The Start-Ups Coming Out of US Business Schools

Kelsey Doorey went to UCLA Anderson School of Business with no intention of starting a business. But she was tired of buying bridesmaid’s dresses for friends’ weddings. Another student encouraged her, so she wrote a business plan for what is now Vow to Be Chic, an idea for renting dresses to bridesmaids in the way suits and tuxedos are rented to groomsmen.

Then, she continued to work on the start-up throughout the MBA program. She used it for her second-year thesis project and took the idea to a business plan competition. She was offered funding from venture capitalists on the spot. But she had already lined up a full-time post-graduation job in New York, where she had interned.

When Doorey called the CEO of her expected employer, he told her to take the money and pursue her dream. He’s become a mentor. And Doorey raised $9 million in funding, owns 13,000 dresses to rent to bridal parties across the US and employs a team of stylists who can help customers online or in the San Diego office and pop-up shops on various tours. Doorey estimates her business has saved women $5 million.

“I think business school is amazing, especially when you take the idea and work on it at school,” says Doorey. “You can apply the principles of almost every class in your business.” In addition, Doorey has a professor who serves as an advisor to the company, and the school introduced her to Susan Feldman from One Kings Lane. Classmates helped work on the business as part of teams on projects for different classes. They also served as focus groups because they happened to be the target market for dress rentals. 

In fact, fellow classmates are among the greatest assets gained at business school, say entrepreneurs. Theo Lee and his friend Michael Kim planned their Korean food business while at UCLA Anderson. “We want to bring Korean flavors to America,” says Lee. They invited classmates to a launch party when the company, KPOP Foods went live on Kickstarter. Originally, Kickstarter advised the team of five to seek funding elsewhere because food products rarely ever did well on the site.

But they went ahead with the plan anyway. Their friends hit social media and kept sharing their video. KPOP reached its goal of $10,000 in the first eight hours of the campaign. In addition, they used their business for projects in classes throughout business school to get feedback from professors and fellow students, which was “incredible,” says Lee. The company has a Korean hot sauce on the market already.

Sometimes, professors or the school itself make a financial investment in the business. Many schools also have accelerators or incubators on campus. Northwestern University’s Kellogg School of Management offers some students in the earliest phase of entrepreneurship $1,000 to test ideas. Then, they offer those who make it to launch $5,000 to work on the business.

Finally, in the competitive Zell Fellows program, Kellogg provides 10 students in new ventures $10,000, travel experiences, networking opportunities, alumni mentors, and more, to pursue the business. In the five years since launching, Zell Fellows program has 44 ventures in the healthcare and new venture tracks that are still active. In addition, the start-ups have raised $33,000,000 in funding and awards.

What is interesting about Kellogg and most business schools is a shift to mainstreaming entrepreneurship. Once a niche inside MBA programs, entrepreneurship is now integrated into much of the curriculum. The schools are trying to teach the mindset and frameworks to all their students, even those who are not planning to start their business.

In fact, Linda Darragh, the Larry Levy executive director of the Kellogg Innovation and Entrepreneurship Initiative, says the school also has mini corporation labs, where big companies, such as Tyson or P&G, talk about innovation with students. Next, the executives outline problems they are facing and have student teams offer solutions within an hour and a half or so. The idea is for students to recognize the needs of these companies and for the companies to see the entrepreneurial mindsets of potential hires firsthand.

One obvious trend at a number of business schools is a desire to commercialize technology already on campus. More than ever, universities are trying to match business students with those in the on-campus engineering, medical, and other schools. Kellogg has an experiential course just for having students make market assessments of existing technology created by those in other parts of the university.

This idea is practically a religion at MIT Sloan. “Our president wants an innovation orchard,” says Trish Cotter, associate managing director at the Martin Trust Center for MIT Entrepreneurship. Sharing the abundance of resources and making connections between the different treasures of the school is a goal of the faculty, says Cotter.

“We can walk out our door to venture capital, big companies, start-ups, and Noble Prize winners,” she adds.

While some used to argue that business schools couldn’t teach entrepreneurship, few can deny the available resources on campus or the usefulness of core courses. But that’s not the only driving force in this start-up frenzy on campuses across the US. Millennials are also demanding such changes at business school.

“This generation of students want more control over their life,” says Al Osborne, senior associate dean at UCLA Anderson. “One way to do it is being self-employed. They also want to have impact.”