Why Students Make Great Entrepreneurs

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Why Students Make Great Entrepreneurs


Over the past dozen or so years, I've been involved in about a dozen startups, either informally (as a friend or advisor) or formally as a founder or investor.  In my experience, I've found that many startup founders that I know began their companies while they were still students (undergraduate or graduate) or shortly after they graduated. This brought to mind the question of whether or not students made good entrepreneurs. I think so. Here are the reasons.

Disclaimer: Two of the three companies I’ve founded myself were done when I was in “student mode”. One as an undergraduate (computer science) and the other as a graduate (MBA). So, I may have a bit of bias. But, as I always say: “Just because I’m biased, doesn’t necessarily mean I’m wrong.”

Why Students Make Great Entrepreneurs
  1. Starry-Eyed Optimism: Let’s face it, starting a company takes a fair amount of optimism. You have minimal resources, and the odds are severely stacked against you. To overcome this potentially troubling reality, founders must to some degree exercise suspension of disbelief and demonstrate a degree of optimism to take that initial step. I think this is easier to do when you’re a student. You’re more equipped to be optimistic than if you were a corporate drone trudging through life with Dilbertian bosses and having the life energy slowly drained out of you. Students (in general) are happier people and more capable of the optimism that is required to get started. Clearly, there are exceptions to this. I’m sure there are a few people in corporate land that are not faking satisfaction or happiness, and are generally optimistic people. My hat’s off to them. The world needs people like you to help make big companies functional so the rest of us can use your products and services.

  1. Trusted Peer Network: One of the great things about being a student is that you have the opportunity to meet and work with a lot of different people. If you do it right, you can get to know some of these people pretty well by working on projects with them and hanging out with them outside of class. This group of people can often make great co-conspirators and collaborators. On the other hand, if you’re stuck in a big corporate world, chances are you’re interacting with a limited set of people with very well defined activities many of whom you may not like anyways. Why is this so? Simple, because in corporate-land you often don’t get to pick who you work with. When you’re a student, to some degree, you get to pick who you “hire” for your social and academic groups. One of the single largest contributors to startup success is the ability for more than one person (however exceptional) to come together and collaborate.

  1. Higher Risk Tolerance: Let’s face it, when you’re a student your opportunity cost is likely lower than most other points in your career (even if you’ve been in the workforce for a little while and decided to go back and get that MBA). When you’re sitting there in class and an idea comes to you, it doesn’t really cost all that much to give things a try. Besides, who needs all that sleep anyways? Students often find it easier to take the initial entrepreneurial leap because the new startup idea isn’t competing with a regular paycheck. It’s competing with classes and academic work. Many academic programs (even the excellent ones) don’t consume 100% of the available energy of an entrepreneurially minded student. There’s time left over for starting companies.

  1. Abstract Thinking: In many academic programs (and especially the better ones), students spend a fair amount of time thinking about abstract concepts. This is particularly true in an engineering, computer science or even a business program. Learning about things like microeconomics, data structures or calculus is to learn about abstract ways to think about complicated things. You look for patterns and structures and frameworks to explain the world. As it turns out, this kind of thinking is very useful when it comes to thinking strategically (but objectively) about a startup. Without this, it becomes too easy to focus too much on tactics and execution -- without sufficient thought to the larger problem. Since students are exposed to a fair amount of abstract thinking, it may come a little easier to them to think about strategy, competition and how their offering might (just might) change the world.

  1. Applied Learning: As a student, you’re quite often “drinking from a fire hose” and bringing all sorts of new information into your brain. Some of which “sticks” and some of which doesn’t. Along the way, a few of these concepts may shake your understanding of the world a bit and every now and then light-bulbs go off as you begin to understand what all the fuss is about. As a student, it’s often very, very tempting to try and apply some of these concepts that are new and exciting and do something with them. One of the easiest ways to do this is to build a startup that somehow implements or expands on the idea.

One of the great things about startups (and particularly software startups) is that it is so easy to get started. Getting started is simply a matter of beginning to think about a problem and solving it. All the legal stuff, company formation and other details, though important, don’t have to get in the way (and are not that hard). One of the biggest barriers to entrepreneurism is that initial leap of faith. And students seem reasonably capable of taking this leap on a frequent basis.

Summary Of My Point: If you’re a student or recent graduate, this is a great time to think about starting a company. Keep your mind open. See if you can find patterns in the problems that you’re seeing and try and find unique and compelling ways to solve problems people care about. It often is really that simple.

A personal quote that I used in a presentation on entrepreneurism at MIT a few years ago:

Starting a company is really, really easy…it’s the surviving and growing it that’s hard.
Dharmesh Shah, 2004

Posted by Dharmesh Shah on Fri, Jun 30, 2006


As a student, you are not living in completely real world with all responsiblities which does help to take big step. Once you join the corporate world and start getting the paychecks, you will start thinking about what will you loose if you start your own company. Once you marry and have kids, it becomes more dificult to take risk as you have to support your family and you can't spend enough time with your new venture.
Students: If you miss this opportunity, it's going to be much tougher to leave your job and start you own company.

posted on Friday, June 30, 2006 at 11:17 AM by Rohit Joshi

One question I have is: How do student loans factor into starting a business when you graduate?

posted on Friday, June 30, 2006 at 1:23 PM by Gary Luu

“Just because I’m biased, doesn’t necessarily mean I’m wrong.”

No, but being stupid probably does!

You have not said anything that can be tested. To be precise:

- are you speaking of _all_students? (of course not, but precisely which ones?)

-What population are you comparing "students" with? (Insane asylum residents, the homeless, Iranian dissident students, college graduates, etc. )

IOW you have added nothing to our knowledge with your post other than indicating how empty-headed and poorly-reasoned you are. You should return to college and study rhetoric, logic, probability and statistics.

posted on Friday, June 30, 2006 at 1:52 PM by G Roper

Tough crowd. Thanks for the first vitriolic comment on this blog.

Will keep these kind of comments around in case I ever get a big head.


posted on Friday, June 30, 2006 at 1:57 PM by

It looks like somebody has spent a few too many years being beaten down by the man at [insert fortune 500 company]. Yikes!

posted on Friday, June 30, 2006 at 2:29 PM by matt brezina

Dharmesh, very astute! I've met many of those people that go to work every day. They can't wait to get out of work so they can get to their hobbies. How much happier is the person that learns to make a living at his hobby? Unfortunately, the people that are "stuck" in their jobs jealously label the people that are making money at their hobbies....."work-aholics".

posted on Saturday, July 01, 2006 at 6:54 AM by Rick Roberge

My theory is that this is not confined to entrepreneurism in business alone, but applies to science and mathematics as well. Newton, Einstein, Galois, Abel, - the list of 20+ achievers is endless. GH Hardy famously remarked that mathematics is a young man's game.

posted on Sunday, July 02, 2006 at 12:03 AM by Arun

Darmesh, I'm sorry for the vitriol sent your way. I find your weblog very encouraging. It's just the sort of food for thought and confirming experiences to lift me a little higher as I work towards my startup. I believe you are giving helpful encouragement. Thanks!


posted on Sunday, July 02, 2006 at 9:18 PM by Christian Campbell

Excellent post as usual, however this time us employees have something to say as well: http://ismangil.wordpress.com/2006/07/04/why-employees-make-great-entrepreneurs/

Old-timers can be great as well!

posted on Tuesday, July 04, 2006 at 6:36 AM by Perry Ismangil

This is a great post. I would like to add how powerful the networking opportunities via faculty and guest lecturers can be. An entrepreneur myself, the lessons I have learned from speaking with people I have met in my time at Babson has been invaluable.

posted on Wednesday, July 05, 2006 at 10:15 AM by Matt Lauzon

You know, this sounds good but I don't think that it stands up to reality. Over 99% of students don't start their own businesses (while being students). They are just students.

To talk about less than 1% is really just to talk about a stereotype. It's a positive stereotype, sure, but if these advantages were significant, more students would start their own businesses.

All five rationales are nice (and I'm sure that students feel flattered!) but, frankly, they aren't worth much. I don't think that even having all five really puts you in that much better position to start your own company. I guess that I see it as a little bit of grease; if you are already entrepreneurial-minded, being a student might enable you to choose to start a business at that time.

posted on Wednesday, July 05, 2006 at 7:35 PM by Dan Howard

This is an interesting theory. However, I think the underlying reason is that college years can be a real source for positive reinforcement and social bonding.

This is necessary for any kind of success in life. You should always set out to surround yourself by positive and supportive people.

However, for many public education students, the academic experience does not bring out that much recognition, leadership or business emphasis. Instructors are generally not very reinforcing or kind.

In fact, in High School, I found many of my classes and instructors to be discouraging. Most didn't seem to reach out on a human level. A lot of instructors were negative about our prospects and would make off-handed remarks about our bleak futures in fast food industry.

posted on Friday, July 07, 2006 at 3:24 AM by Stevieo

Well said. Very inspirational. My business partner and I are students. It is business men like yourself and my mentors that believe in us enough to give us a chance. Thanks.


posted on Friday, July 07, 2006 at 6:49 PM by Steve Walchek

Nice thought, but I personally feel that being a successful enterpreneur has nothing to do with being a student or not being one.
A student's ususal motive is to learn, an enterpreneurs to earn money (lets keep morality aside for the time being). Whatever one wants to do one has to do it, it only matters whether you have the heart to face the odds.
A handsome bachelor (student) needn't be a good father (enterpreneur) and that does not stop him from being a loyal husband (employee) , they are all different roles, we need to understand each one of them in its entiriety.

posted on Monday, July 10, 2006 at 12:39 AM by Gangs

Nice to see Dharmesh Shaw's post. I am firm believer of Student Enterprises. Actually I am running a project supported by Indian Government called Center for Student Enterprises at NITIE Mumbai. Every student is forced to start and run an enterprise part of MBA prog. and they are doing it. To learn swimming, some body has to push the guy in to waters and save him. I run International Student Enterprise Awards ( Oct 2008) and get very good nominations .. Hellow intern, coherendz, webvastra were some of the student companies..

posted on Thursday, March 27, 2008 at 10:50 AM by dr t prasad

Well, I believe that you are writing based from your experiences.
I would assume that you have a good sample for student entrepreneurs. In our case however, it was not that fruitful.
Successful student entrepreneurs based from our experiences are not those with high IQ or those with high periodical exams. These are the first ones that gave up after encountering some constraints in their respective businesses. You would see them after in a corporate landscape as an employee. These are the students that looks at risks first before the opportunities.
If schools would like to recruit potential student entrepreneurs in their programs they should go outside of their campuses and scout for kids who are already assisting their parents in their enterprises; orphans in the street who initiated small service ventures in the alleys just to get their daily meals. The seed of entrepreneurship most likely have been planted in their hearts. These are kids if given an opportunity will surely succeed in an Entrepreneurship Program. But again, it is only the first half...

posted on Monday, June 09, 2008 at 1:26 AM by juan Raul Relloso

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