Net firms soar on campus
Students start e-businesses amid classes
By Stephanie Armour, USA TODAY
At first blush, Geoffrey Cook appears to be just another Internet wunderkind spinning technology into profit. His Internet businesses generate handsome enough revenues to let him vacation in Aruba, hire a personal administrator and set his sights on becoming a millionaire by age 25.
But Cook is far removed from the stock-option stomping grounds of Silicon Valley. He works on his businesses from a cramped dorm room with posters of Jimi Hendrix and Doors memorabilia on the walls.
''My friends think it's cool I run a business out of my dorm room, but sometimes I'm up all night preparing an investor brief or handling employee issues,'' says Cook, 21, a Harvard College senior in Cambridge, Mass., who founded CollegeGate and CyberEdit.com. The online sites, which have 50 employees around the country, provide editing and document preparation services, such as resume writing.
''It can be very stressful,'' he says. ''I was a better student last year. I go to half my classes.''
The new economy is ushering in a new age on campuses, where a rising tide of students are launching Internet businesses and forcing educators to confront tough ethical questions. Should professors or universities be allowed to invest in student ventures? Should faculty members sit on the boards of directors of their students' start-ups? Should students be allowed to use their university dorm rooms and computers in pursuit of personal profit?
Harvard College's Faculty of Arts & Sciences voted Tuesday to allow students to conduct limited business activity in dorm rooms, reversing a ban that had been widely flaunted for years, and other universities are grappling with similar policy shifts.
The issues are looming large as more students, swayed by their classmates' entrepreneurial derring-do, create Internet businesses. More than 60% of those ages 18-29 want to have their own business, according to Roper Starch Worldwide. Many more are swept up by the Internet: An informal poll of about half of Harvard business school graduates found interest in high-tech careers had jumped from 11% in 1998 to 25% last year.
Colleges and universities are germinating more start-ups because students have unparalleled access to cutting-edge technology and venture capital from investors coming to campuses in search of lucrative dot-com ideas. They can take courses without going to class by studying online. And they're no longer waiting until diplomas are in hand to start their own companies. In today's competitive Internet environment, any delay is dangerous.
''Oh, man, it's so cool,'' says Binoy Agarwal, 21, a University of Tulsa junior majoring in management information systems who helped found OneWeb Solutions. The Web application developer incorporated six months ago. ''The success of technology companies is so amazing you want to go in that direction, too. But a personal goal I've set for myself is to come out with my degree.''
Access to technology
One reason that colleges propagate so many Internet ideas is that students have easy access, sometimes even in their dorms, to resources such as high-speed Internet connections, streaming video and other technologies. Shannon Scherer came up with the idea for her business, a Web site marketing her father's chain saw art, based on a class marketing project.
''I have access to professors, the students, all these resources,'' says Scherer, 28, who is also getting a master's degree in marketing and communications at Franklin University in Columbus, Ohio. ''It's all free. My university is very big on applying what you do in the classroom.''
As a senior at North Carolina State University, Chris ''Spence'' Spencer gets all kinds of advantages he wouldn't get if he dropped out.
The 31-year-old, who rock climbs and skydives, is the founder and chief technology officer of Sentrisystems.com, which protects Web-based transactions. Because his company is located on a research and technology park adjacent to the main campus, Spencer rides a university transit bus to class, works out at the university gym and has access to university perks such as video teleconferencing.
''I don't think I've gotten as much out of college as I could have, but being a part of a company is a great educational experience in and of itself,'' Spencer says. ''You're tossed into the lion's den. You have to deal with the real world.''
The university has been an invaluable resource in other ways, too: Spencer received seed money from a venture capital firm that is funded with more than $10 million in private capital from foundations and endowments of the school.
While landing funding and coming up with a competitive idea present challenges, coping with the reality of work and school is often one of the biggest hurdles. Backpack-toting students carry vibrating pagers (cellular phones ring too often and disrupt class), dole out business cards to students they hope to recruit as employees and forgo dates in favor of all-nighters writing business plans.
Bob Gibbons, 22, a senior majoring in policy analysis and management at Cornell University, launched BClick Network, a business that represents Web sites that have advertising. He began it with $700 from savings and Christmas and birthday money, and he now represents 500 sites. Weary of working out of his room in an Ithaca, N.Y., home he shares with 10 others, Gibbons is scouting Long Island for office space.
''I gave up my spring break and spent it on the business,'' Gibbons says, adding that it seemed wise to start on his Internet idea while still in school. ''It seems like suicide to wait until graduating. You have the resources of the university, and it's the ideal place to do it.''
Forced to miss classes because of travel and work schedules, Marty Puranik, founder, president and CEO of Internet service provider Atlantic.Net, downloads and watches videos of class lectures. Even then, he says, it's sometimes not enough.
''I had a meeting in San Jose with Cisco Systems, and I had a homework assignment to do. I had to explain that my assignment was going to be late,'' says Puranik, 26, a senior majoring in decision and information sciences at the University of Florida in Gainesville, whose business now has nearly 80 employees and 40,000 subscribers in five states.
New conflicts for educators
But increasingly, such student-run e-businesses are creating new conflicts that have educators revamping policies regarding capitalism on campus. Massachusetts Institute of Technology (MIT) this year adopted more explicit guidelines to prevent faculty conflicts of interest. And faculty at the University of Pennsylvania's Wharton School of business must now get approval before joining student-run firms, a change that was initiated late last year.
''The conflict-of-interest problem is enormous,'' says Michael Rappa, a technology management professor at North Carolina State University in Raleigh. ''The knowledge students are getting is very valuable and can be quickly applied to new businesses worth millions of dollars. That raises whole new issues as to the role that faculty should play.''
But it's difficult to regulate, because businesses forged by student-faculty duos can bring such potentially huge rewards. An MIT professor and a doctoral student helped found Akamai Technologies, an Internet content delivery service based in Cambridge, Mass., which launched its commercial service in April 1999 and raised $234 million in its initial public offering in October.
And students are thirsty for partnerships with faculty members, because venture capitalists tend to look favorably on fledgling businesses that have the credibility of a professor.
''This is very big,'' says David Schmittlein, deputy dean at the University of Pennsylvania's Wharton School of business. ''It's an issue schools are going to have to deal with, because entrepreneurship is very important for students. More flexible rules for managing relationships with student and faculty are developing.''
Adam Menzel, 20, and Ben Nobel, 20, two e-business entrepreneurs, even had one professor who wanted to go to work for them. Too many restrictions on faculty support, they say, could wind up hurting colleges instead of helping.
''There can be some economic value for the school (if they're involved),'' says Nobel, a computer science major at Middlebury College in Vermont. ''It's a win-win.'' Menzel is a junior majoring in economics at Brandeis University in Waltham, Mass.
Together - relying on cell phones, dozens of daily e-mail messages and at least one PalmPilot - they run Javaticker.com, a financial site they started in 1998 that offers stock quotes and financial news.
Menzel carries a cell phone and calls clients between classes; Nobel, who moved to a substance-free dorm because it's quieter and more conducive to dealmaking, worries that his girlfriend feels slighted because he spends so much time on the job.
''A lot of people do sports or drama. This is just what we do, run a business. Every day is exciting. I feel like I'm learning something new every day,'' Nobel says. ''It's hard, but it's more fun than school.''
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