1 Technology Entrepreneurship Research at Stanford Chuck Eesley Management Science & Engineering Stanford Technology Ventures Program March 9th, 2010 firstname.lastname@example.org
Chuck Eesley Lobby 10 Consulting Sun Dance Genetics
Institutional Environments and Entrepreneurship Drivers of entrepreneurial entry and performance (different contexts) Developed economy Entrepreneurs from Technology-Based Universities - with David Hsu (Wharton), Ed Roberts (MIT) Bringing Entrepreneurial Ideas to Life Boom and Bust Founders Cutting Your Teeth - Prior entrepreneurial experience Developing economy The Right Stuff Role of institutional environment in selection of high human capital entrepreneurs Entrepreneurial Performance in a Developing Country: Evidence from China What Drives an Innovation Strategy? Role of Institutional Env./funding of S&T in search for ideas 3
Entrepreneurship Research B-schools, economics and sociology faculty have produced a large literature on industry dynamics, strategy and firm performance for large firms. Management of Innovation – largely shows difficulty large firms have with surviving waves of innovation (creative destruction) (Much less on how and when entrepreneurial firms take advantage of this) Studies of Tech. Entrepreneurship began in 1960s (Roberts, Cooper) Data, Quality Research scarce (self-employment) E-ship taught via war stories Systematic study of Tech. Commercialization and Entrepreneurship Lacking Almost nothing is known outside of the US and EU 4
Factors that Drive Founding Do Not Drive Performance 5
6 Data Unique data on firm origins, early composition and multiple stages of performance measures Alumni: 105,000 surveyed; 42,930 records in 2001 Date of birth, country of citizenship, gender, major at MIT, highest attained degree 7,798 indicated founding at least one company Survey of self-identified MIT alumni entrepreneurs in 2003 2,067 respondents (r.r. 27%) Hsu, Roberts, Eesley 2007 Alliances & Acq. - SDC Platinum Patents – USPTO VC - VentureXpert
Table 1. Estimated Employment and Sales Data for All Active MIT Alumni Companies° °Underlying data from 2003 MIT survey of all living alumni, updated to 2006; ~25,800 active companies. ALL DATA FROM: Entrepreneurial Impact: The Role of MIT, Edward Roberts & Charles Eesley, MIT Sloan, February 2009
Estimated Number of “First-Time” Firms Founded Each Decade By MIT Alumni
More entrepreneurs emerge from each successive MIT class, and they start their companies sooner and at younger ages.
Table 4. One-Time and Repeat MIT Founders by Decade of Graduation (percent) Over time, the number of multiple companies founded per MIT alumnus has been increasing, with dramatically increased economic impact per entrepreneur.
The MIT “magnet”: <10% of MIT students grew up in Massachusetts; 31% of alumni firms are in Massachusetts
MIT Entrepreneurial Ecosystem has grown in its components and impact over the yearsUnderlying culture, history, role models, and policiesAlumni initiatives: MIT Enterprise ForumRe-oriented Technology Licensing OfficeMIT Entrepreneurship Center: Classes: 1 to 30 in 15 years; 3 new ones in energy ventures in past 2 years Clubs, including MIT $100K Business Plan Competition Conferences, and many forms of internal and external networkingRecent MIT institutional broadening and growth Venture Mentoring Service MIT Deshpande Center Entrepreneurship & Innovation MBA Track
Table 14. Entrepreneurship Center Factors Important to Venture Founding (from limited sample only) *Respondents could check all relevant categories.
Table 8. Role of MIT’s Positive Feedback Loop in Venture Founding(from limited sample only)
For more information, see complete report:Entrepreneurial Impact: The Role of MIThttp://entrepreneurship.mit.edu/Downloads/Entrepreneurial_Impact_The_Role_of_MIT.pdf
Context Alumni survey Tsinghua University ~26,700 mailed (correct addresses) 3,000 surveys 11% r.r. Growing tradition: Stanford GSB, Chicago, HBS Disadvantages: Biased towards tech., other response bias? Advantages: Defined‘at risk’ set, first abroad, detailed work history and founding data, less biased by govt. concerns Other surveys: business owners, self-employed and entrepreneurs merged together – Treiman and Walder, “Life Histories and Social Change in Contemporary China” Self-employment (Chinese Health and Nutrition Survey, NBS HH Survey) 18
Proportion of Revenue Not from Founding State 30
Interview Quotes China is more state-led than a market economy still. The government controls many resources. For firms the quickest way to make a lot of money is through the government. The government has incentives for firms to put up good numbers (it’s good for the politicians’ careers). In the 1990s … government was giving them less support. Many universities created “university –run” enterprises and were basically selling off the periphery of campus. Even high schools had school—run enterprises that were considered acceptable. There is a Tsinghua name to many of them. - GC – 2nd generation investor
Interviews Historically, investors in China see fewer experienced, serial entrepreneurs “Forced to rely more on work experience outside of an entrepreneurial context to judge the quality of entrepreneurs – GY – VC investor Tsinghua alumni, entrepreneurship among alumni has a meta-effect where some learn the process and mentor each other so in the future there will be more and more entrepreneurs from Tsinghua as has already happened with MIT alumni. – RC – Wave Communications (his 6th start-up firm) 32
33 Analysis: E[yi | x] = α + ρ’zi + ’xi + ’yi + ’pre xi + ’Xi + pre, mid, post + η + φ + i
Dep. Variables: yi represents our measures of firm performance xi is government ties (father in government, privatized, coastal province) yi is government programs (specifically science parks) zi is separate measures for exposure to entrepreneurship, prior founding experience, or innovation Xi vector of control variables - Everjob_govt, Comm. Party, Govt. customer, Privatized, Entrep. parents, Entrep. index, rural, EECS, Overseas, SEZ, software, electronics, wealthy family, Master’s, PhD, number of cofounders η and φ represent year and industry sector dummies >0
34 Results: firm performance N=230; (R2 0.627) ***, **, and * indicate statistical significance at the 1%, 5%, and 10% levels, respectively. Everjob_govt, Comm. Party, Govt. customer, Privatized, Entrep. parents, Entrep. index, rural, EECS, Overseas, SEZ, software, electronics, wealthy family, Master’s, PhD, number of cofounders, industry and year fixed effects were included as controls but coefficients are not shown to save space.
Stanford Alumni Entrepreneurship Survey Endorsed by Pres. Hennessy Planned for this year Enable a comparison with MIT, Tsinghua Aggregate Economic Impact on Region and World New questions about entrepreneurial process, success factors, impact of university programs IIT India data More broadly always looking for help: Mentoring, guest teaching Access to Data (Portfolio companies) Funding Ideas / Advice 35