Student Uprising

A look at why, faced with poor job prospects, university students today are starting companies in record numbers.

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Faced with poor job prospects, today's university students are starting companies in record numbers

When Elaine Salazar, 37, decided to return to school to pursue her goal of becoming an entrepreneur, she turned the tables on the university gatekeepers. "I had a list of questions for them," she recalls, "but mostly it boiled down to 'What are you prepared to do to help me become a successful entrepreneur?'

"I interviewed them all -- Harvard, Stanford, all of them," says Salazar, a former director of training for National Public Radio. In the end, it was the University of Texas's entrepreneurship program, as well as the Austin Technology Incubator in the same town, that earned her approval. "It was clear," Salazar says, "that they were interested in helping me succeed. Not on some big philosophical level, you understand, but me as a person."

After spending the first year at UT studying basic subjects like finance and marketing, Salazar and three other students received assistance in preparing the business plan for an art-supply company called Ampersand, which went on to win business-plan competitions sponsored by UT and the University of San Diego. The prizes: one year of free office space in the Austin Technology Incubator, a small cash award, and sustained help in building the company. Salazar eventually went solo with Ampersand and set up shop in East Austin, Tex., in 1993.

"What really makes UT's program work is the second year," Salazar explains. During that year the curriculum is tailored to the students' business plans. "If we need some marketing assistance, boom, they bring in the world's foremost marketing expert to work with us. If we need accounting help, boom, they bring in the world's top accountants. We ask," Salazar says, "and they deliver."

While Salazar's experience may not be typical (yet), she does represent a new breed of student in her expectations: she wanted the education that would give her the biggest boost in starting her own company. Similarly, UT's program represents a fresh response to the growing number of students like Salazar.

Students' holding down jobs while going to school is not news. Because of financial pressures, college students have always worked -- and have even created their own businesses on campus. What's different today are the forces both on campus and off that are leading even more students to set up shop. One of those forces is downsizing. Students see their parents and their parents' friends worried about holding on to a job. That makes the idea of starting a company more attractive. Another effect of downsizing is a reduction in the number of corporate recruiters pitching jobs on campuses. More students feel they are going to have to invent their own careers.

While uncertainty may be one side of the new economy, the other side is an abundance of opportunities. Technology in particular is a boon to campus entrepreneurship. Not only does technology allow small companies to compete effectively against large ones, but the new generation of students are every bit as comfortable with computers as their parents were with television sets.

Finally, many more colleges than ever before have formal entrepreneurship programs. That means more faculty advisers for young company builders, more fellow students helping with market research and the like, more ties to the world of venture capital, and more role models as teachers straddle the line between teaching and running their own companies.

What we are seeing is much more than a period of economic transition," says George Kozmetsky, 78, the founder of IC2 Institute, a research center in entrepreneurship at the University of Texas. "It is a transformation, a great big change."

Kozmetsky is in a position to recognize such trends. His tenure in the field of business education dates back to the creation of the school of industrial administration at Carnegie Mellon University in 1951, and before that a stint teaching at Harvard Business School. He also cofounded Teledyne Inc. and serves on the boards of several companies, including Dell Computers. The entrepreneurial transformation, according to Kozmetsky, is a reflection of changes in the global economy. "For the last 20 years," he says, "American companies have concentrated on shareholder value while Asian companies have focused on market share." Although that has meant shrinking job opportunities at many large U.S. corporations, "global economic warfare," says Kozmetsky, has created "an economy that is wide open. No markets are safe or secure anymore. Everything is up for grabs. No matter what field you are talking about -- electronics, education, entertainment, or anything else -- it opens up more opportunities than I've seen in my entire lifetime. Very few generations in history, perhaps not since the Renaissance, have been accorded the opportunities this period provides. It's a profoundly different world."

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