Student entrepreneurship in college is on the rise in poor economy

Correction: An earlier version of this story misspelled the name of student Yaella Landau. This version has been corrected.


Melissa Eddison, 22, in the GroW Community Garden on the campus of George Washington University. Eddison is working to create a sustainable urban cafe called Funkstown Food Co-Op. (Matt McClain/FOR THE WASHINGTON POST)
November 3, 2011

Student entre­pre­neur­ship in college is on the rise in poor economy

John LaPides leans back in his chair and watches as the next young entrepreneur takes a seat across from him at a long wooden table.

LaPides’s student assistant sets a timer for 10 minutes, and Pitch Dingman, a weekly speed-pitching session at the University of Maryland’s Dingman Center for Entrepreneurship, begins.

“This is really in the ‘written on the back of a napkin’ phase,” warns Yaella Landau, a 22-year-old pre-dental senior, before pitching an idea for artisanal homemade vanilla extract packaged in pretty bottles.


James Li, 20, a student at Georgetown University started REaction Strategy Group, a consulting group for nonprofits. (Matt McClain/FOR THE WASHINGTON POST)

LaPides, one of the center’s “entrepreneurs in residence,” nods enthusiastically as Landau describes how the bottles would help distinguish the product. He tells her that companies such as Celestial Seasonings have succeeded in selling products with whimsical packaging, and peppers her with questions about the manufacturing process and competition until the stopwatch hits 60 seconds.

“One minute,” the student assistant says quietly. “We should talk about next steps.”

LaPides wraps up quickly — there’s a line of other student entrepreneurs waiting outside to pitch their own business ideas.

Roughly two dozen students file in over two hours, including a young Chinese woman, who wants to sell mass-produced versions of her native Sichuan “hot pots,” and Chris DeVore, a junior who wants to design hats and gloves made of a synthetic material that mimics the properties of reindeer fur.

Similar scenes are playing out on college campuses across the country, where an explosion of new pitch sessions, business plan competitions and entrepreneurship courses are catering to a new kind of student entrepreneur.

Driven by a desire to find personal fulfillment along with a paycheck, and by a sour economy that makes traditional employment seem just as risky as starting a business, members of the so-called millennial generation — the 20-something children of the baby boomers — are increasingly forgoing traditional career paths and are hatching business plans based on social responsibility and their own passions, interests and ideals.

“The down economy has made students realize that there may not be a cushy job at the end of this rainbow,” says Asher Epstein, managing director of the Dingman Center. “So they’re taking their destiny into their own hands.”

* * *

The idea that entrepreneurship is something that can take place, and be taught, on a college campus isn’t new.

Most entrepreneurship educators believe the first formal entrepreneurship class was taught to Harvard MBA students in 1947. Entrepreneurial education gained momentum in the 1960s, and by 1985, more than 250 entrepreneurship courses were offered at colleges throughout the country, according to the Kauffman Foundation, a research group focused on entrepreneurship.

Since then, “the number of entrepreneurship programs has quadrupled and quintupled,” says Eric K. Martin, co-director of the Galant Center for Entrepreneurship at the University of Virginia’s McIntire School of Commerce.

Martin says participation in U-Va.’s entrepreneurship program has doubled in the past four years, with 10 percent of eligible students now taking part.

Other area universities report similar increases and have added new entrepreneurship course work and resources to accommodate the demand.

Several universities in the Washington area have programs like Pitch Dingman, in which students pitch business ideas to instructors with entrepreneurial backgrounds and develop business plans based on that feedback. Many schools also have entrepreneurship competitions with thousands of dollars in cash awards, such as U-Md.’s Cupid’s Cup, U-Va.’s Entrepreneurship Cup and George Washington University’s Business Plan Competition.

Georgetown also has established a business plan competition in recent years, along with a new nine-credit entrepreneurship certificate program and a first-year seminar on entrepreneurship, among other resources.

It’s a big change from when Neil Shah and William Huster, now 23 and 24, respectively, founded a fair-trade tea company as Georgetown freshmen. The business failed within a year, and Shah and Huster were left wishing they could have learned the basics of starting a business in the classroom rather than in an unforgiving marketplace.

So as juniors, along with co-founder and classmate Arthur Woods, they started a new business: Compass Partners, an incubator for student entrepreneurs that offers 150 freshmen at several schools across the country, including Georgetown, GWU and American University, a two-year entrepreneurship fellowship with online course work, on-campus mentorship and guest speakers.

“In business school, we learned how to take Coca-Cola international but not how to file taxes or how to bootstrap,” Shah says. “We wanted things like mentorship and entrepreneurship course work to be much more accessible.”

The Compass program is geared toward “social entrepreneurs,” who aim to solve social problems through business — a trait many of today’s undergrad entrepreneurs have in common.

“The tech bubble in the 1990s brought a huge amount of hype about one product or service, and what a lot of fun that was for a while,” says Elaine Romanelli, a strategy professor specializing in entrepreneurship at Georgetown’s McDonough School of Business. “The undergraduate entrepreneurs I’m meeting now have a different entrepreneurial intention or purpose. ... They are focused on building not only a profitable business, but in building a business that’s founded in sustainability, that’s connected to the community and that may have a nonprofit or philanthropic purpose as well as an entrepreneurial one.”

* * *

The concept of social entrepreneurship has made business owners out of students who otherwise wouldn’t have considered entrepreneurship, such as Melissa Eddison, a 22-year-old GWU senior who is working to open the Funkstown Food Collective on the GWU campus in late 2012.

The cafe will serve locally grown organic food and has a business model that combines for-profit and nonprofit components, with an option for students and low-income patrons to volunteer at the cafe for food credits.

“This was another way I could effect change,” says Eddison, who is majoring in international economics.

The same goes for 20-year-old Georgetown sophomore James Li, who founded REaction Strategy Group, a consulting company that aims to help nonprofit organizations create better relationships with donors, as a Compass Fellow last year. Li and his business partners — 11 other students — have since designed Web sites, social media plans and other donor-relation strategies for several nonprofit groups locally and nationally.

Li says the company’s success has been motivating but says he was truly convinced he was on the right track after Nicolas Jammet, Jonathan Neman and Nathaniel Ru, who founded the Sweetgreen yogurt and salad chain as Georgetown undergrads in 2007, spoke to his class a couple of months ago. Li says he connected to their desire to create a socially responsible business; Sweetgreen uses local, organic ingredients, compostable packaging and flatware, and solar power in some stores.

“The hunger to do something we’re passionate about rather than going out and getting a job that pays well, but doesn’t speak to a certain purpose, defines our generation,” Li says.

Li is among many student entrepreneurs motivated by campus-born business success stories — not just Facebook creator Mark Zuckerberg, but homegrown entrepreneurs such as Kevin Plank, who famously ran a campus flower-delivery company at U-Md. before creating the athletic apparel company Under Armour at age 23.

“Undergrads see their peers charting their own career paths and creating the kind of lifestyle they want through entrepreneurship,” says George Solomon, co-director of GW’s Center for Entrepreneurial Excellence. “It all feeds into this idea of doing their own thing.”

* * *

As entrepreneurship programs on campus grow, professors are taking care to teach not only how to start a business but also how to fail gracefully. That means planning worst-case-scenario exit strategies and discussing how to treat investors with care after a business folds.

“Students have a lot of energy and passion, and have great ideas, but working against them is the fact that they don’t know what they don’t know,” Epstein says. “Understanding that, in fact, most ventures do fail is a very important part of the learning process.”

It’s an idea that’s especially salient for students preparing to enter the workforce as entrepreneurs after graduation, such as U-Va. senior Meredith McKee. A double major in studio art and American studies, McKee, 21, also works as a professional photographer and stationery designer, with her own company, a business bank account and a Web site that aims to help establish her brand. She spent every Saturday in October shooting a wedding, and every Sunday editing those photos.

“People in my generation believe we can do what we’re passionate about, and especially in this economy, we don’t see working for a company as the only option,” says McKee, who hopes to do freelance photography and design work full time after graduation in May.

McKee’s boyfriend, fellow U-Va. senior Kevin Ruth, 21, is also a student entrepreneur, having started an engineering design and consulting firm last summer with three other engineering students. Ruth says he and his business partners plan to keep the company going after graduation, but on the side, as they pursue traditional jobs. McKee says she sees the wisdom in this approach, too.

“The economy affects entrepreneurship in both directions,” she says. “The idea of finding money to get a business going in this economy is terrifying. I still want the security of a 401(k) plan and health insurance, and the fact that I won’t have that as a small-business owner is pretty scary.”

Eddison, who is slated to graduate from GWU in December, says the search for capital for her food collective through fellowships, angel investors and other sources has been humbling.

As Eddison’s friends are fine-tuning their résumés and lining up job interviews, she’s working with third-year law students on incorporation paperwork, developing a marketing plan and working with finance professors to iron out the wrinkles in her business plan.

“It’s thrilling to be laying the bricks as I go, but it’s also scary,” she says.

Other student entrepreneurs note that the risk and the tough choices start long before graduation, such as Li’s decision to persuade two of his business partners to forgo summer internships at major consulting firms to work on REaction full time last summer.

The three friends lived in Li’s parents’ Los Angeles home, sleeping in Li’s childhood bedroom and camping in coffee shops in between client meetings during the day.

They netted two new clients, including Los Angeles-based Pathways Volunteer Hospice, for whom they created a new Web site and a social media plan, in addition to retooling other parts of the organization’s donor relations.

Pathways operations manager Vickie Kaefer says she was skeptical when she heard the organization was considering contracting with a group of college students, but she says that uncertainty dissolved after Li and his team delivered a smart, professional pitch early last summer.

She says Pathways is still working to implement REaction’s plan but says the organization has already received positive feedback from donors.

“Board members aren’t afraid to give out our Web address anymore,” Kaefer says. “It makes us look so much more modern and professional, and that was only one of the ways [REaction] helped us.”

Still, Li says, making the leap without a promise of payoff was difficult.

“I had to convince my business partners that it wasn’t as big of a risk as you’d think it is,” says Li, who hopes to work for REaction full time after graduation in 2013. “I think there’s a strong case for the idea that you can learn more spending a summer working at your own start-up than you ever could at an internship.”

LaPides, of U-Md.’s Dingman Center, agrees, saying the value of entrepreneurship on campus is “not about creating the next Google or Under Armour.”

“Chances are, the business you launch as a student is not the one that’s going to become big,” says LaPides, noting that Plank founded Under Armour using capital from his flower-delivery business. “But it’s not always about the company, but the entrepreneurial spirit you develop and the entrepreneurial lessons you learn while you’re doing it. The students who fail early and fail cheap at their first business here — who knows what kind of success they’ll create for themselves in the future?”

Amy Reinink is a freelance writer in Silver Spring. She can be reached at wpmagazine@washpost.com.

by Amy Reinink

John LaPides leans back in his chair and watches as the next young entrepreneur takes a seat across from him at a long wooden table.

LaPides’s student assistant sets a timer for 10 minutes, and Pitch Dingman, a weekly speed-pitching session at the University of Maryland’s Dingman Center for Entrepreneurship, begins.

“This is really in the ‘written on the back of a napkin’ phase,” warns Yaella Landeau, a 22-year-old pre-dental senior, before pitching an idea for artisanal homemade vanilla extract packaged in pretty bottles.

LaPides, one of the center’s “entrepreneurs in residence,” nods enthusiastically as Landeau describes how the bottles would help distinguish the product. He tells her that companies such as Celestial Seasonings have succeeded in selling products with whimsical packaging, and peppers her with questions about the manufacturing process and competition until the stopwatch hits 60 seconds.

“One minute,” the student assistant says quietly. “We should talk about next steps.”

LaPides wraps up quickly — there’s a line of other student entrepreneurs waiting outside to pitch their own business ideas.

Roughly two dozen students file in over two hours, including a young Chinese woman, who wants to sell mass-produced versions of her native Sichuan “hot pots,” and Chris DeVore, a junior who wants to design hats and gloves made of a synthetic material that mimics the properties of reindeer fur.

Similar scenes are playing out on college campuses across the country, where an explosion of new pitch sessions, business plan competitions and entrepreneurship courses are catering to a new kind of student entrepreneur.

Driven by a desire to find personal fulfillment along with a paycheck, and by a sour economy that makes traditional employment seem just as risky as starting a business, members of the so-called millennial generation — the 20-something children of the baby boomers — are increasingly forgoing traditional career paths and are hatching business plans based on social responsibility and their own passions, interests and ideals.

“The down economy has made students realize that there may not be a cushy job at the end of this rainbow,” says Asher Epstein, managing director of the Dingman Center. “So they’re taking their destiny into their own hands.”

* * *

The idea that entrepreneurship is something that can take place, and be taught, on a college campus isn’t new.

Most entrepreneurship educators believe the first formal entrepreneurship class was taught to Harvard MBA students in 1947. Entrepreneurial education gained momentum in the 1960s, and by 1985, more than 250 entrepreneurship courses were offered at colleges throughout the country, according to the Kauffman Foundation, a research group focused on entrepreneurship.

Since then, “the number of entrepreneurship programs has quadrupled and quintupled,” says Eric K. Martin, co-director of the Galant Center for Entrepreneurship at the University of Virginia’s McIntire School of Commerce.

Martin says participation in U-Va.’s entrepreneurship program has doubled in the past four years, with 10 percent of eligible students now taking part.

Other area universities report similar increases and have added new entrepreneurship course work and resources to accommodate the demand.

Several universities in the Washington area have programs like Pitch Dingman, in which students pitch business ideas to instructors with entrepreneurial backgrounds and develop business plans based on that feedback. Many schools also have entrepreneurship competitions with thousands of dollars in cash awards, such as U-Md.’s Cupid’s Cup, U-Va.’s Entrepreneurship Cup and George Washington University’s Business Plan Competition.

Georgetown also has established a business plan competition in recent years, along with a new nine-credit entrepreneurship certificate program and a first-year seminar on entrepreneurship, among other resources.

It’s a big change from when Neil Shah and William Huster, now 23 and 24, respectively, founded a fair-trade tea company as Georgetown freshmen. The business failed within a year, and Shah and Huster were left wishing they could have learned the basics of starting a business in the classroom rather than in an unforgiving marketplace.

So as juniors, along with co-founder and classmate Arthur Woods, they started a new business: Compass Partners, an incubator for student entrepreneurs that offers 150 freshmen at several schools across the country, including Georgetown, GWU and American University, a two-year entrepreneurship fellowship with online course work, on-campus mentorship and guest speakers.

“In business school, we learned how to take Coca-Cola international but not how to file taxes or how to bootstrap,” Shah says. “We wanted things like mentorship and entrepreneurship course work to be much more accessible.”

The Compass program is geared toward “social entrepreneurs,” who aim to solve social problems through business — a trait many of today’s undergrad entrepreneurs have in common.

“The tech bubble in the 1990s brought a huge amount of hype about one product or service, and what a lot of fun that was for a while,” says Elaine Romanelli, a strategy professor specializing in entrepreneurship at Georgetown’s McDonough School of Business. “The undergraduate entrepreneurs I’m meeting now have a different entrepreneurial intention or purpose. ... They are focused on building not only a profitable business, but in building a business that’s founded in sustainability, that’s connected to the community and that may have a nonprofit or philanthropic purpose as well as an entrepreneurial one.”

* * *

The concept of social entrepreneurship has made business owners out of students who otherwise wouldn’t have considered entrepreneurship, such as Melissa Eddison, a 22-year-old GWU senior who is working to open the Funkstown Food Collective on the GWU campus in late 2012.

The cafe will serve locally grown organic food and has a business model that combines for-profit and nonprofit components, with an option for students and low-income patrons to volunteer at the cafe for food credits.

“This was another way I could effect change,” says Eddison, who is majoring in international economics.

The same goes for 20-year-old Georgetown sophomore James Li, who founded REaction Strategy Group, a consulting company that aims to help nonprofit organizations create better relationships with donors, as a Compass Fellow last year. Li and his business partners — 11 other students — have since designed Web sites, social media plans and other donor-relation strategies for several nonprofit groups locally and nationally.

Li says the company’s success has been motivating but says he was truly convinced he was on the right track after Nicolas Jammet, Jonathan Neman and Nathaniel Ru, who founded the Sweetgreen yogurt and salad chain as Georgetown undergrads in 2007, spoke to his class a couple of months ago. Li says he connected to their desire to create a socially responsible business; Sweetgreen uses local, organic ingredients, compostable packaging and flatware, and solar power in some stores.

“The hunger to do something we’re passionate about rather than going out and getting a job that pays well, but doesn’t speak to a certain purpose, defines our generation,” Li says.

Li is among many student entrepreneurs motivated by campus-born business success stories — not just Facebook creator Mark Zuckerberg, but homegrown entrepreneurs such as Kevin Plank, who famously ran a campus flower-delivery company at U-Md. before creating the athletic apparel company Under Armour at age 23.

“Undergrads see their peers charting their own career paths and creating the kind of lifestyle they want through entrepreneurship,” says George Solomon, co-director of GW’s Center for Entrepreneurial Excellence. “It all feeds into this idea of doing their own thing.”

* * *

As entrepreneurship programs on campus grow, professors are taking care to teach not only how to start a business but also how to fail gracefully. That means planning worst-case-scenario exit strategies and discussing how to treat investors with care after a business folds.

“Students have a lot of energy and passion, and have great ideas, but working against them is the fact that they don’t know what they don’t know,” Epstein says. “Understanding that, in fact, most ventures do fail is a very important part of the learning process.”

It’s an idea that’s especially salient for students preparing to enter the workforce as entrepreneurs after graduation, such as U-Va. senior Meredith McKee. A double major in studio art and American studies, McKee, 21, also works as a professional photographer and stationery designer, with her own company, a business bank account and a Web site that aims to help establish her brand. She spent every Saturday in October shooting a wedding, and every Sunday editing those photos.

“People in my generation believe we can do what we’re passionate about, and especially in this economy, we don’t see working for a company as the only option,” says McKee, who hopes to do freelance photography and design work full time after graduation in May.

McKee’s boyfriend, fellow U-Va. senior Kevin Ruth, 21, is also a student entrepreneur, having started an engineering design and consulting firm last summer with three other engineering students. Ruth says he and his business partners plan to keep the company going after graduation, but on the side, as they pursue traditional jobs. McKee says she sees the wisdom in this approach, too.

“The economy affects entrepreneurship in both directions,” she says. “The idea of finding money to get a business going in this economy is terrifying. I still want the security of a 401(k) plan and health insurance, and the fact that I won’t have that as a small-business owner is pretty scary.”

Eddison, who is slated to graduate from GWU in December, says the search for capital for her food collective through fellowships, angel investors and other sources has been humbling.

As Eddison’s friends are fine-tuning their résumés and lining up job interviews, she’s working with third-year law students on incorporation paperwork, developing a marketing plan and working with finance professors to iron out the wrinkles in her business plan.

“It’s thrilling to be laying the bricks as I go, but it’s also scary,” she says.

Other student entrepreneurs note that the risk and the tough choices start long before graduation, such as Li’s decision to persuade two of his business partners to forgo summer internships at major consulting firms to work on REaction full time last summer.

The three friends lived in Li’s parents’ Los Angeles home, sleeping in Li’s childhood bedroom and camping in coffee shops in between client meetings during the day.

They netted two new clients, including Los Angeles-based Pathways Volunteer Hospice, for whom they created a new Web site and a social media plan, in addition to retooling other parts of the organization’s donor relations.

Pathways operations manager Vickie Kaefer says she was skeptical when she heard the organization was considering contracting with a group of college students, but she says that uncertainty dissolved after Li and his team delivered a smart, professional pitch early last summer.

She says Pathways is still working to implement REaction’s plan but says the organization has already received positive feedback from donors.

“Board members aren’t afraid to give out our Web address anymore,” Kaefer says. “It makes us look so much more modern and professional, and that was only one of the ways [REaction] helped us.”

Still, Li says, making the leap without a promise of payoff was difficult.

“I had to convince my business partners that it wasn’t as big of a risk as you’d think it is,” says Li, who hopes to work for REaction full time after graduation in 2013. “I think there’s a strong case for the idea that you can learn more spending a summer working at your own start-up than you ever could at an internship.”

LaPides, of U-Md.’s Dingman Center, agrees, saying the value of entrepreneurship on campus is “not about creating the next Google or Under Armour.”

“Chances are, the business you launch as a student is not the one that’s going to become big,” says LaPides, noting that Plank founded Under Armour using capital from his flower-delivery business. “But it’s not always about the company, but the entrepreneurial spirit you develop and the entrepreneurial lessons you learn while you’re doing it. The students who fail early and fail cheap at their first business here — who knows what kind of success they’ll create for themselves in the future?”

Amy Reinink is a freelance writer in Silver Spring. She can be reached at wpmagazine@washpost.com.

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