Professor William Sahlman, Co-Head of the Entrepreneurial and Service Management Department, recently shared his views on entrepreneurship and the HBS Business Plan Contest with Todd Thedinga (OB). Professor Sahlman is giving the HBS Business Plan Contest kick-off presentation on Tuesday, October 23 at 3:30 in Spangler Auditorium.
TT: Although we are entering a rough period in the economy, a lot of VCs are saying that now is the best time to be starting a company. Do you agree with that view? Or do you think it is more important to go and get relevant experience and then try something entrepreneurial when the market is stronger?
SAHLMAN: The first issue about the role of experience is that I have always been a proponent of getting real operating experience, some real P&L responsibility, some real sales experience, because I think for anyone starting a business it’s very hard “to do” and learn simultaneously when the stakes are relatively high and the competition so intense. So I have not changed materially over the years in terms of suggesting that people find a great company to work with, in a place they want to live, with people they can learn from. In the past several years it was possible for relatively young and inexperienced people to raise capital and pursue ideas that were not really technology-based. The ideas depended on the Internet, they depended on a set of tools being available, but frankly it wasn’t rocket science. So it was the domain of MBAs – young, hungry, energetic people who were able to attract capital, able to do deals, able to identify opportunities to re-engineer business processes. I think the next phase is going to be a little more technologically challenging… I see lots of new things that involve very high tech content and/or are financial engineering, taking advantage of the downturns in markets and the relatively high cost of capital. And that typically means that the traditional MBA doesn’t necessarily have all the things that they would need to successfully start a business today. But they could partner up with other people and potentially go at it.
TT: Along those lines, do you think working with contemporaries at MIT has typically been an unrealized opportunity here?
SAHLMAN: I would say that there are lots of technologies and lots of very smart people at MIT or at other engineering schools. But because there is such a wide gap between ideas and commercialization, I don’t think that it’s as though there’s a vast untapped treasure trove, because of an inability to speak two languages or because of a proprietary domain of Sloan students. Rather I think it’s hard to have technology people value business insight and management as much as they value technology, and conversely: people from the business world tend to undervalue technology, and it’s relatively rare that the two sides work perfectly together. So I certainly think that it’s a fertile place for those inclined to learn two languages to go work, mine, cultivate, and I presume that that’s going to happen more. And indeed we see some evidence in the Business Plan Contest that there have been more collaboration outside the school than previously.
TT: Right, in fact last year’s winner involved a group of Harvard PhD candidates in Biochemistry.
SAHLMAN: Yes, you have some pockets of expertise at other schools in biotech, photonics, genomics, and specialty materials. And I think some of those collaborations will work.
TT: What is your elevator pitch to someone who is considering entering the HBS Business Plan Contest?
SAHLMAN: There are tremendous learning benefits from working with a small team on a business idea and trying to address all of the various integrated aspects of business in a single cohesive plan . . .Exposing it to people inside and outside the school, who are process-literate, know the industry, have been around and know the application for the technology or whatever it might be. That process is valuable independent of whether you start the business immediately upon graduation or you use it as a template for doing something ten years down the road. So I’m a big fan of the learning content of working with your peers, exposing your ideas, trying to be persuasive while still asking and answering tough questions. I think that is the great benefit of the Business Plan Contest and I would encourage anyone to give it a shot.