By Edward Roberts
David Sarnoff Professor of Management Technology
Professor of Technological Innovation, Entrepreneurship, and Strategic
Management Chair, MIT Entrepreneurship Center
I was in Portugal for the 1st time back in 1959. Then I was here 3 years ago - before we started this competition. Much has changed. I had the opportunity to share the enthusiasm particularly of the people ISCTE-IUL to do something of this sort. I am excited to be back in Portugal once again and see how much has been accomplished in such a short time. I’m thrilled to be part of this celebration.
It is my believe that specially science & technology based universities have the opportunity of dramatically impacting economically the regions that they are in and countries where they are located. We have done this a lot at MIT for many years now. I started the MIT Entrepreneurship Center in 1990, so we have 20 years of building a formal entrepreneurship center and the programs related to it.
Two years ago, I issued a report said that when we study the Alumni from MIT and the companies that are still alive and working we have found that 25,800 companies (76% of all founded) employ worldwide 3.3 million people and produce 2 trillion dollars global revenues. I am sure that some of these revenues are produced in Portugal and some of those jobs as well. These constitute the 11th largest economy in the world if we were to consider them together. We looked also at the companies depending on University technologies, MIT and others, they are the largest source of impact on jobs and on revenues – 1.7 million jobs of the 3.3 million come from companies that were based up on an university technology and about a trillion of the overall revenues come from those companies.
So, if we try to build policy of stimulating your economy by looking carefully at the universities into which you could be pouring resources and helping them to function, you may very well do wonders on your economy over time.
The Stanford results will be very similar to MIT's. Don't be surprised to find out that the same study, comparatively, would equate it to the 10th largest economy in the world.
The indication really is that if you go to select the places, you are going to find big impact. But I think of it more generally. If you go to any university that is really educating its students to go out and find entrepreneurial and innovative ways of leveraging the knowledge that they absorbed while students, then and only then can you really contribute significantly to the economy over time.
By the way, one very important piece of our study showed that 30% of all of the jobs were in manufacturing. And as you´ll understand, the highest economic development impact derives from manufacturing far more than service jobs. These are the highest leverage producing jobs, critical for a vibrant economy.
The 3% of jobs in the MIT sample is 3 times the overall manufacturing in employment in the USA. So the average employment in the USA is 11% in manufacturing and in the MIT sample it was 30% and I will bet that the Stanford sample will show something similar.
The question fundamentally is how could Portugal do something comparable in launching programs such as what is being done right know with this wonderful venture competition. There are a number of things that we have learned from ourselves that may be needed to be copied or adapted in Portugal.
Number 1: We have clearly benefited from commitment from the top. The top of the university and those who support it and in our case private support – our alumni, and publicly – the major governmental institutions. The support for building an university that is committed to economic growth through knowledge transfer and spin-off and diffusion. This is the number one ingredient.
Number 2: The faculty of the university must share the kinds of values that say that their job is more than just produce know-how and distribute it to its students. Their job is to encourage, stimulate, supervise, advise, coach the students and alumni. That it is a good thing to go out and take this knowledge and start companies and create jobs and help the economy of their region and countries. There are ways to help encourage faculty to do this. In many universities faculties are forbidden from participating in such commercially oriented activities. In other times, the worry is that these will create conflicts of interest between academics and what their jobs is supposed to be. Our experience is that these threats are avoidable. We can build a faculty wanting to assist their students and themselves in tech transfer and impact, without having them to undertake major conflicts of interest.
Number 3: We have seen here in the examples of the companies that are semi-finalists, students have to be encouraged to have activities that bring them closer and closer to this sort of thing. Our $100k business plan competition, is a wonderful motivating force to get students work together on this. When we have started the $100k, the same year as the MIT Entrepreneurship Center was formed in 1990, it was in the USA the first university based business plan competition and it was the $10k. The students worried about could they find $10k the first prize? I took the worry off their hands by making a phone call to an alumnus venture capitalist and I told him this was a great opportunity to support student enthusiasm. He said “do you want 10,000 dollars from me?”, I said I do, but I will be calling you next year asking you for more money. “So do you want $20,000?, to which I replied, “How would $30,000 do in exchange for naming the prize for 3 years so that the students have a stable source of funds and focus on the on building student participation?”. But I also got some support from him regarding my research activities on entrepreneurship. So we then settled cheap at $70,000 to which he sent the check the next day. Starting with €100k is a wonderful beginning, you are ahead of where we were, when we started off.
But a business plan competition is not the limit of what the students activity must be. You must have clubs really covering every aspect of entrepreneurial interest of the students. Such activities are the essence of the heart land of what goes on at MIT on entrepreneurial activities. The energy club, the largest club today at MIT is the sustainability club. All the clubs come together across the entire campus. We have a venture capital club. We have clubs in the Sloan School and in the Engineering Schools. And above all, the clubs get together across the entire campus so that students can blend.
Number 4: Expanding direct students' education in entrepreneurship dramatically. In 1990 we had one course at MIT today we have 30 classes related to entrepreneurship and thousands of MIT students taking these classes. That takes an investment by the administration. In hiring faculty, in developing coursework, in bringing outsiders to co-mingle with faculty, so that you can do what I call "dual track basis":- bring an academic discipline knowledge and combine it with practitioner experience so that you are able to get students engaged in those kinds of educational opportunities.
Number 5: You don’t have to do things the same way we did it. An an example, in Cambridge we have a tremendous number of outside venture capitalists. Our job is just providing a level playing field so that they can get in and have access to our students in a competitive mode to provide access to people and money. You may not have a stronger situation like that. You may have to look for government supplementation or to the point of having university itself become a source of support. It has been done in other parts of the world and if done carefully, it can be a strong stimulating experience in fostering entrepreneurial attitude.
Last piece of advice: you need patience to succeed. It takes a long time to first build attitudes, then go from attitudes to programs and then from programs to results in creating an entrepreneurial environment and the jobs outcome that matters.
And I am delighted that MIT is having the opportunity of working with Portugal to help to accomplish this. Thank you.
