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Despite tough economy, entrepreneurship alive and well at SMG
By Brian Fitzgerald
Entrepreneurial start-ups fail when the economy is down, right? Not necessarily. Of the 30 corporations comprising the Dow-Jones industrial average, 16 were founded during down business cycles. For example, Stanford University students William Hewlett and David Packard founded their electronics company in the Depression year of 1938. Bill Gates started Microsoft during the 1975 recession.
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| Ascend Communications founder Rob Ryan, who directs a high-tech business start-up “boot camp” at his Montana ranch, speaks to aspiring entrepreneurs in the SMG Auditorium on December 2. Photo by Kalman Zabarsky | |
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In fact, entrepreneurs can fuel the economic recovery process -- as they
did after the 1990-91 downturn, says Peter Russo, director of the SMG
Entrepreneurial Management Institute (EMI). “A year ago, there was
a general sense that funding wasn’t going to be available for start-ups,
and I think people were just holding off,” says Russo. “Now
there’s some sense that the economy is beginning to turn up again,
so entrepreneurs are a little bit more optimistic about their ability
to raise money to start a venture.”
Russo, an SMG lecturer in management policy, points out that start-up
costs are low during hard times. At the same time, many unemployed graduates
find that they make ideal entrepreneurs. “I think that a number
of students who found it difficult to find work in the past year began
exploring the possibility of starting companies,” says Russo. “They’ve
come up with viable ideas and will be pursuing them.”
Russo’s goal as director of EMI is to help students and alumni develop
start-up business proposals and bring them to fruition. EMI, founded in
1984 through a grant from the late Henry Morgan, a former SMG dean, sponsors
a variety of programs and activities designed to help students further
their entrepreneurial aspirations, including the Michael Bronner E-Business
Center and Hatchery, an annual business plan competition, and a series
of “boot camps” to provide condensed, practical assistance
in entrepreneurial finance and developing a business plan.
In the last boot camp, on November 16, 20 BU students presented their
start-up plans to an audience from the business community, which provided
feedback and tips. “We went over many different aspects of starting
a business, such as how to put together a proposal, how you should use
that process to focus on your business plan, how to go about seeking financing,
how to prepare yourself for meetings with interested parties, and legal
issues,” says John Kaufman (SMG’03). “I didn’t
have a specific business plan, but I have thought through a few, and I
found the boot camp very useful for ones I may have in the future. It
seems pretty clear that Professor Russo is personally motivated to make
things happen.”
Russo certainly made things happen from 1983 to 1998 as CEO of Data Instruments.
He is credited with managing an employee-owned corporation that evolved
from a small manufacturer of industrial pressure sensors to a global company
with sales of $54 million in 1997, the year before it was acquired by
Honeywell. “As well as providing general education in entrepreneurship,”
says Russo, “I feel that I am able to share with students my practical
experience from my years as an entrepreneur.”
Still, all the education in the world can’t guarantee success without
energy, drive, and a sense of adventure. He adds that although networking
skills are equally important, young people starting a business often ignore
this aspect -- to their peril. “If anything, students underestimate
the importance of building a strong network and a strong team right from
the beginning,” he says. “Networking skills in general are
far more important than most students understand.” Russo points
out that the Michael Bronner E-Business Center and Hatchery, launched
in 2000, catalyzes the development of closer ties between SMG students
and the Boston venture capital community, which invests in start-ups on
behalf of institutions and individuals.
“Networking is key,” says Scott Hutchinson (SMG’02),
president of BzzAgent.com, a company he formed last year while taking
Russo’s Starting New Ventures course. “Between my business
school and professional contacts, and [cofounder] Dave Balter’s
marketing industry networks, we found that there was a world of information
at our fingertips that was vital to how we developed our business model.”
BzzAgent.com is a collection of consumers who get an insider preview of
new products. They receive points when they report back on how they helped
spread the word about products such as books and CDs. The points they
accumulate over time earn them prize rewards. Word of mouth marketing?
If BzzAgent.com sounds like a pipe dream, consider the fact that the company
recently signed Penguin Putnam Publishing and AT&T Broadband to its
marketing campaigns. “Scott is a really bright guy with an interesting
idea,” says Russo. “His company creates a ‘buzz’
for its clients’ products. It is an interesting technique.”
Russo says that new ideas can take off when the economy is slow -- today’s
tough business climate simply reduces the margin for error. Contrary to
popular perception, entrepreneurship is alive and well, but anyone wanting
to launch a new company must do the necessary homework. “Nearly
all MBA students at BU take at least one course in entrepreneurship, and
each year more than 30 MBA students graduate with a concentration in entrepreneurship
from SMG,” he says.
Is there a Hewlett, a Packard, or a Gates waiting in the wings at SMG?
Perhaps we’ll find out soon: in May, the school’s first undergraduate
class concentrating in entrepreneurship will graduate. “I think
the picture looks good,” says Russo. “In the past year there
has been a lot more activity, both among BU students and alumni, in getting
new businesses up and running.”
6 December 2002
Boston University
Office of University Relations