I've written in Inc. before about problems with business plan competitions. Most voices promote them as unerringly valuable to students and entrepreneurship in general.

I'm presenting a contrary voice from an important source--a student. I'm not suggesting it's the final word, nor all voices, but a voice from the supposed beneficiary.

Context

I teach entrepreneurship at New York University. NYU and many organizations in Silicon Alley host tons of competitions and pitch events. I've also started several ventures over more than two decades and participated on both sides of these events.

Many of my students compete in them. Several have won--I think largely for not focusing on the competitions but instead on their customers and teams.

After all, customers pay you for solving their problems and meeting their needs, not because you won an award.

Conflicting interests

People running competitions aren't your customers. They have their interests, which generally differ from your customers'.

You can usually tell when someone offers apparently free money that they are helping themselves more than you. We hope that the interests of venture capitalists and other institutions funding the competitions overlap with the students', but they don't always.

Competition organizers and funders tout winners, but most winners would have succeeded without the help. Did the contest help them beyond the success they would have had anyway?

What about the losers or even near-winners? Does the experience teach them new skills or beliefs? Does it create connections? Does it enable and motivate those who could succeed as entrepreneurs to try?

What about non-participants? Do competitions promote entrepreneurship among people who could become entrepreneurial but haven't thought about it?

Who can answer better than the students themselves?

A student's perspective

A former student, Nahima Uddin, who participated in a competition recently emailed me:

The competition went well and it was really great to meet a lot of young social entrepreneurs. We didn't win but I'm glad I got to meet a lot of people who are very passionate about an unmet (it was very easy to tell the difference between those who were genuinely in it to solve a problem vs. those who were just doing it for the name of the competition).

I remember why you're not a fan of competitions like these and I understood why after the end--after the competition, I spoke to a lot of people who were really upset that they didn't win and thought that there was now a barrier to keep moving forward or was stuck in the direction of just re-applying for the competition next year.

It made me quite sad and I really wanted them to see that it is possible to continue their projects given that they've worked so hard on it and there are so many other opportunities to get funding and start a project.

Also just speaking to my friends afterwards, it was surprising to hear many of them say that they would never be able to think of something innovative but I'm really glad that I don't see starting projects that way and I think a lot of it goes back to your class, so I just wanted to say thank you again for that :).

While not denying some benefits from the competitions, we should consider some of their problems. At least then we can improve them.

  • They attract people "just doing it for the name of the competition." This sounds to me like cargo cult entrepreneurship than actual, effective entrepreneurship.
  • They make some contestants feel "there was now a barrier to keep moving forward."
  • Some contestants get "stuck in the direction of just re-applying for the competition next year"--in other words, they divert resources from their customers and teams to the contest. Is that effective entrepreneurship?
  • They miss "other opportunities to get funding"--like actual revenue! The contest seemed to make people less resourceful, one of the most important entrepreneurial skills.
  • People outside the competition "say that they would never be able to think of something innovative." While the competition can't change everyone, you'd hope it would motivate people to think they could innovate. The competition sounds like it discourages people.

I congratulated Nahima and sent her a link to my last article. She wrote back

Thank you for the kind words!! Also, thanks for sharing your article with me--I completely agree with all your points.

I do think these competitions can be a good learning experience but I think very few see competitions that way and are stuck on a win/lose outlook, and often also forget that there are more learning opportunities than just participating in these competitions.

If anything, I think it's a much bigger problem in Stern though but I think the problem with seeing things as a learning opportunity goes for everyone (also think people see failure as the end of all means).

In closing, I'm not suggesting these competitions are bad, but believe we should address their problems. Only then can we solve them.

Published on: Mar 31, 2017