The Dos and Don’ts of Dorm Room Enterprise

Thinking about starting a college business? Learn from these Inc. 5000 CEOs that did it big.

By Tamar Snyder |

The college dropout turned billionaire is a tale that's becoming stale.

Sergey Brin and Larry Page famously dropped out of Stanford's Ph.D. program in computer science to launch Google. Microsoft's Bill Gates and Facebook founder Mark Zuckerberg are managing just fine without their mahogany-framed diplomas from Harvard. Steve Jobs quit Reed College to start Apple, but hung around to sit-in on classes that piqued his interest. And Michael Dell started Dell Computers out of his University of Texas dorm room before dropping out at age 19 -- once monthly sales topped $80,000.

Gates, Dell, Zuckerberg and friends are not alone. At least 73 of the high-flyers on Forbes' 2008 "The World's Billionaires" list are dropouts.

But many of the Inc. 500|5000 CEOs say that they never would have gotten their businesses off the ground without help from the academy. "Stay in school," is their advice to budding entrepreneurs.

"Student startup businesses are definitely on the rise," says Donald F. Kuratko, a professor of entrepreneurship and executive director of the Johnson Center for Entrepreneurship & Innovation at Indiana University's Kelley School of Business. Kuratko offers several reasons, including the expansion of entrepreneurship programs and their increased popularity, as well as the development of student business incubators and growth of student business plan competitions.

A lot has to do with the students themselves. "This is a new generation of students with more independent expectations of what they seek in their careers," he says. Put simply, these student entrepreneurs witnessed the erosion of job security and set out to become their own bosses.

And so the dorm room has become the ideal business incubator. Here Inc. 500|5000 CEOs weigh in on the pluses and minuses of getting an education while building a business.

DO revel in the security that parents and student loans provide

Starting a business while in school is less risky than later on in life.

"The benefits of starting a business while in school is that you're already broke," jokes Thomas Wick, founder and CEO of eVitamins, an online retailer of health and nutrition products, No. 3632 on this year's Inc. 5000 list. "So I really had nothing to lose. No wife, no kids, no worries. If the business flops, oh well. I'd start another business or use my degree and get a real job." Wick started his company at the kitchen table of his college apartment in 1999 with $1,000 he borrowed from a friend. His mom owned a heath foods store, and he needed to pay the bills while studying finance at Western Michigan University. eVitamins is on track to rake in more than $5 million this year, and Wick is about to launch eMuscle.com, a social networking site geared toward the exercise enthusiast.

LiveOffice founders and UCLA fraternity mates Matthew Smith and Alexander Rusich were able to continue their "starving student" lifestyle into their mid-20's, allowing them to reinvest all of the software company's earnings into building the business. If they didn't achieve their goal of "making $100,000 and living by the beach," they could chalk it up as a "learning experience."

They like to joke that in the early days, they were "funded by Visa, MasterCard, and American Express." The longtime buddies initially invested $38,000 of their own money, working out of an off-campus apartment near UCLA that doubled as office space. The company, which recently welcomed new CEO Nick Mehta, posted $19 million in revenues in 2007. This year, the company is ranked at No. 2092 on the Inc. 5000 list.

For Dan Roitman, the timing was right. Knowing that "I could become a 'boomerang child' and return home after college, practically rent-free" gave him the security needed to take $5,000 of his own money, rent a nearby office for $250 a month, and start Stroll, an Internet retailer with close to $6 million in revenue last year from selling personal development and language learning audio books. Once he graduated, he moved back home and rented a nearby office for $250 a month. This year, the company is ranked at No. 2290 on the Inc. 5000 list.

DO turn classmates into customers

For the college entrepreneur, it pays to view your classmates as hot commodities. They can serve as sounding boards for your ideas, become your business partner, or even serve as cheap labor. Roitman's fellow students at University of Maryland, College Park, would "willingly work for burritos," he says.