on communicating general principles of team management, project analysis, client relationships, some commonly used tools of market research, and in sharing progress reports with each other. The students learn much about teamwork and the issues facing early stage technology-based companies. Summer internships and later full time jobs often result from the E-Lab projects. By the way, far more company projects are volunteered than we can accommodate in a single class, indicating the strength of the local network.

 

Two innovative entrepreneurship faculty members who had been teaching “Entrepreneurship Without Borders”, our subject that concerns the issues of establishing new companies outside of the United States, developed an approach for globalizing E-Lab. Professors Richard Locke and Simon Johnson introduced “Global Entrepreneurship Laboratory” or G-Lab in 2000, with the instructional and preparatory parts of the class, including team and company selection, taking place during the latter half of the Fall Term. During November and December each team works with a company’s management to define precise, deliverable objectives and to begin substantial background research while on campus. Then, during MIT’s “open” January Independent Activities Period, the teams go off to every part of the world to work with their chosen companies in three weeks “team internship” projects. Finishing up of the projects and evaluation by both company and class occur during February and March. This global entrepreneurial subject has rapidly grown to be the most popular elective course in the MIT Sloan School, with half of the MBA class participating, providing them with a non-U.S. entrepreneurial work experience. In seven years 185 host companies in eighteen countries have “employed” 810 MIT students in G-Lab projects, including 160 students during the past year. Professor Richard Locke who co-created and runs G-Lab says: “Only at MIT Sloan could we move from brainstorming to in-the-field implementation in a few short months. The student teams have offered exciting, imaginative and – perhaps most important – effective changes in the way start-ups around the globe conduct business.”

           

The third mixed-team real-world project class is “Innovation Teams” or I-Teams (everything must have a short name!), a “hands-on” team project subject focused upon developing commercialization plans for carefully selected MIT faculty research efforts. At the time that MIT launched the Deshpande Center for Technological Innovation in the School of Engineering the idea for this approach was conceived jointly by Professors Charles Cooney, the new head of Deshpande, and Edward Roberts, the head of the Entrepreneurship Center.  Each student team of business and technical students deconstructs the features of the technology, learns about the Intellectual Property issues in cooperation with the MIT Technology Licensing Office, scans the potential markets, interviews prospective customers and industry experts, and performs a go-to-market analysis in which it recommends a course of action (e.g., startup, partnership, licensing to industry, further research in the lab). Every team is coached by a seasoned entrepreneur from the Greater Boston community and works closely with the MIT faculty Principal Investigator of the underlying research project. The initial developer and teacher of I-Teams for several years was Senior Lecturer Ken Zolot, who has been succeeded by Professor Fiona Murray.

 

The I-Teams model has caught on with many students and faculty across MIT. New variations of I-Teams have been encouraged by the MIT Entrepreneurship Program leadership. In collaboration with the MIT Media Lab, “Digital Innovations” was created by Professor Alex Pentland as a mixed-team projects course to develop and experiment with mobile devices that might impact various markets in developing countries such as Chile. Last year then Senior Lecturer and Entrepreneur-in-Residence Bill Aulet started “Energy Ventures” as another mixed-team real-world projects subject to encourage the growing student interest in entrepreneurship based upon sustainable technologies, with energy ideas and new technologies coming from MIT faculty laboratories and graduate students. In parallel a coordinated academic subject was launched by Professor Donald Lessard and Senior Lecturer Henry Weil called “Energy Strategies”, to enable a student to build a thorough understanding of energy markets, technologies, competition and regulatory aspects. “Strategies” and “Ventures” are scheduled back-to-back in the same classroom, located in a central MIT campus classroom, to encourage students MIT-wide to do the theory and the practice together. This year the energy-related sequence under the “dual-track” collaboration of Lessard and Aulet has added a subject on “Financing Energy Ventures”. The same I-Teams model has now been applied in a new subject called “The X-Prize”, to bring the excitement of competing to solve major problems in the national X-Prize efforts into a campus-level pursuit of entrepreneurial beginnings. All of these classes involve mixed business-technical student teams in commercialization planning and implementation for state-of-the-art technologies. All of these classes are also feeding grounds for team business plan proposals for the MIT $100K Competition.

           

During MIT’s January Independent Activities Period a number of short but intense courses are offered that relate to entrepreneurship. In 2008 the “Starting and Building the High Technology Firm” subject brought about 200 students, mostly from science and engineering, daily for one week into the MIT Sloan Wong Auditorium. Two years ago we started our first entrepreneurship class restricted to undergraduates, with more to follow. And last year Ken Morse joined faculty of the EECS Department to launch the first subject aimed at entrepreneurship for just EECS students. The entrepreneurship education boom at MIT seems to be continuing and accelerating, exposing more and more students to the examples and lessons underlying new company creation and development.

 

MIT Sloan Entrepreneurship & Innovation MBA Program

The most recent development in entrepreneurship education at MIT, and perhaps the most significant to date, is the launching in 2006 of the Entrepreneurship & Innovation (E&I) Track within the two-year MIT Sloan MBA Program. The program focuses on teaching committed grad students how to launch and develop emerging technology companies. It builds what are likely to become a select lifetime cohort of collaborative entrepreneurial MBA classmates, and leads to a MIT Sloan Certificate in Entrepreneurship & Innovation in addition to the MBA degree. The E&I curriculum heavily emphasizes team practice linked to real-world entrepreneurial projects, balances theoretical and practitioner education, and provides a thorough exposure to the many building blocks of an entrepreneurial career. Perhaps not surprising to some, over one third of the entering MBA students applied for admission to this new opportunity when it was announced in June 2006.

 

The E&I program begins with the standard first-semester MIT Sloan MBA core, permitting the entrepreneurship cohort to become fully integrated with their classmates in all activities. But during that first term the E&Is also take an overview course that introduces them to all aspects of entrepreneurship education and practice at MIT. Both academic and practitioner faculty meet with the group, as do the heads of the MIT Venture Mentoring Service , Technology Licensing Office, Deshpande Center and several local entrepreneurs and venture capitalists, creating special access to the MIT entrepreneurial ecosystem. The semester is followed almost immediately by an intense one-week group trip to Silicon Valley arranged by the MIT Entrepreneurship Center.  The class visits leaders of multiple VC firms and meets in small groups with a large number of carefully selected early-stage high-tech firms in the life sciences, medical technology, software, information technology, advanced materials and new energy fields. During the following three semesters, the E&I program requires participants to participate in at least one MIT $100K team (described below) and to choose several additional subjects from a restricted menu of entrepreneurial electives (including E-Lab, G-Lab and I-Teams, all described previously) that prepare them to start and build companies while letting them enroll in other broadening MIT and MIT Sloan courses such as in finance or marketing.

 

One of the students in the inaugural MIT Sloan E&I class, Nikhil Garg, MBA 2008, described his experience: “I could have spent my entire two years on campus meeting like-minded entrepreneurs here and there. But everyone in this class wants to start a company. It’s so much easier to facilitate ideas and business relationships with other MBAs and techies in this type of environment.”  Will O’Brien, MBA ’08, spearheaded weekly thirty minutes “open mic” sessions to encourage his classsmates to practice their pitches, preparing them for future encounters with VCs. “The caliber of ideas has been phenomenal”, says O’Brien. “They’ve ranged from new ventures in wind energy, developmental entrepreneurship, media, and even beer manufacturing.” In December 2008 Will launched a Web 2.0 company that he began with an E&I classmate during their second year in the program.

 

Half of the inaugural group had previously founded their own or been part of startup companies. Many more company formation initiatives began even within the first term of the students’ arrival on the MIT campus.  A group of the first year E&I class demonstrated their entrepreneurial savvy by winning the UC-Berkeley School of Business “Media Case Competition”, sponsored by Yahoo!, and took home a check for $10,000. Another first year E&I participant became part of an African-American team that won the $10,000 first prize at the 2006 Whitney M. Young New Venture Competition at the Wharton School, the three finalists being MIT, Stanford and UCLA. One more classmate was a $1K winner and another a finalist in the MIT $100K competition. Now, with three E&I classes well underway and the fourth group about to begin, the evidences continue to grow of strong MBA student desires to create their own new firms, despite the E&I program leadership’s guidance that they first gather more real-world experience working in startups before initiating such actions on their own.

 

Clubs

 

From $10K to $100K and Beyond              

Entrepreneurship-related clubs are a vital aspect of the MIT Entrepreneurship Program. These clubs are housed in small cubicles in the E-Center space, use its conference facilities, files and IT system regularly, and are provided with significant assistance by the MIT Entrepreneurship Center’s management and staff. The first significant student entrepreneurship organization, created in the same year as the MIT Entrepreneurship Center itself, was the $10K Business Plan Competition, started by the MIT Entrepreneurs Club (largely engineers) and the MIT Sloan School’s New Ventures Association. Its purpose was to encourage students and researchers in the MIT community to act on their talents, ideas and energy to create tomorrow’s leading firms. 54 teams competed in the first competition; the winner received $10,000 and the runners up received $3,000 and $2,000 respectively. As an illustration of the MIT entrepreneurial ecosystem at work even in these early days, the finals that first year were conducted as one of the monthly programs of the MIT Enterprise Forum of Cambridge! That practice continued for ten years as the Cambridge Enterprise Forum had the only large audience and community linked to entrepreneurship on the MIT campus. An early achievement of the new E-Center was to secure several years of funding of the grand prize from a generous MIT alumnus venture capitalist, David Morgenthaler ‘40. His gift freed up the students’ time and energies for building the scale and quality of the $10K competition. With rapid growth occurring, the activity further benefited in 1996 by the memorial gift from the family of the late Robert Goldberg ‘65 which elevated the competition to become the $50K, with $30,000 going to the first place winner and two $10,000 prizes to the runners up. The later combination of the $50K competition with the Developmental Entrepreneurship Competition led to the renamed MIT $100K Business Plan Competition.

           

Undergraduate and graduate students from all five MIT Schools and 27 Departments and labs have entered successfully in the MIT business plan competitions over its 18 years. Figure 1 shows the sources of entrants to the competitions over these years, with MIT Engineering and MIT Sloan accounting for the majority. Students from Harvard and other local universities participate, as well as non-students, but each team must include at least one MIT student. Multi-disciplinary teams of technical and business students have proven to be the most successful competitors. These teams bring together the skills necessary for making the bridge between technology and the marketplace, the same lesson taught in a variety of the classes, clubs and programs throughout the MIT entrepreneurial ecosystem. The business plans are judged by panels of experienced entrepreneurs, venture capitalists and legal professionals through the year-long multi-stage student-run activity.
Figure 1. MIT $10-50-100K Competition Individual Entrants

 

 

 

Tracking alumni companies has been one of the $100K organization’s greatest challenges, even in terms of how many teams competed, who were their members, but especially what happened to them following the competition. We now know that more than 1,500 plans have been submitted over the years by over 7,500 individuals. Figure 2 shows the number of teams that entered the competition annually, reflecting significant growth of numbers over time but also reflecting the cyclical effects of the Internet boom and bust.

 

 

 

Figure 2. Teams Entered into the MIT $10-50-100K Competition

 

 

           

           

The refinement process of the competition, its network of mentors, investors and potential partners, and the cash prizes awarded have helped many of these teams to act on their dreams and build their own companies and fortunes. Although records are incomplete and tracking is difficult once the students are gone, Karina Drees ‘06, Lead Organizer of the 2006 $100K, was able to document 105 real companies formed through the $100K process, of which 22.8% had already successfully exited, 23.8% are still in business as private companies, 20% are no longer in business, and 34% have unknown status due to lack of information. Even if we assume total failure of the unknowns, the 46.6% (or more) of the companies that have survived or been acquired provide a remarkable success story compared with companies formed nationwide. The $100K companies have received more than $700 million in venture capital funding. At least 24 firms have been acquired, of which the seven for which we have figures sold for over $2.4 billion. The amount of the transaction was not disclosed in the other cases.

 

We show in Table 1 the acquisition or IPO exit values of those firms formed out of MIT $100K competitors for which we have reliable data. Testimony from the entrepreneurs indicates that many of the successful companies were based on technologies licensed from MIT. Also they recognized the importance of the support they received from the vast MIT entrepreneurial ecosystem, and in many cases had found key people to commercialize their technology through the $100K efforts.

 

Table 1. Exit Value of Select MIT $100K Competitors

 

Company	$10-50-100K Date	Valuation at Exit (in millions of $)
Silicon Spice (acquired by Broadcom)	1995	1,200
Direct Hit (acquired by Ask Jeeves)	1998	517
Webline (acquired by Cisco)	1996	325
Harmonix (acquired by MTV)	1995	175
Brontes Technologies (acquired by 3M)	2003	95
C-Bridge Internet Solutions (acquired by Excelon)	1996	64
NetGenesis (acquired by SPSS)	1995	44
Firefly Networks (acquired by Microsoft)	1995	40
Stylus Innovation	1991	13
Lexicus (acquired by Motorola)	1991	Not disclosed
Flash Communications (acquired by Microsoft)	1997	Not disclosed

 

The public data of Table 1 document a value capture for the nine companies of $2.4 billion. This amount, a dramatic underestimation of exit value of all the $100K firms due to our lack of more complete information, represents over a 550X Return On Investment on the historical MIT $100K budget and a $150 million per year average return over the life of the student $100K undertaking.

 

We also found three $100K companies that completed successful public offerings, generating more than $350 million at the time of their IPOs. But by itself the one company that is still public (the other two were acquired post-IPO) is Akamai Technologies, which lost in the1998 competition to Direct Hit. It was a $50K finalist founded by MIT faculty and students, based upon licensed MIT that had Market Capitalization as of June 18, 2008 of $6.03 billion.

           

In 1998 the student leaders of the MIT organization created an annual MIT $100K Global Startup Workshop located in a different country each year, in which MIT students bring the lessons they have learned about student team-based entrepreneurship to academic institutions from all over the world. The workshops have been held in Boston, Singapore, Spain, Australia, Italy, China, UK, Abu Dhabi, Buenos Aires and Madrid, heavily attended by campus representatives seeking to replicate the MIT experiences. This student initiated and run effort has helped to create competitions worldwide modeled after the MIT activities to stimulate entrepreneurship. Despite this, INC. magazine said that “[the MIT $100K] is more equal than all the others”! To illustrate, a recent winning MIT team, SteriCoat, consisting of a 2006 MIT Sloan alum and his teammates, entered various business plan competitions as a way of raising additional funds to launch their business. In addition to winning the MIT $100K, the team took first place in the Oxford University Competition and the Harvard Biotechnology Competition, and second place in the Rice Business Plan Competition.

 

New MIT entrepreneurial endeavors that are linked to the $100K continue to be born. In 2005 the Cambridge MIT Enterprise Forum chapter launched its Ignite Clean Energy Business Plan Competition, founded and chaired by two MIT alums. For the first two years nearly all of its events were held on the MIT campus. In 2006 an alumnus who had volunteered for that competition took the concept with him when he moved to the California Bay Area and founded the California Clean Tech Open, with the MIT Club of Northern California and the MIT Enterprise Forum of the Bay Area as the sponsors. In 2007 a spectacular advance occurred with an additional prize provided to the MIT $100K by the U.S. Department of Energy and NSTAR of $200,000 for winning business plans focused upon “clean energy”.

 

 In the spring of 2006 the competition incorporated under its umbrella the Entrepreneurship for Development Competition (plans for new businesses aimed at solving socio-economic problems in developing countries), the action inspiring the student organizers to re-brand from the previous MIT $50K title to the MIT $100K, offering two grand-prize winners $30,000 each and the four runners up $10,000 each. A new $10,000 prize has just been established for the best plan submitted in the area of aero-astro, new prizes are now provided for the life sciences competitive track, and inevitably additional targeted entrepreneurial competitions will happen in the future, further stimulating campus-wide initiatives. The 2008 competition was run with seven parallel tracks, including Financial Services created as this year’s additional area for student teams, with major prizes awarded for the winners of each track.

 

Lots of Clubs

        

The array of clubs tied to entrepreneurship is impressive, and forms a key part of the MIT entrepreneurial ecosystem. Students at all levels, from undergrad to PhD and post-doc, across all MIT departments, actively participate. They contribute immeasurably to creating the unique “passion for entrepreneurship” that now seems apparent throughout MIT. Many of these clubs are housed in small spaces within the MIT Entrepreneurship Center; others just use the E-Center’s mailing lists and get advice and help there. The clubs often represent interest groups around particular areas of technology, such as the Astropreneurs Club, BioPharma Business Club, Energy Club, Mobile Media Club, NeuroTech Club and the NanoTech and TinyTech Clubs. All of them have speaker programs with venture capitalists, MIT faculty and related entrepreneurs helping to educate and connect the members to early stage firms and to new ideas in their fields. Frequently the clubs organize major meetings and colloquia.

           

Other clubs are more focused upon stimulating entrepreneurship per se, or providing connections for prospective entrepreneurs. For example, Sloan Entrepreneurs promotes networking events within the MIT Sloan School, and with the Greater Boston community, other local MBA programs and established Boston organizations. Tech Link started in 1999 as a joint venture between the MIT Sloan Senate and the MIT Graduate Student Council to generate social interaction across school and departmental lines for personal and professional development. It has become the largest student organization at MIT with 1200 members and organizes many major events each year, including “treks” to visit early stage companies in different technological fields. The MIT Innovation Club centers its activities on helping its members to generate new ideas and commercialize new technologies. And there are many others.

           

One of the most vital and successful student activities is the Venture Capital/Private Equity Club. Evolving from a small interest group with local speakers, the group now organizes and runs two major nation-wide conferences, the MIT Venture Capital Conference in the Fall and the MIT Private Equity Conference in the Spring, wholly managed by MIT students. The hundreds of attendees, from the professional community as well as MIT students, make invaluable contacts for their entrepreneurial ventures as well as for recruiting opportunities.

 

Conferences

        

In addition to facilitating the major conferences of the VC/PE Club, the Entrepreneurship Center goes outside of MIT’s boundaries to produce several key conferences that further enhance the environment for new firm formation. Its most visible Cambridge event is the annual so-called “Bio Bash”, more formally known as the “Celebration of Biotechnology in Kendall Square”.  Last year over 850 registered for the event, including 150 Founders, CEOs or Board members. As with the many other seminars and receptions organized by the MIT E-Center, the purpose is to bring together students, entrepreneurs, venture capitalists and others who will enhance networking and communications that might stimulate additional entrepreneurship. With MIT in the center of an intensive biotechnology cluster, including the MIT-related Whitehead and Broad Institutes, creating the Bio Bash was a natural opportunity. In recent years the program has started with a professional colloquium on some major topic of importance to the biotech community, providing a “legitimate” excuse for some executives to travel to Cambridge from Europe or the West Coast just for the day.

           

Each semester the E-Center organizes a major networking reception in the MIT Faculty Club to honor the CEOs of past and present “E-Lab companies”, i.e. those that have hosted student teams from the Entrepreneurship Lab classes. The current students are always given prominence at this event to try to promote summer internships and permanent jobs with the heads of the high tech companies and their many venture capital investors who regularly attend the reception. For the past four years the Spring “E-Lab Bash” has featured the award of the Adolf Monosson ‘48 Prize for Entrepreneurship Mentoring, given to recognize a person or group who has been outstanding over the years in nurturing and assisting young entrepreneurs.

           

Over the several recent years that MIT had a partnership with the UK called the Cambridge MIT Initiative, the transfer to British universities of insights from the MIT Entrepreneurship Center and the $100K were key components of the relationship. Annually in London the E-Center organized a black-tie networking event that drew 500 people together to build entrepreneurial ties, attendees including the student leadership and the year’s winning team of the MIT $100K competition. Even the Brits were surprised at their own enthusiasm for such rousing get-togethers. Observers at any of these conferences/receptions/parties could see that the real benefits were in the numerous one-on-one conversations that were happening between job seekers and job providers, between enterprises looking for money and investors searching for good targets, and between those with new ideas and those with previously developed skills wanting their next chance.

 

Impact of the MIT Entrepreneurship Center and Its Network

        

In 2003 MIT completed a major survey of all its living alumni to determine the extent and impact of those companies founded by MIT alumni and to identify MIT-related factors that influenced the founding of those new companies. 25,800 companies were estimated to still be in existence, employing about 3.3 million people and generating annual worldwide revenues of nearly $2 trillion, the equivalent of the world’s 11^th largest economy. In Table 2 we show several dimensions that directly link to Entrepreneurship Center efforts. Clearly MIT’s entrepreneurial network was seen as a critical influencing force even 50 years ago, but its strength has grown dramatically to the point that half of the most recent entrepreneurs see the network as a key factor. Appropriately the MIT Entrepreneurship Center itself and the $10K-50K-100K Business Plan Competition have had essentially no perceived influence on alumni entrepreneurs until the past decade or so, when alumni have had the opportunity to engage with them. Only a few graduates of MIT classes prior to the founding of these two entities have become connected with them, perhaps as E-Lab company CEOs or as $100K judges. But during their relatively short lives both the E-Center and the $100K have jumped into prominence as influences upon those students who later became company founders. Other survey results indicate that the more recent alumni entrepreneurs in particular see extracurricular and social activities as accounting for the team formation of about 60% of the new firms, with an increase in the percentage of the startup ideas also coming from networking. The growth of classes, clubs, conferences and their informal spin-offs has altered the internal environment of MIT relating to these entrepreneurial movements.

 

Table 2.  Entrepreneurship Center Factors Important to Venture Founding

                        (from limited sample only)

 

            *Respondents could check all categories that were relevant.