Entrepreneurship at Rice

As I wrapped up my role as the inaugural Entrepreneur In Residence at Rice, I was asked to summarize what we accomplished during my time there in this article, published in the trade journal of the Society of Petroleum Engineers. The article is on pages 29-31 of the journal but, for those who don't wish to click through, following is just the text:

Preparing Engineers to Be Job Makers, Not Job Takers

The entrepreneurial spirit is an
increasingly valuable asset in today’s
economy. The same toolkit used to
launch a business from scratch turns
out to be quite applicable to larger,
more established organizations as well.
Mature energy companies and even
nonprofit or government bodies have
just as much need as startup companies
for ambitious employees who have
the ability to identify problems, listen
to customers/stakeholders, marshal
resources, and inspire teams to create
efficient solutions.

The George R. Brown School of
Engineering, part of Rice University
in Houston, Texas, is tasked with
preparing the next generation of
engineers for careers in academia or
industry. In fact many of the students
could spend the majority of their
professional lives working in the energy
industry. However, it is difficult in a
traditional classroom setting to imbue
engineering students with the spirit of
entrepreneurialism. In addition, there is
a dearth of rigorous scientific research
about entrepreneurship and its effective
development. So, if entrepreneurialism
is an increasingly important skill for
engineering careers, how does a
university prepare its students today for
their careers of tomorrow?

As part of Rice’s vision for its second
century of existence, the Rice Center
for Engineering Leadership (RCEL)
was given the specific task of helping
Rice engineers develop into inspiring
leaders, exceptional team members, and
bold entrepreneurs. RCEL’s approach to
entrepreneurship development is based
on three key elements:

1. A curriculum built on
rigorous academic research
on entrepreneurship.
Myriad authors, speakers, and
bloggers profess they have
unlocked the formula for
entrepreneurial success. However,
the evidence presented is largely
anecdotal, and more often than
not using their formulas only
demonstrates their ineffectiveness.
RCEL’s entrepreneurship
curriculum uses concepts from
“effectuation,” which the Society
for Effectual Action (SEA) touts
on its website as being “a logic
of thinking, discovered through
scientific research, used by
expert entrepreneurs to build
successful ventures.” The
members of SEA have created
a body of research spanning
multiple academic institutions
and industry partners around
the world.
2. Programming that is
experiential in nature.
Students are required to practice
entrepreneurship rather than just
study it. This requires interaction
with real-world entrepreneurs, not
just with academic faculty.
3. Focus on the intersection
between economic value
and social value—called
“transformational
entrepreneurship.”
Students succeed in RCEL’s
entrepreneurship curriculum
by attempting to develop
entrepreneurial opportunities that
don’t just make money but also
provide positive societal value.

To implement these elements,
RCEL has taken a three-pronged
approach: curricular, co-curricular,
and extracurricular.

Curricular
The curricular approach is based on
the classic academic model in which
students take courses offered by
faculty. Students complete assignments,
and receive course credit and a
grade. Rice offers several curricular
entrepreneurship courses, ranging
from those that are industry-specific to
those broadly scoped in nature and from
those that provide a light exploration of
entrepreneurship to those that are deep
experiential dives.

RCEL’s most significant “deep-dive”
entrepreneurship course, ENGI 540, is
a lean startup course in which students
must deliver a business—not a business
plan—by the end of the semester.
This course attracts students from

all disciplines, from engineering to
business to architecture to the liberal
arts, at both the undergraduate and
graduate levels. The number of male
and female students is about equal, and
students come from a broad spectrum of
backgrounds, cultures, and continents.
Students must perform a lot of work
before being accepted into ENGI 540,
including an initial application during
the semester before enrollment and
a significant amount of preparatory
homework the summer before the
semester begins.

The requirement to perform
preparatory work serves two purposes:
It weeds out the least committed
students, and it ensures that students are
ready to hit the ground running on the
first day of class. In essence, students
spend the summer developing and
refining multiple startup ideas. They
arrive on the first day of class ready to
pitch their ideas to their classmates.

During the first day of class, students
self-organize into startup teams that will
focus on the venture ideas they found
most promising. No single-student teams
are allowed; if a student fails to compel
students to join his or her venture, the
venture is dead. This closely models
the real startup world in which very
few lone founders make it very far. The
self-organizing policy also creates a
free market in the class for talent as
teams with skill gaps try to entice key
students to join their cause. The breadth
of student disciplines and backgrounds
ensures that engineering students
gain experience working in highly
diverse teams—again modeling the real
startup world.

The ENGI 540 semester
comprises 13 weekly cycles of startup
development, during which the students
adopt the lean startup mantra of “getting
out of the building” to gather feedback
from real customers. Each week students
must present at the beginning of class
what they accomplished and what they
learned (rather than just what they did)
during the previous week.

The aspect of ENGI 540 with which
Rice students struggle the most is the
absence of a clear grading rubric.
Since they first set foot on campus,
Rice students have been optimizing
their efforts around a causal grading
rubric (“If you do x, y, and z, then you
will get an A”). However, predictable
causality has no place in the world of
entrepreneurship. We deliberately keep
our grading methodology concealed
from the students in order to increase
their comfort level under conditions of
heightened uncertainty—a critical skill
for entrepreneurs.

At the end of the semester,
student teams pitch their ventures to
evaluators—an audience of venture
capitalists, angel investors, corporate
development officers, academic leaders,
and entrepreneurs.

Each evaluator is given a finite
amount of virtual currency to invest in
as many or as few ventures as he or
she sees fit. RCEL uses this investment
distribution as the primary determiner
of student grades. The final pitch isn’t the
first time evaluators have heard about
the student ventures. Each evaluator
has been introduced to the class over
the course of the semester as a potential
mentor and network connector. Most
evaluators work closely with student
teams for months so they can make a
much more informed final investment
decision than if they had just heard a
pitch for the first time.

Co-Curricular
This approach supplements
nonentrepreneurial academic curricula
with entrepreneurial practicum. There
is a lot of intellectual property being
developed in every lab and every
classroom across the Rice campus
every day. However, the faculty leading
those labs and classes often lack the
entrepreneurial expertise to help
students commercialize their work.

Faculty now have the option of
adding an entrepreneurship module
to each of their courses. In this
entrepreneurship module, RCEL
entrepreneurship faculty present several
guest lectures on entrepreneurship
and work closely with the students
outside class time to ensure that they
take commercial opportunities into
consideration when pursuing their work
in the lab.

For example, in a course titled BIOE
428 (Bio-MEMS [microeletromechanical
systems] and medical microdevices),
several student teams designed and
developed nanoscale biosensors.
Through the course’s entrepreneurship
module, they identified, sized,
and validated target markets, and
honed in on some applications for
their inventions—one of which
ultimately became the basis for a
startup company.

Extracurricular
RCEL also provides entrepreneurial
support that is completely unrelated
to academic coursework. Last
summer, RCEL, in partnership with
the Rice Alliance for Technology
and Entrepreneurship, launched
OwlSpark, an on-campus
technology startup accelerator for
Rice entrepreneurs. OwlSpark—
itself a startup that started in ENGI
540—provides funding, space, and
mentorship for Rice’s most innovative
startup ideas.

There are several student
entrepreneurship organizations RCEL
supports and sponsors. Additionally,
RCEL regularly brings entrepreneurs
and investors on campus where they
hold “open office hours” for students,
faculty, staff, and alumni seeking
entrepreneurship advice.

Results
How will we know if our efforts are
successful? How can we measure
the efficacy of our actions? Most
organizations like RCEL choose
relatively simplistic entrepreneurship
measures—such as number of startups
launched or total dollar amount raised.
However, these metrics gauge activity
levels, not results.

Academic institutions, in particular,
are prone to use metrics such as
the number of students enrolled in
entrepreneurship courses.

Even if we included all the students
impacted by the co-curricular and
extracurricular entrepreneurship
offerings at Rice, we would still be
measuring means to ends and learning
nothing about our efficacy in achieving
those ends. In startup jargon, these
are referred to as “vanity metrics”
because they look pretty but, at best,
offer no real insight and, at worst, give
a false sense of confidence that leads
to complacency.

It will probably be years before
we can really tell if RCEL’s efforts have
been effective.

In the meantime, however, we have
turned to a tool gaining significant use
in the marketing industry: Net Promoter
Score (NPS). Using an extremely simple
question—“How likely would you be
to recommend Product X to your peer
group?”—and a rating system based
on a scale from 1 to 10, the team behind
NPS has had success segmenting
customers into Promoters (9s and 10s),
Passives (7s and 8s), and Detractors
(1 through 6).

NPS is the percentage of a product’s
customers who are Promoters less the
percentage who are Detractors and is
scored on a scale from -100 to 100. An
organization’s goal is to improve the NPS
of its product or service relative to its
competitors’ scores and/or relative to its
historical scores.

In 2012, RCEL began using the
NPS system to gauge the perceptions
of its entrepreneurship constituents:
Rice students, faculty/staff, alumni,
entrepreneurs, investors, and
even people with no Rice affiliation
whatsoever. Our hypothesis was that,
if we were effective in our efforts to
improve entrepreneurship at Rice, that
would be reflected in an increase in our
entrepreneurship NPS.

Over 12 months we conducted five
NPS assessments asking, “How likely
would you be to recommend Rice for
entrepreneurship to your fellow [peer
group members]?”

In 1 year the three-period moving
average of Rice’s entrepreneurship
NPS improved overall by 9 points. It
improved most significantly with oncampus
constituents (students, faculty,
and staff) but also improved consistently
among alumni, entrepreneurs, and the
community at large.

There is no NPS industry benchmark
for entrepreneurship at academic
institutions; however, we interpret these
relative score increases as an indicator
that RCEL is having a positive impact on
entrepreneurship at Rice.

While we have launched dozens
of startups since RCEL began its
entrepreneurship efforts, we should be
clear that our goal is not for students
to drop out of college to launch what
they hope might be the next Microsoft
or Facebook.

We do believe, however, that many of
the hardest and most worthy problems
entrepreneurship can address require
entrepreneurs to have spent significant
time in the “real” world. Industries
as complex as energy, aerospace,
and healthcare need entrepreneurs
who have been to the front lines and
experienced their industry’s actual,
functioning state of the art.

Our hope is that, by preparing
students today to take the problem
solving and design skills they hone in
their engineering coursework and focus
them on engineering startup companies,
they will be better equipped to
make significant contributions
tomorrow as entrepreneurial
founders, commercialization-oriented
academics, and
“intrapraneurs” effectively solving
meaningful problems within
established corporations.