It is 3pm on a muggy Sunday afternoon in July. I’m perched at my desk on the top floor of the Sainsbury Building overlooking Regent’s Park boating lake listening to the kids splashing each other and their parents accidentally-on-purpose.
The corridors and lecture theatres below me are at peace, not a student cry to be heard. The class of 2014 graduated a couple of weeks ago and they are now decompressing on a beach somewhere. The class of 2016 waits in excited anticipation preparing to descend noisily in three weeks. Meanwhile the majority of the class of 2015 are immersed in résumé-transforming internships.
But for 60 aspiring entrepreneurs it’s all about to begin. In 18 hours John Bates and I will light the fire on a cauldron of entrepreneurial fervour that will last throughout the summer. This is Entrepreneurship Summer School (ESS) – now stronger than ever in its 12th year. London Business School has seen a dramatic growth in entrepreneurial aspiration over the last few years. I’m not sure why. There is certainly more opportunity – The Economist recently likened this to a ‘Cambrian’ age for startups.
London has also spawned a huge entrepreneurial ecosystem, which adds further vim. The School catalyses more – the re-birth of the Incubator has made a huge impact and the Deloitte Institute of Innovation and Entrepreneurship funds an ever-greater smorgasbord of student entrepreneurship initiatives. Or maybe it’s just that we’ve hit a critical mass of startup aspiration on campus, all vying for bragging rights, providing role-models and somehow showing that, to quote Steve Jobs, “It’s better to be a pirate than join the navy”. Whatever the reason, we were flooded with applications for ESS this year.
There’s the usual diversity of hopeful ventures. As I scan the list I see one team intent on creating a range of high heel shoes that’ll never hurt; a couple of social entrepreneurs with a better business model for ‘of-grid’ lighting in Africa; another bent on helping us all monetise our personal data. Ten there’s the usual smattering of peer-to-peer platforms threatening to disintermediate entire industries and a biologist with a novel way of extracting malaria-infected cells from blood.
All quite incredible in both senses of the word. I’ll be suspending disbelief for the summer, partly because I’m not that great at spotting winners (though better at distinguishing losers), partly because most ideas will have morphed into something far more probable by the end of the summer – and that’s the thinking behind ESS. Students seem prone, maybe even encouraged, to pitch their ideas as finely cut gems of self-evident value. It’s our job to disabuse them of this unhelpful mindset – encouraging them instead to reframe their opportunities as mere hypotheses and, stretching the scientific metaphor a little further, to challenge and equip them to test and even falsify their venture’s hypotheses. We exhort them to get ‘the hell out of the building’ to quiz customers and industry experts who can throw helpful mud at their opportunities.
Our maxim is “fail fast, fail cheap” and ESS is all about seeking out ‘disquieting evidence’ and using this evidence to transform, shape or even discard their original notions as fast as they can. Discovering ‘Plan B’ by testing ‘Plan A’.
With a world awash with accelerators we position ESS as something of a brake. We actively caution against premature business plans. We’ve seen too many of them and most read like fiction (John Bates quips that, for so many plans, “the staples are the only thing connecting the numbers and the argument”). For most new ventures, value is built over many years and a summer spent laying foundations and avoiding quicksand will be a summer well spent.
So, what do the students have in store as they excitedly assemble tomorrow? Well, first comes the paradoxical news that the answers are not in the classroom. John and my first task (ably assisted by a cast of several dozen) is to persuade them that the answers are out there buried in the minds, behaviours and prejudices of the stakeholders on whom they are dependent for their businesses to succeed. Truth emerges in the ebb and flow of conversations and a few well designed ‘proof-of concept’ experiments.
Second is that, despite each having dozens of ventures under our respective belts, and being judged competent to teach entrepreneurship at a place like London Business School, we can’t tell them whether their idea has legs (and even if we could, we wouldn’t).
So, if neither institution nor instructor holds the answers, what use are we?
Well first, we give them a robust methodology so that they can identify and reach those who have the information they need. As Peter Drucker said, “Entrepreneurship is risky mainly because so few so-called entrepreneurs know what they are doing – they lack a methodology”. Tough you won’t hear either of us advocate ‘entrepreneurship by numbers’, we do hold that there’s an increasing plethora of useful tools and frameworks that can guide entrepreneurs to ‘make the most important thing the most important thing’. Which is, after all, the most important thing.
Second, we strive to imbue participants with the skills and insights to extract that evidence – guerrilla market research, sales, power networking, storytelling, strategy as hustle, cold-calling. We facilitate conversations and debate with leading practitioners and exponents. We recruit numerous panels of accomplished entrepreneurs who talk candidly on what they’ve learned on financing, team-building, sharing equity as well as all the various pot-holes and time-bombs that they’ve sunk for themselves over the years. Like pancakes, the first venture is often a throwaway.
Then, and many say this is the best ingredient, we provide every team with their own mentor. These mentors are drawn from our own entrepreneurship community – every one of them a founder of one or more successful businesses who is happy to give substantial time to help the next generation of entrepreneurs. Students learn the value of a mentor as a sounding board and means of surviving the loneliness and ambiguity of founding their first business. Many mentors form lasting friendships with their charges. Some have been known to invest downstream.
Students seem to have enormous fun and we observe palpable progress over the summer. The course necessitates a huge amount of work as they immerse themselves in their chosen market and industry to collect the evidence they need to rigorously test their venture. In common with most other endeavours, the more they put in the more they get out and ultimately they’re the ones who benefit. So, lots of intensity and insights but what’s the impact?
In the short term, there’s the grand finale of ESS in September. We give students 30 minutes to present their findings to fresh panels of investors and entrepreneurs. These findings are not mere reflections, rather we ask them to present an evidence-based snapshot of the viability of their venture. Thirty minutes is plenty of time to impress or dig themselves into a hole and the judges are relentless. We don’t mind whether a student concludes that their venture is a no-brainer or (as we may have suspected all along) a ‘basket case’. And neither do the judges. What’s important is that students make a reasoned argument that is based on solid, micro-level, enquiry and evidence.
For some it’s also a voyage of self-discovery. Yes, they collected copious evidence. Yes, their venture is viable. But they hated the loneliness and ambiguity of the life so it’s back to the day job.
In the longer term? Well, ESS is one of the few programmes where we attempt longitudinal impact studies and the results are quite pleasing. We find that around 40 per cent of all ESS participants have started at least one business – that’s 296 businesses started by 224 alumni. Twenty have sold or floated their business. Sixty per cent of those who have not yet started a business say that they aspire to do so.
The businesses they start? It seems that only 30 per cent start businesses similar to those they brought to ESS. Which is a great outcome if we really prevented them from launching fundamentally flawed businesses. Just 47 businesses have shut down (which is fine – perhaps we should also ask whether they intend to start another?)
Students also seem to love the experience and, while their accolades are great, the real proof is the businesses ESS alumni build, the investment they generate and the people they employ. Aggregate 2013 revenues from ESS businesses are over £50m. Seventy-seven businesses report creating employment for others (a total of 530 FTE in 2013). Between them they’ve raised just over £110m in risk finance.
Of course, ESS can’t take much credit for this. Our raw material – the new cohort of students – bursts with entrepreneurial talent, enthusiasm and aspiration well before we get our hands on them. And the very act of bringing them together in one cauldron creates a curious energy exchange of its own. Besides, ESS is just one element of a much larger ecosystem of entrepreneurial support within and without the School. But for all that, whether you liken it to magic, alchemy or (management) science, something sizzles at the Summer School.
Now all is quiet in Regent’s Park as well. As I’ve written this, dusk has descended and it’s time to go home. Although all is now prepared, I feel the usual pre-teaching adrenaline. This is by far the hardest teaching we do all year as we assemble, brief and choreograph the 130 external contributors to ESS and manage the expectations of our 60 putative entrepreneurs. But we love it.