When Kate Harrison entered a master’s program in environmental management at Yale University, she figured she would use her previous law degree to find a clerkship or work for an environmental firm after graduation.
Instead, as commencement nears, Ms. Harrison is working for her own Internet company that she founded while at Yale: TheGreenBrideGuide.com, a website that connects couples who want an environmentally-friendly wedding with “green” products and services.
With unemployment at a 25-year high and job prospects dim, more college students are looking to start their own businesses. Many are turning to on-campus entrepreneurship centers, which are reporting an upsurge in student interest. And while starting a business in this economic climate may be challenging, students are finding there are advantages, too.
“If you were looking for a job two years ago, when there were all sorts of great jobs and lots of hiring, you were going to go for the safe and secure thing. But now, if that opportunity isn't so safe and secure, [entrepreneurship] looks better,” says Tim Kane, an economist and senior fellow at the Ewing Marion Kauffman Foundation, which studies and promotes entrepreneurship.
Harrison, who started her website after turning the research she did for her own green wedding into a book, agrees. Though she knew that she eventually wanted to grow her own business, she initially looked for jobs in environmental policy. “A lot of the firms I was looking at are having hiring freezes right now. [I] put some feelers out, and thought, ‘Wow, this would be a tough market.’ ”
How campus programs help
In starting her business, Harrison isn’t quite on her own. She will take part this summer in a 10-week business boot camp run by the Yale Entrepreneurial Institute (YEI), where she'll learn about accounting, tax law, and how to find seed money.
More than 3,000 higher-education institutes have entrepreneurial programs in the form of classes, small business incubators, or mentorship services, according to the United States Association for Small Business and Entrepreneurship (USASBE).
Yale started its summer camp in 2007 after watching many of its graduates move to the San Francisco Bay Area to start their businesses. “We realized we have this whole community of innovators who have been under our noses, but we haven't provided the structures to support them,” says Shana Schneider, YEI's deputy director.
These days, YEI is “inundated” with interest in its programs, says Ms. Schneider. She estimates there has been a 50 percent increase in participation over the past two years.
Such programs help forward-thinking students turn their ideas into viable enterprises, says Sherwin Greenblatt, director of the Venture Mentoring Service at Massachusetts Institute of Technology (MIT). The program matches up students and graduates with alumni entrepreneurs. “Many engineers and scientists don't have any idea how to go about [commercializing their ideas],” he says.
One startup working with VMS is Lingt Language, started early this year by Justin Cannon, who graduated from MIT last year, and Chris Varenhorst, who graduates this month. They created a Web-based language-learning software that allows teachers to create homework assignments that incorporate video and audio.
They got their idea for the company when they took a Chinese class together at MIT and saw that, despite their teacher's best efforts, it was impossible for everyone in a class of 35 to 40 people to get the speaking practice they needed. Lingt Language, which has been up and running in a beta version since February, has 300 users already. And the firm has begun to market the product to language teachers.
Advice from MIT’s mentoring program has been useful, say Cannon and Varenhorst. “They make us think very hard about how to make this into a sustainable business,” says Cannon.
Still, entrepreneurship is a “high mortality undertaking,” says MIT’s Mr. Greenblatt. Only 31 percent of new businesses make it to the seven-year mark, according to the US Small Business Administration, a federal agency that aids small businesses. Small startups have even higher failure rates, says Greenblatt – only five to seven percent are still standing after five years.
The startups nurtured by the MIT program seem to fare better. Greenblatt says about 15 percent of startups that come through his program make it to the five-year mark.
Right time to start a business?
A recession isn't necessarily a bad time to start a business, says Greenblatt. “If you're just starting out, you don't need a lot of money. You just need to get your thinking straight.”
Young companies are often Internet-dependent and need little in the way of office space or other facilities. Lingt Language and The Green Bride Guide are both run out of their founders' homes.
And young entrepreneurs have other advantages: few familial or financial responsibilities, for instance. “The worst thing that can happen is that the company can fail, and I go back to school at Yale,” says Rich Littlehale, who is taking a year off from school to work on YouRenew, an Internet business he started with fellow Yale student Bob Casey, that resells or recycles electronic devices as laptops and mp3 players.
There are even benefits to starting a business in a recession, says Green Bride Guide’s Harrison. For one, a lot of talented people are looking for work. Harrison has taken on two writing interns who might have been snapped up by media companies in plusher times. An unemployed friend built her website as a side project while hunting for an MBA job.
Small businesses that build a strong foundation now will be positioned to take off once the economy recovers. Big companies looking to innovate used to invest in research and development but now they buy small companies, says Dr. Kane of the Kauffman Foundation. “The young students who have that figured out have a huge advantage.”
And the value of entrepreneurial education is not all about successful business, says Michael Morris, president of USASBE and director of the entrepreneurship program at Oklahoma State University. Teaching students to take calculated risks and innovative approaches is good for society, too, he says.
For YouRenew’s Mr. Littlehale, starting a business has also been a way to make a positive impact on society. “The economic situation has encouraged me to look at what I want to do with my life.”
“Four years ago, people were thinking, ‘We'll just go to Wall Street and make a lot of money,’ ” he says. “Now, there's almost no guarantee anywhere, and this is what I'd rather be doing anyway.”