Teaching Entrepreneurs to Do More Than Dream
Original article was published as an Op-Ed with Wall Street Journal on Tuesday August 18, 2015.
I was saddened but not surprised this summer to learn that the University of California, San Diego’s Moxie Center for Student Entrepreneurship had closed at the end of June, having finally run out of other people’s money. Backed by a million-dollar gift from local philanthropist Irwin Zahn’s Moxie Foundation, the center’s stated aim was to fund startups by student entrepreneurs. It lived long enough to hand out all of that cash, then expired.
UCSD no doubt sees the Moxie Center’s 2 1/2 -year run as a great success: Look at all of the young innovators who had the opportunity to take their concepts to fruition, thanks to their Moxie grants. But as a businessman, I see it as a failure. The Moxie Center, while promoting the entrepreneurial spirit, was run like a charity, in that it didn’t seek any returns on its investments in student enterprise. Is that really a good lesson for young startups?
Through its own example, the Moxie Center failed to teach its budding entrepreneurs the two most basic survival skills for startups: understanding the concept of “win-win” and how to forecast profits and losses. As someone who mentors young entrepreneurs, I know this isn’t specific to UCSD. I see the same failure to teach these basic concepts in business schools and incubators across the country.
Campus of University of California at San Diego, La Jolla, Calif. Photo: Getty Images
So here goes: Win-win means that both parties in a transaction come out of it feeling satisfied that they got a fair shake. Sure, you can give your products away and collect a lot of good will—but your business won’t last long if you do.
You’d think that a profit-and-loss forecast would be a bedrock concept for a program teaching people to start their own businesses. You’d be wrong. I’ve mentored graduate students at prestigious universities who couldn’t tell me how they were going to cover things like payroll taxes, workers’ compensation and other basic costs. One had generously given himself a salary of $125,000 in his business plan and was astonished when I sat him down with his own projections and showed he’d be lucky to make $50,000 annually. He lacked even the most elementary grasp of the overhead expenses involved in running a business.
Another student I met, also from a major M.B.A. program, didn’t understand how retail pricing worked and couldn’t believe how little his company would clear from a retailer like Wal-Mart. I hate to think of how it would have played out had nobody explained the financial facts of life to him—but, incredibly, none of his professors had done so.
Too many U.S. business schools are focused on producing future leaders for big corporations and Wall Street firms—not equipping people to venture out on their own. The story is very different in China, where I was born and educated before coming to the U.S. in 1994. Business schools there focus on the basics of running a small business and how to create a profitable company. They want to pull as many people out of poverty in as short a time as possible, and they know that the rising tide that will lift the most boats is the small-business community. Why do so many in America’s higher educational system fail to grasp this simple truth?
As an entrepreneur myself, and one whose success has come here in my adopted country, I believe U.S. business schools need programs that are more useful for student entrepreneurs and the businesses that will be their first forays into the working world.
To that end, my peers and I in San Diego’s local American Ceramic Society and the International Microelectronics and Packaging Society are launching a mentorship-internship program to serve recent UCSD graduates and the businesses willing to take a chance on them. The program is just getting under way, and we are working with the UCSD business school to identify potential candidates. The plan is to pair graduates with local companies for a paid one-month internship—at no cost to the company. The program will donate $1,000 to UCSD to pay the intern’s one-month stipend. If the host company decides to hire the intern within a year, the company will donate $3,000 to the program, which will go toward more internships for other graduates.
The goal is to place as many graduates as possible with companies that might otherwise hesitate to hire someone fresh out of school, and to make the program self-sustaining. Most important, we hope it helps future entrepreneurs thrive and enter the real world of business with a better understanding of its basics.
Mr. Kuang is the founder and president of Torrey Hills Technologies LLC in San Diego and co-author of "From Start Up to Star: 20 Secrets to Start Up Success"
Entrepreneur | Best Seller | Wall Street Journal Op-Ed Writer | IMAPS Fellow | 2.6M Followers in Social Media
9 年Thomas Dolan FYI
down-to-earth suggestion and nice program for students.
Entrepreneur | Best Seller | Wall Street Journal Op-Ed Writer | IMAPS Fellow | 2.6M Followers in Social Media
9 年Ji Wang (王骥) FYI.
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9 年Is there any chance you could share the details of that program? Seems really interesting and it would be amazing trying to do it over here in Mexico. Great article.
Retired
9 年Great article, saw it last week in the WSJ. Jim