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Does Oxford University have any claim to MBA startup ideas?

18 Oct

Copyright PharmaVentures Ltd 2010

Another question that was asked by the incoming MBA class to the entrepreneurship panel I was sitting on the other day.

“Does Oxford University have any claim to startups that originate from the MBA class?”

The short answer is “no”.

Normally, when some Intellectual Property (IP) is developed as a part of research at a university, the university has a significant claim to the IP – afterall it has been developed whilst working there. The split can be very fair though – the scientist who originated the IP can get 1/3 to 1/2 share of IP rights with the university.

This can be very lucrative for the university and the scientists involved if the IP ends up becoming part of a successful company or product. For example Remicade, an arthritis antibody treatment, was developed at New York University School of Medicine. In 2007, Royalty Pharma paid $650 Million to buy the royalty stream from NYU. Can you imagine your university suddenly getting a $650 Million cash injection? Nice!

Of course Oxford University tries to commercialise as much technology as possible, mostly through its technology transfer arm, Isis Innovation.

I’m told that one of the biggest royalty streams to Oxford University is thanks to Ed Southern’s “Southern Blot“, a molecular biology technique. However, I’m not actually sure if the patents are still valid.

The Said Business School has an arrangement with the University that any business ideas developed by MBA students are exempt from any claim by the University. Afterall, what right-minded entrepreneur would come to a business school that would lay claim to his ideas just because he was there for a year learning about Porter’s Five Forces and the Laffer Curve?

The exception would be if your business was based on IP developed elsewhere in the University. We do some projects with Isis Innovation so that is quite possible. One of the recent Oxford MBA startups, Lab Minds, is based on technology developed by two people from one of the science departments, so I presume the University has some licensing arrangement there.

So don’t worry about coming here with your amazing startup idea. I think the University is hoping that you’ll make it big and give some money back of your own free accord.

Next post, also a question at the same panel, – should you keep your startup idea secret?

Who says MBAs can’t start companies?

15 Oct

We don't just have jargon. We have frameworks baby. Yeah!

In the startup community there is this “MBAs can’t do startups” opinion, which is often quite strongly expressed. People do seem to love bashing MBAs! In fact, I was on the entrepreneurship panel for the incoming MBA class at Oxford the other day and one of the new class made a similar comment, asking for the panel’s opinion. I won’t speculate here on why this opinion is so popular, but I do suggest you read this post by the Humbled MBA.

In response to the never-ending “MBAs can’t do entrepreneurship” quips I thought I’d do a couple of blog posts about MBA entrepreneurs – one highlighting companies that had been started by MBAs and gone on to some success, and later a post about up-and-coming MBA startups, maybe with an Oxford focus. Luckily, I found that most of the work looking for successful MBA companies had been done by another blogger(*1) and in this Quora post, so I’m going to use them and highlight a few of the companies.

So here, in no particular order, are some successful companies started by MBAs(*2):

Zynga – founded by Mark Pincus (Harvard MBA 1993). Zynga was recently valued at $11.15 Billion. Zoiks!

Geocities – founded by David Bohnett (University of Michigan Ross School of Business 1980). Sorry, GeoCities has closed. 😦

Sun Microsystems – founded by Vinod Khosla and Scott McNealy (Stanford MBA 1980). That worked out quite well.

Nike – founded by Philip Knight (Stanford MBA 1962). Nike make shoes and seem to have been fairly successful. According to Forbes, he’s worth $12.7 Billion now. Not bad. He does sound like a bit of a git though.

Victoria’s Secret was started by Roy Raymond (Stanford MBA 1977?), but there’s quite a sad story to him. In his honour I interrupt this flow of MBA startups for a picture of a Victoria’s Secret model.

Adriana Lima wearing Victoria's Secret bikini. Nice finishing.

If that last company has made you feel amorous but you have no-one to be amorous with, then check out founded by Gary Kremen (Stanford MBA 1989).

If you visited the previous company, but decided that hot girls probably prefer guys with loads of money, why not make lots of money on the stockmarket with E-Trade*(3)? The company was founded by William A. Porter, who got his MBA from the MIT Sloan School of Management in 1967.

Both ProFounder and  were founded by  Jessica Jackley (Stanford MBA 2007). They’re both relatively young companies, but Kiva in particular seems to have got quite wide adoption in the US with its microfinance model for entrepreneurs in developing regions. I visited their offices earlier this year and was very impressed by the company. Since being founded in 2005, the company has apparently raised $249 Million in loans for the entrepreneurs it helps.

US biotech giant Genentech (now part of Roche) was founded by Robert Swanson, a VC with a MBA from MIT Sloan School of Management (1970). But it wasn’t MBAs that made Genentech big – it was the mAbs. Geddit?! If you get that I want you to know my Twitter handle is Major_Grooves and you should get that too.

Tony Hawkins is a voice artist with over 15 years of experience. He sounds a bit like a robot*(4). He does not, however, have an MBA. Trip Hawkins does though! He got his MBA in 1978 from Stanford and founded computer games company Electronic Arts.

All these companies have been US companies founded by US MBA graduates. Mostly from Stanford. So here’s a token Brit! Lonely Planet was founded by Tony Wheeler (London Business School MBA 1972) but he doesn’t mention his MBA on his profile page*(5). He probably doesn’t think it’s very cool.

I was going to start this post with Fedex as I’d heard that the Fedex “hub and spoke” model was based on the founder’s poorly rated MBA project. However founder Frederick Smith doesn’t appear to have done an MBA. Quite how he managed to start a company without an MBA is really beyond me. Despite their company founder not having an MBA, Fedex does value its MBA employees:

So next time someone tells you that “MBAs can’t do startups”, quote a few of the above companies or send them this blog post.

*(1) I think this list maybe has some mistakes, and some MBA founders that I don’t quite consider “pure” founders – i.e. they they bought in to a company or similar (like Mitt Romney and Staples). Also I’ve not mentioned any of the finance firms here because they are boring.

*(2)Note I’m only highlighting the MBA founders here. Many(most?) of these companies had non-MBA co-founders who were instrumental in the companies’ success. The point here is just to show that MBAs can be involved in successful entrepreneurship as company founders.

*(3) This WannabeVC does not give investment advice. Don’t do shares kids. If you want to try trading, you should see that startup I write about in the follow-up to this post.

*(4) Seriously, he really sounds like a robot. Is it his voice used for those instant animation movies with voice over that people have been posting on YouTube recently? What I mean is… maybe it’s the robots that sounds like him!

*(5) Back then, in the olden days, it wasn’t called an MBA – it was actually a MSc in Management that Tony received. Still doesn’t sound cool.

A Solution to the MBA/Entrepreneurship Paradox

5 Sep
cunning plan

As cunning as a fox that's Professor of Cunning at Oxford University

There’s a paradox that comes with doing an MBA and then trying to be an entrepreneur.

I’m not talking about whether or not MBAs make good entrepreneurs, or whether anything you learn on an MBA is useful for a startup. Sure, most MBAs go off to become management consultants or work in finance, but from my school I think there’s at least 10% that go off and start companies after their degrees.

No, I’m talking about the paradox of leaving a degree with a shed-load of debt and trying to “bootstrap” a startup. You can reduce many costs to try and extend the metaphorical runway, but the massive £500-600 a month loan repayments that kicks in 3 months after you finish the course makes for quite an elephant in the room.

The problem is that when you explain to investors what your personal bootstrapping cash burn-rate is you have to inflate it from a fairly reasonable £21k to around £30k (gross salary equivalents before tax), which doesn’t sound much like bootstrapping to an investor.

Put bluntly, the MBA loan repayments make it damn difficult to live cheaply after your course finishes. Of course not everyone has to take such a big loan to do the MBA, but I think I’m far from the minority (Note: my running out of runway problem doesn’t even include my loan repayments as I’ll have run out of money before they even start. Ha!).

Fear not though, I have a cunning plan that might cure this paradox!

Problem: Business schools want to encourage entrepreneurship. MBAs are expensive and most students have to take chuffing huge loans to pay for them, which impedes entrepreneurship.

Solution: business schools refund the MBA loan to the bank and converts it to convertible debt based on the startup the student has started during the course. The loan would convert to equity in the startup at the first qualifying financing round. If they don’t raise any finance within a certain time-period, then the loan reverts to a normal personal debt, with interest accrued.

There would of course have to be some safe-guards to prevent wide-scale abuse and people setting up fake companies after the degree, but I’m sure with some more thought it could be possible.

Of course it will never happen. The amount of money the school would “lose” in the short-term would be massive. Perhaps a benefactor could finance the scheme?

I know it sounds like a fairly hare-brained scheme, but put it this way – if a business school really believes its MBA programme is compatible with entrepreneurship and it really believes in the students it recruits, then it should have confidence in the businesses they start. If they got one or two home runs, then they could make a good return.

Potentially true

I was considering titling this post, “would anybody like to pay off my student loan for me?”, but that seemed a bit too blunt.

Running out of runway

2 Sep

This is what happens if your runway is too short

It’s the start of September and I have approximately 1 week of my MBA left with our Capstone Course next week. Technically I think I remain an Oxford University student till the end of September.

I also, by my calculations, have enough cash left in the bank to last me until the end of November (based on my current burn rate, which is pretty low). Oh, and come January, repayments for my rather massive MBA loan kick in. None of this would be a problem if I was being sensible and trying to look for a regular job like most of my class (quite successfully it seems recently), but oh no, I’m trying to become an entrepreneur.

So over the Summer I’ve been working on a Strategic Consulting Project (SCP) with a couple of classmates, looking at my original startup idea in more detail and as a result you might say the original concept has evolved, or “pivoted”, to something a bit different, but still with the original idea at its core.

The question now is – how do I pursue the idea? I want to, but in many ways the SCP has left me with more questions than answers. Still, I’m convinced there is a real opportunity there, but the rather practical problem of paying my rent and bills is getting in the way.

So there the advice falls in to two distinct camps – the “you need to just go for it and commit 100%” camp, and the “get some part-time consulting gigs to support you while you develop the business” camp. Which is right?

I know I prefer the “100%” camp, but it doesn’t really answer the “pay my rent” question. I unfortunately don’t have any rich benefactors to support me for those extra 3 months I need to give this a decent shot beyond November, and when you factor the loan repayments in the amount of “salary” I need is a bit above what you might call “bootstrapping”. Such is the MBA/entrepreneurship paradox.

I know what the recently published Startup Genome Report says – people who do a startup part-time raise 24x less funding that those that commit full-time.

“Temporary moonlighting is permissible but significantly curbs performance and potential.”

Another entrepreneur did say to me the other day that if I can’t convince someone to give me money to live for a few months then maybe the idea is not good enough. I’m not sure about that. Rich people tend to be rich because they don’t part easily with their money. I think maybe my problem is that, despite a year of study, I am still at the idea stage – and people don’t tend to get investment at the idea stage. Ideas are easy.

In the meantime, what do you think I should do – is part-time entrepreneurship possible? Is the “100%” camp biased by the Silicon Valley echo-chamber? Leave a comment below!

This startup malarkey is a bit of an emotional rollercoaster, and I’ve barely even got started! I have to admit it is beginning to stress me out a bit.

MBA Business Plan Theatre

26 Apr

A business plan from some LBS students

Today I submitted my team’s Entrepreneurship Project (EP), which counts as one elective towards our MBA. The EP is basically a term-long project where you develop a business plan – it doesn’t have to be a startup, but inevitably that’s what most of them are. I came in to the course really looking forward to doing the EP, as I knew I wanted to base it on my start-up so I could test the idea with four clever classmates.

I’ve been very fortunate to recruit a great team – Khalida, Alex, Amita and Jonathan – that really believe in my startup. I’m very grateful to them for the hard work that they’ve put in to developing what is, essentially, “my baby”. In effect, I’ve received the equivalent of quite a few thousand pounds worth of free consultancy and research!

We also had to do a presentation of our business to a panel consisting of local entrepreneurs and business angels. Whilst our presentation was a bit… light, it did pique the interest of one of the judges, who is now helping me as an advisor (and maybe as an investor in the future), which is a great result.

Although the EP has been a useful experience for me, it’s probably fair to question the value of “MBA business plans”. Silicon Valley legend, Steve Blank*, is not a fan of business plan competitions, which are fairly analogous to the EP. I can see his point – with many startups, you’d be better off just developing your Minimum Viable Product (MVP) as soon as possible, and getting your product in to peoples’ hands to test your ideas.

For the vast majority of people on our course, the EP is just an academic exercise. The real point of the EP, from an academic point of view, is just to apply some of the things you have learnt over the previous two terms. For that reason we are pretty much obliged to shoehorn in references to various frameworks such as Porter’s Five Forces at every opportunity.

I think most of the students are in agreement that if we were to pass our EPs on to real investors for investment, the first thing we would do is strip them of most of the “MBA talk”. It would certainly shorten them substantially!

I think the real reason business plan competitions are so popular is that it’s something tangible that a group of students can do together in a relatively short period of time. For many ideas, it’s simply not feasible to build something beyond the reasoning behind the idea, as is mentioned in this blog post about someone who has started a couple of biotech companies after business plan competition.

So what am I doing now the EP is over? Well, I’m stripping out all the MBA talk from my EP as I am in the semi-final of my school’s business plan competition! Huzzah!

*the same Steve Blank we had hoped to meet in Silicon Valley but did not. I would have loved to have discussed this with him in person.

Twitter and Tufano

17 Apr

I’m sitting in San Francisco airport awaiting my flight back to London so I’ve just got time to crank one last Silicon Valley trek blog post out.

Friday morning we visited Kiva. I had heard of them as we have a couple of classmates that have worked with them, but I didn’t really know what they had done there. I knew it had something to do with microloans, but not much more than that.

It turned out to be a really interesting meeting. It was a refreshingly honest meeting (no “PR friendly” soundbites etc.) discussing exactly how Kiva works and where it is going. The Kiva fellowship sounds really interesting, and after my brief stint in Ghana it sounds like that sort of thing I would quite like to do for a few months. However, the fellowship is unpaid and as I said to the guy presenting, my crippling MBA loan repayments make paying for myself to go to a far-flung country quite impossible. Besides, I have a start-up that needs to takeover the world!

I was going to have lunch with the legendary Jerry Sanders, who is currently working on a futuristic transport startup, but I realised it clashed with my last meeting so had to pull out. Shame!

Last visit of the trek was to Twitter, still based (thanks to some tax agreement with the city government) in downtown San Francisco. Twitter had been the subject of an interesting Fortune article the day before our visit, which highlighted some of the companies current issues. Needless to say, none of that was discussed in our meeting, but hey it was fun to visit Twitter HQ and tweet from there (I am that sad).

In the evening we met with incoming Said Business School Dean, Peter Tufano and had an open Q&A session about the future of the Business School. I think he’s going to be good for the school.

Friday night entertainment included Duran Duran, and last night’s entertainment included Trentemoller, but I’m all blogged out so excuse me if I don’t go in to detail.

Seeing as this is my last Silicon Valley trek post a few notes of thanks: firstly to Xavier for being “trek leader” and using his extensive network to set up loads of cool meetings. Next to Nick – without whose logistical skills the trip would have descended in to chaos (herding cats doesn’t come close!). Also Joe for also leveraging his extensive network to sort out some awesome meetings and sending us in the direction of some great SF music nights. Our drivers too – without whom we would have never got anywhere. Lastly all my classmates, for making this such an awesome week in Silicon Valley!

Beers and Berkley

17 Apr

Thursday morning started off with a visit to media monitoring company Meltwater. This was a particulalrly interesting meeting for me as I’ve been working with the Meltwater Entrepreneurial School of Technology and was in Ghana last week. This was actually one of the best meetings of the week. Fellow MEST MBA consultant, Louis, gave a good presentation about Meltwater and set us the challenge of suggesting some business areas Meltwater could move in to. Then a Meltwater sales director gave us an hour of B2B sales training, which was really good actually as, strangely, sales training doesn’t appear on any MBA curriculum for some reason. We then did some role-playing in pairs pretending we were selling Meltwater services to each other. At the end of the session I suggested about 6 companies that Meltwater could acquire. I’ll take the credit, and commission,  if they ever move in on these companies.

In the afternoon we had no company visits arranged so Xavier took the trek organisers, including myself, for a tour of the Anchor Steam brewery. At the end of the tour we tried six Anchor Steam beers. Each one was only about 1/3 of a pint, but by the end I felt like I’d drunk 6 full pints. 🙂

Looking at the trek matrix I just realised I was meant to be at the Salesforce meeting later in the afternoon, but I didn’t go. Oops! My bad!

In the evening we travelled over to Berkley for a mixer with the Haas Business School MBA students. I really liked the Berkley campus. Whereas the Stanford campus is all perfectly manicured, like a model village, the Berkley campus feels a lot more “real”. It still has beautiful buildings, but it has a lot more character than Stanford. The mixer with the Haas students was great. They were really out-going and paid for all the drinks and food! Apparently the school puts $400 per student in to a student association budget to spend on social events. Take – note SBS!