For all the attention directed toward startups in an era of record venture capital financing, massive appetite for early-stage investments, and an ever-growing club of VC-backed “unicorns” crossing billion-dollar valuations, entrepreneurial activity by MBAs from leading programs has lagged far behind. Entrepreneurship among recent MBA graduates has reached its lowest level in eight years, falling by over a quarter since 2015.
In a survey by the Financial Times, the decline in the proportion of students founding a business within three years of graduating, to 16 percent from 22 percent, coincides with an increase in the opportunity cost; average post-MBA compensation has risen nearly 10 percent over the same period, and established corporations have increasingly sought to replicate the innovative and cultural characteristics that that draw students to startups. At the same time, new evidence has come to light that socioeconomic and demographic disparities have resulted in “lost Einsteins,” capable innovators who do not realize their entrepreneurial potential, on a dramatic scale.
Recent research by economists at Harvard, MIT, Stanford, LSE, and the US Treasury highlights that individuals born into families at the top one percent of the income scale are overwhelmingly more likely to become inventors, by a factor of ten, than those with family income below the median. The authors proceed to demonstrate a significant causal relationship between exposure to inventors while growing up and the likelihood of becoming inventors—with consequences not only for children from less wealthy families, but also for minorities and women, who often are exposed to fewer role models in a space where they have been persistently underrepresented.
Harvard Business School is actively working to buck this trend and foster a thriving entrepreneurial ecosystem. This starts in the classroom: not only does the school offer over 30 second-year electives related to entrepreneurship, but the required first-year curriculum offers critical components of an entrepreneur’s toolkit. The Entrepreneurial Manager (TEM) in particular delves into the watershed decisions across an early-stage company’s life cycle, such as crafting a business model, attracting talent and capital, and operating and improving a growing enterprise. Attention from the Student Association and faculty alike regarding increased diversity in the protagonists featured in cases furthermore exhibits a commitment to leveling the playing field for underrepresented groups.
A short walk from the Aldrich classrooms, potential founders can find broad-reaching support at the Arthur Rock Center for Entrepreneurship. HBS students have privileged access to a multitude of resources to develop skills conducive to launching and managing a successful venture, build a broad network within the startup community, and develop a business from idea to inception and beyond. Shared space at the Innovation Lab and interactions with Entrepreneurs-in-Residence promote mentorship and camaraderie, as does the HBS Startup Bootcamp. As profiled in The Harbus last month, this year’s Bootcamp drew 188 students, about one-fifth of the first-year MBA class, for hands-on guidance on building a business. Would-be entrepreneurs may even find financial support at the Rock Center: its flagship New Venture Competition will this April distribute over $300,000 of awards, while the Rock Accelerator and Rock Summer Fellows programs are also potential sources of funding for student startups.
Beyond graduation, the powerful entrepreneurial ecosystem at HBS provides valuable ongoing support to the over 50 percent of alumni who start a business over the course of their careers. The Rock 100 connects high-impact alumni founders; programs such as Startup Studio NYC, the Harvard Launch Lab, the Harvard Life Lab, and Northern California Startup Partners support the startup ecosystem across industries and geographies.
Perhaps as a result of the drive at this institution to promote an entrepreneurial spirit, we cannot overemphasize the caliber of the entrepreneurs that we have encountered in our class at HBS and the gravity of the challenges that they work to address. At The Harbus, we are enthusiastic to highlight their stories. In this issue, we are pleased to introduce Startup Corner, a new recurring feature on HBS startups and the students who founded them. These inspirational founders come in all shapes and sizes, from all industries, ethnicities, and socioeconomic backgrounds—a harbinger, we hope, of a time when there are no more lost Einsteins.
Pria Bakhshi (HBS ’19) is originally from India via London, England (along with a few other places) and graduated from the London School of Economics and Political Science in 2011. Pria is an RC, Section G, and is a Student Advisor to the HBS Business & Environment Initiative. Prior to HBS, she spent six years in sales and trading at Goldman Sachs in London.
Sumit Malik (HBS ’19) is an investor, writer, and entrepreneur. Professionally, his background is in venture capital and private equity at Warburg Pincus, strategy as a board member of Santander Asset Management Chile, and investment banking at Goldman Sachs. Personally, he writes for academic and popular publications and performs music and poi (light- or fire-spinning). He previously received an A.B., summa cum laude, from Harvard College and an S.M. from the Harvard Graduate School of Arts and Sciences.