Posted on: Sunday, April 11, 2004

Colleges now see value of teaching entrepreneurship

By Jim Hopkins
USA Today

SAN FRANCISCO — With a mother like his, no wonder Richard Branson became an entrepreneurial dynamo.

His Virgin Group straddles dozens of ventures — from music to cars to cell phones to bridal gown sales. Yet it's Branson's Virgin Atlantic Airways that his independent-spirited mom may have influenced most. After all, Eve Branson, 80, once talked her way into a glider pilot training program by masquerading as a man.

"There are definitely traits which I inherited," Richard Branson says with a grin in a new documentary, "Lemonade Stories," about mothers' influence on entrepreneurial kids.

The film raises critical questions that experts are debating more than ever: Are entrepreneurs born? Or are they taught to turn good ideas into great companies?

Scouting answers, U.S. universities have poured $1 billion into the subject in the past 10 years. Along the way, they're upending business schooling — adding hundreds of instructors and thousands of classes on entrepreneurship.

The outcome is crucial to the U.S. economy as it struggles to claw back 2.4 million jobs lost to the recession. Entrepreneurs historically have led the nation out of hard times. Startups, often begun by laid-off executives, create as many as 80 percent of jobs. But amid the slow recovery, there are worrisome signs that entrepreneurship needs a boost.

Just 6.8 percent of discharged managers started companies last year — down from 9.6 percent in 2002, Challenger Gray & Christmas said recently in a survey of 3,000 workers. That's far below the 15 percent average in 1991-92 as the nation emerged from recession, the outplacement firm says.

Educators want to create more entrepreneurs like Earl Graves Sr., the founder of Black Enterprise magazine, whose success landed him on DaimerChrysler's board. Graves, 69, sold Christmas cards when he was 7 — imitating his father, who held three jobs at once.

"I was always thinking of where I was going to make more money — and how," he says. "People who don't have ambition — they get a regular job."

Entrepreneurs like Branson and Graves are born — though skills can be taught, too, experts say.

From family, they inherit many traits key to entrepreneurship: creativity, drive, a willingness to take risks.

Male entrepreneurs are about twice as likely to be self-employed if their parents were self-employed, says Babson College Dean Patricia Greene, citing research by others. Moreover, 35 percent of female entrepreneurs had self-employed fathers vs. 24 percent of wage earners, Greene's research shows.

Arthur Blank, co-founder of Home Depot, recalls the risk his father took starting a pharmaceuticals supply business. The elder Blank, father of six, was in his late 30s when he began the venture. He died five years later, when Arthur was about 15. Arthur's mother, Molly, refusing to give up on the family firm, successfully took over. The business was later sold.

That never-say-die spirit can't be taught, Blank, 61, says.

But with education, he says, "If somebody has that potential, that kernel within ... it can be nurtured."

So, what "can" be taught about entrepreneurship?

• Skills. Young ventures, unlike big existing firms, need to be organized from scratch.

That means basics like writing a business plan, deciding whether to incorporate and knowing how to get intellectual property protection. It also means learning to get financing from the most common source — friends, family and credit cards — and the least common, venture capital.

• Frequency. Students need to know that starting a company isn't as rare as they might think, so they shouldn't be afraid to try.

About one of every nine U.S. adults was involved in starting a company last year, the Ewing Marion Kauffman Foundation said in a survey of 9,195 adults. Ventures might never go further than doodles on a lunch napkin. But that's a start as "common as getting married or having a baby," says Kauffman CEO Carl Schramm.

• Opportunity. That means learning to recognize when you have a great idea — and when you don't. Being the 18th person to open a nail-care salon in an already crowded market is a crummy idea.

"But inventing a machine to fix broken nails would be a great idea," Schramm says.

Kauffman, trying to supercharge startups, is spreading entrepreneurship education across university campuses, and away from their business school homes.

The foundation, created by a healthcare entrepreneur in Kansas City, Mo., gave a combined $25 million to eight universities in December. The schools must match the grants with $50 million more. Over seven years, Kauffman will track graduates against those from other schools to see if they have higher startup rates.

The cost of paying for those new professors and centers is at least $1 billion. ""And all of that has come in the last 10 to 15 years," Katz says.