The STEM Student and Business

@Austin_J_Foster is a math major. He asked me to comment on the role COBA should play in his studies. More generally, Austin wonders “Are STEM students lacking without business courses?”

Austin, your income potential and financial future ultimately depend on your ability to add economic value. This is what employers pay people to do and it is what businesses extract as profit. The better you understand the value creation process, the more likely you are to make a significant economic contribution and the more money you are likely to accrue either as an employer or as an employee. Many people with great technical skills have a deep understanding of the logic of their chosen field of science but lack a “market mindset.” They do not understand the value creation process and can spend a great deal of time making “discoveries” that have limited commercial value. (This drives employers crazy.) I have written on this topic in a prior blog post. See “Slaying the Beast” by clicking here.

Similarly, applying your skills in areas you don’t fully understand can lead to errors with massive consequences. Since you are a math major, let me give you an example from your world.

This is the Black Scholes equation. It is used to determine the value of derivatives. It won two people the Nobel Prize in economics. It is also blamed for causing the financial crisis we are still digging out from. (Google it and you can read on for weeks.) The problem had nothing to do with the math. The math is solid. The problem came about because some of the conditions on which the model is predicated, didn’t hold in the real world. Many people using the formula didn’t understand this.

The lesson for an aspiring mathematician is this: You have a very powerful tool. Math geeks are taking over the universe, including business. But, just because you can do the math, doesn’t mean you understand the substance of what the math represents. Math isn’t done in a vacuum. It is applied to a specific context. You need a deep contextual understanding to ensure that your model conforms to the “real world.” The real world feels no obligation to conform to your model. So if you want to apply math to the economy or business, you need to understand this world.

By now, you are probably thinking: “Gee, Dean Jarley I only wanted to know what business courses people like me might take to complement my interest in STEM.” If so, fair enough! It comes down to trying to develop that “market mindset” I mentioned earlier. A good start would be two courses in economics (micro and macro), a course in finance and one in marketing. This will give you a sense of how markets work and how firms respond to market signals. If you want more, consider our entrepreneurship minor. It is designed to help STEM majors understand the business creation process. Information on it can be found by clicking here.

Good luck to you Austin and thanks for the great question.

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Repost Wednesday: Dinner at the College

If you had three people in history you could ask to dinner, who would they be? It is a question commonly asked of interviewees. The response is frequently both entertaining and revealing. Ruling out dead people, I’d invite Ron Popeil, Mel Kiper Jr., and Snooki. I think Snooki’s speaking fee is a little high (ask Rutgers they paid $35,000 to the horror of their students). If so, Kim Kardashian would do. We would serve rotisserie chicken, debate each others’ “up” and “down” sides in infinite detail, and probably cause enough drama to be charged with disturbing the peace—oh wait that’s the Housewives of Orange County.

Maybe inviting them to dinner is a bad idea, but I would like them featured on a panel discussion at COBA about personal branding and launching a highly successful career. Even this doesn’t quite give them their due for each of my guests did more than achieve celebrity status…they invented a whole new category. Ron Popeil is from my father’s generation. He is maybe the best pitchmen ever, created all sorts of kitchen gadgets and perfected the infomercial. Mel is from my generation. He invented the professional “draft analyst,” became a fixture on ESPN and turned the NFL player draft into a two-day television event. Snooki, is from my children’s generation and while it is fashionable to make fun of her, as far as I know, she is the first serial reality TV star—let’s hope that can’t be easy to do. The format is simple. Ron, Mel and Snooki will tell their stories. The students will be charged with identifying similarities in their stories and developing actionable career strategies based on our speakers’ experiences.

Our guests are what sociologist and writer Malcolm Gladwell calls “outliers.” They are unusually successful people and if we are to believe Gladwell, they are likely to share a few common characteristics. For one, outliers tend to come from a culture of entitlement. Not “the world owes me something” view we normally associate with this term, but rather from a perspective and tradition that says it is okay to challenge authority, pursue your own agenda, and take the initiative. (Helicopter parents take note.) Snooki, for example, has plenty of this, and can take a punch to boot. Outliers also have the vision or good fortune to see opportunity before others do. Mel Kiper credits his career in part to a discussion he had with an NFL general manager who spoke of the need for better information on players and encouraged him to turn it into a business. Finally, outliers get lots of practice developing their new skill before anyone else does. Gladwell is a strong proponent of the 10,000 hours rule—that virtually every really talented person spent the equivalent of five full years in practice. Getting extensive practice hours in before anyone else gives outliers important first mover advantages. Mel started his firm while he was still in college and I have no doubt that he spent hours pouring over player numbers when he was eight years old. Similarly Ron Popeil came from a family of pitchmen, had perfected his pitch skills through years of practice and seized the opportunity when the broadcasting rules changed to allow long format commercials.

Another way to look at our guests is that they are all entrepreneurs. Entrepreneurs tend to identify and advocate disruptive ideas—ideas that challenge conventional wisdom in an industry, turn assumptions upside down and revolutionize a market. I’m only guessing but the type of entitlement culture that Gladwell describes may also give people a natural advantage in generating disruptive ideas and thereby creating new market opportunities to get their 10,000 hours well before anyone else. For Mel, the disruptive idea was that only those inside the game—coaches and scouts could evaluate talent. For Ron, it was that you couldn’t separate product development from marketing –that they are one in the same. If I’m right, opportunity isn’t a matter of luck, it is the product of a particular culture and hard work. Snooki isn’t on reality TV by accident, she executed a plan that involved cultivating a unique personality. Thomas Edison once quipped “The reason so many people miss opportunity is that it tends to be dressed in coveralls and looks like work.”

In the end the question isn’t whether we would have the infomercial, draft analysts, or serial reality TV stars without our guests. These developments were probably inevitable. The question is they these developments are associated with the names Popeil, Kiper and Snooki. And, how we can increase the odds that the name associated with the “next big thing” is our own.

Ron, Mel and Snooki….have your people call my people and we will set something up.

Clean the World

As I mentioned last Monday, my trip to Washington DC gave me the opportunity to meet and engage with many people from very different backgrounds.  My team included the CEO of Ron John’s, a former astronaut, and a young student from UF (who was getting way out of his comfort zone).

It is awfully hard to beat an astronaut, but probably the best story I heard came from Shawn Seipler.  Shawn is a father of four who was looking for a way out of all the travel associated with his sales and marketing job.  One day while in one of an endless stream of hotel rooms, he called down to the front desk to inquire about what happens to all of the bars of soap and shampoo in hotel rooms when the customer checks out.  The answer of course was that it is thrown away.   It was then that Shawn and his partner Paul Till, started to research the potential for recycling soap products.  Their orignial goal was to keep them out of landfills, but  while doing this research, the team discovered that two very deadly child diseases:acute respiratory illness and diarrheal disease could be significantly reduced simply by giving kids soap to wash their hands.

It was from this research that Clean the World was born.  Clean the World now employs 30 people here in Orlando and works with corporate partners to recycle soap and distribute it to impovrished people around the world. I found his story so compelling, such a great example of professional risk-taking, cross-disciplinary collaboration and data-driven decision-making that I invited him to speak at UCF.  But, I had already been beaten to the punch:  Shawn will be speaking in the student union at 4:30 on April 9th as a guest of our Center for Entrepreneurship.  If you want inspiration, come out and hear his story.

Starting Salaries for Entrepreneurship Majors

When you google something and end up at my blog, google analytics records your search request and shows it to me.  (Somewhere George Orwell is nodding and thinking “I told you so, but what government agency is named google?”)  Anyway, the other day there was an entry for “starting salaries for entrepreneurship majors”.  I started laughing and shaking my head.  My first thought was: “Wow, this is really stupid, they want to be paid to risk other people’s money!?”  Then I remembered that this is what fund managers get paid to do.

Entrepreneurship is hot. Lots of business schools are investing lots of money in developing entrepreneurship programs. There are many reasons for this:  entrepreneurship is important to economic diversification and national competitiveness; it is important to university efforts to commercialize research, many new jobs are in small start-ups not large companies and many entrepreneurs who have money like to give it to schools to create more people like themselves, etc. etc.  Taking entrepreneurship courses and developing entrepreneurial skills is important.  Every student should understand the business development process: be able to identify a market opportunity, put together a credible business plan and know what it takes to get the business adequately funded and positioned for success.

Yet, I fear that entrepreneurship is in danger of becoming the new general business degree.  It is what students decide to get when they don’t know what else to get, aren’t really that comfortable with numbers, and want something sexier than a GBS.  Admit it: you would rather date an aspiring business owner than a general business major–it suggests way more initiative and prospects for a wealthy lifestyle.

Dating prospects aside, if you don’t want to start your own business soon, don’t be an entrepreneurship major.  Many employers are leery of hiring entrepreneurship majors because they think they won’t stay with the company long.  Or worse yet, that they will take what they learn from the company and go into competition against them.  Also the best entrepreneurship programs help students develop a network of people who can help them launch their business.  These networks are important to success. If you are not serious about starting a business shortly after graduation, your network will dissipate quickly and will be impossible to reconstruct later on.

 If you want to work for a few years and then consider starting a business, you are better off thinking about getting a graduate degree in entrepreneurship when the time is right.  If the promise of a big starting salary is what is motivating your current business school experience google accounting, finance, MIS  or economics.

On Inventing Your Future – Literally

Two big events are taking place at UNLV over the next few months and they represent a real opportunity for you to choose a different path.  One is the Governor’s Cup Business Plan Competition. The other is the College of Engineering’s Senior Design Competition. Both contests involve significant prize money and are designed to encourage students to create new products and start successful businesses. Until recently, both competitions underachieved.  Engineering students would create prototypes of new products that never made it to a market launch. Business students would create plans for life-style enterprises that required little capital, showed little imagination and drew little interest from Governor’s Cup judges or venture capitalists.  In a competition that includes college students from around the state, LBS students rarely stood out.

Then one day, Dean Rama Venkat of the College of Engineering invited me to lunch to discuss how we might bring business and engineering students together in ways that would encourage them to start businesses.  The idea had a lot of potential.  Engineering students know how to make things, but lack a strong understanding of consumer wants, how big the market might be, and where to get the financing and managerial talent to get a product to market.  Having a patent on a new product, process, or design innovation is great, but that doesn’t mean that you are going to make any money from it.  Business students don’t know how to make things.  So their business plans focus on “fictional products” or they rely on what they know: life-style businesses such as restaurants, spas or personal services. If we could figure out a way to get business and engineering students talking to each other and competing together to create new businesses focused on new products, great things just might happen.

As is typically the case, Deans talk and others do the real work. In this case, for LBS, the two key people are Professor Andrew Hardin, Director of the UNLV Entrepreneurship Center and Dr. Janet Runge, program coordinator for our Global Entrepreneurship Experience.  Dr. Hardin teams MBA students with engineering students and inventors in the community.  Dr. Runge, spearheads our Governor’s Cup teams. The results of their efforts have far exceeded out expectations: LBS swept the Governor’s Cup Competition last year; two of the senior design competition teams have started businesses; and Scuba Solutions and Geyser Flow Control have won the Southern Nevada Business Plan Competition-a contest open to everyone in Vegas.  Venture capitalists have taken notice and students throughout LBS have caught the entrepreneurship bug.

To give you a sense of just how big a deal this has become: Once a month, President Smatresk hosts campus tours that highlight the great things going on at UNLV and show how we are helping to grow and diversify the Nevada economy.  Every tour ends with the Deans of Business and Engineering introducing students who demonstrate their new products and explain their market potential to media people, legislators, and members of the business community—every tour.  As a student, you could not get better publicity for your ideas.

Resolve to invent your future.  Seek out Dr. Hardin and Dr Runge, tell them you want to get to know some engineers (or scientists if you are really brave) and be involved in these events.  Rather then work for someone else after college, you can take a risk with some capital, start your own business, and chart your own course.