Why Launching a Business While at Business School Has Its Advantages

Although Andrey Kuropyatnyk started business school with the intention of changing his career to early-stage investor from technology consultant, the EMBA course at University of Chicago Booth School of Business turned him into an entrepreneur.

He co-founded Altris.AI, which uses technology like artificial intelligence to help doctors diagnose retinal diseases – such as Glaucoma – that cause irreversible blindless. Previously only highly-trained specialists could interpret eye scans, but he says Altris.AI “potentially increases the level of confidence in retinal diagnostics by more than 96 percent for all eye care specialists”.

The Ukranian says he wouldn’t be where he is now without the support of his EMBA professors and peers.

An elective course crystallised the concept for his business; classmates who were experts in the field became his co-founders and he won US$10,000 in Booth’s New Venture Challenge business plan competition. He says this has “transformed our idea into the flourishing business it is today”.

While many entrepreneurs enjoy the benefits associated with founding a business at business school — where you can experiment in a risk-free environment with access to a support network — not everyone is convinced.

There’s been bias against business schools over the years from some of the world’s most famous founders, including PayPal’s Peter Thiel, who say courses such as MBAs promote risk-averse thinking. Recent evidence suggests entrepreneurial activity among business students has fallen to its lowest level in nearly a decade, even though it became one of the hottest career paths.

It all begins somewhere

However, some of the most successful startups of recent years trace their roots to business school. The food-ordering delivery service Deliveroo, was founded by Wharton School MBA alumnus William Shu; Sofi, the peer-to-peer lender, was setup by a throng of entrepreneurs who met at Stanford Graduate School of Business. 

Such success stories are one reason for the growth in entrepreneurship at business schools, alongside the creation of the internet breaking down barriers previously associated with launching a business.

Waverly Deutsch, Booth professor of entrepreneurship believes business school provides a safe environment in which entrepreneurs can experiment with startup ideas.

She says, “An MBA gives you an incredible network of potential co-founders, employees and mentors who have large networks themselves. Many students get angel investments from their classmates.”

Deutsch, who lectured Kuropyatnyk thinks entrepreneurship can be taught. She says, “Entrepreneurship is fundamentally a process. You’ve to identify an opportunity, validate it, find a market, create a solution and test it. You can teach that process and mentor the skills related to it — negotiation, creativity, product development. All of those things make it easier for someone to succeed.”

She cites Booth’s startup survival rate of about 40 percent as evidence that the approach works – the failure rate of all US companies after five years is higher than 50 percent. But Deutsch cautions, “No process is a guarantee of success”.

Despite the benefits of launching a business while at b-school, entrepreneurial activity appears to be waning. According to figures from the FT, at Stanford last year 36 percent of the MBA cohort founded a firm within three years of graduation – falling to 22 percent this year.

And at Babson College in 2017, more than half of the MBA class started a company by the three-year-mark, which has since fallen to 37 percent this year.

Being efficient with time

Schools say students are hedging their bets rather than cooling on entrepreneurship. Many graduates are launching ventures alongside full-time jobs, so aren’t included in the entrepreneurship figures schools report. And others are creating companies much later in their careers, once they’ve acquired skills in the workforce and paid off some student debt.

Rhonda Shrader, executive director of Berkeley-Haas Entrepreneurship, says, “I absolutely encourage students to get entrepreneurial skills and experience while they’re here and continue on if there’s strong evidence that they’ve found product-market fit. If not, staying plugged in and getting additional experience while paying off debt, banking dollars for the future, is a smarter move.”

The hedging trend is especially true at California’s Haas School of Business, she says because “in the Bay Area the cost of living is nuts”. 

She adds, “If you’re not worried about making next month’s rent or student loan payments, you can have a much more honest perspective about your startup. Confirmation bias (seeing what one wants to see) is the biggest mistake that entrepreneurs, both beginning and experienced make.”

Positive attributes

According to Andrew C. Corbett, chair of entrepreneurial studies at Babson College, working on a business while at business school can be attractive to employers. He says, “All companies need to innovate and be entrepreneurial regardless of what stage they are at – their markets and customers’ needs change – so they have to act like an entrepreneur.”

He relates the example of Lubrizol, an US$8 billion Berkshire-Hathaway (Warren Buffett) firm which is one of many companies that “want to hire entrepreneurial grad students because they’ve a need to be innovative and entrepreneurial”, he says.

At Booth, Kuropyatnyk has been running Altris.AI alongside the work he does for his own technology consulting company, while studying the EMBA part-time.

He says, “The biggest challenge as an entrepreneur has been a shift in mindset. In a corporation you’ve the resource and time to strategize and plan in detail, but this isn’t always the case as an entrepreneur. So being smart with your time and network is key.”