A failed initial public offering may seem like bad news all around. But for Kevin Ward, who slaved over the S/1 last summer as PaperExchange.com's director of business development, the firm's September decision to stay private was a blessing in disguise. It spurred him, he says, to return to the MBA program he'd dropped out of when he first joined Boston-based PaperExchange in 1999.
"I left with the desire to come back and finish the MBA," notes Ward, "but the big questions were when and how." When he found that the online business-to-business exchange had limited capital, making it difficult to pursue strategic partnerships, those questions were answered for him. And, thanks to the University of Chicago policy that gives students five years to earn their MBAs, and the interactive Webcast class the school offers through a relationship with MIT, Ward was back in class right away. He's been back at the university since January, and expects to get his degree by June.
Ward was part of an exodus from MBA programs that took place in the late 1990s--a time when every business plan dreamed up for a professor seemed to be a candidate for real-life Internet success. But in these days of dot-com disillusionment, some of those jilted schools are reopening their doors to the students who dropped out and signed on with corporate high-fliers--often in finance posts--only to see funding fizzle and options drown in the past year or so.
"It's a testament to the idea that they still think there are things left to learn, that maybe they don't know as much as they thought they did," says Ellen Rudnick, executive director of the Chicago Graduate School of Business's entrepreneurship program, who kept in touch with Ward by E-mail while he was away. She is now trying to do the same with other dropouts, she says, to help keep them on the degree track, just in case.
Duke University's Fuqua School recently expanded its yearlong leave- of-absence program to make it easier for entrepreneurs to test the waters and return. And Stanford University--which, to stem the flow of MBA dropouts, has stuck by its no-guaranteed-return policy--was "not unreasonable" when it decided to readmit two or three students who asked to come back after having left for a shot at dot-com stardom, says dean George Parker.
To cater to returning students' desire for more real-world experience, and to slow the dropout rate, some schools are also adding to their entrepreneurial curriculum. Business-plan development is now a core area for first-year students at Dartmouth College's Tuck School. For its part, Babson College has attracted more than 20 MBA students to its new Entrepreneurship Intensity Track, which requires the launch of a business before graduation.
SIGN OF IMPATIENCE
Far from being stigmatized as dropouts, students who come back are often seen as a rich resource for classmates. They "bring home the real- world situation of how difficult, or easy, it is to raise money," says Rudnick, who teaches a lab on new ventures that Ward is now taking. The students also share first-hand their experience of the "decisions you have to make when a business doesn't have the money it expected."
But with most MBA programs lasting 18 months to two years--and the dot-com options far from surefire these days--some recruiters now see dropping out of a graduate program as a sign of impatience rather than entrepreneurial valor. Still, even failed ventures add value to a résumé if the candidate has circled back to earn an MBA, says Peter McLean, co-head of the global financial officers practice at retained recruiting firm Spencer Stuart. "It shows a certain capacity for risk that is probably really good for CFOs," he says.
Tom Ritchie, who is returning to the University of Virginia's Darden School after a year handling the financial and legal work for CookItNice Mediaworks, praises his experience at the Hollywood start- up, which was attempting to produce weekly TV shows linked to a Web site. "It was the extension of my education that I'd hoped for," he says. And for a time, he used it to overcome his frustration at being unable to apply what he had learned in the classroom. The company, though, failed to make the first round of deal negotiation or financing. (Ritchie blames fickle agents, who welcomed the business plan with "euphoria [and then] dropped the idea months after.")
SCHOOL AS RECESS
Not everybody who leaves a program early returns to school. After dropping out of the University of Pennsylvania's Wharton School last year to work at NetConversions Inc., a marketing services firm based on a Wharton professor's research, Andy Liu and David Niu found structuring private equity rounds on the road to be far more stimulating than classroom exercises.
"In business school, you learn how the deals work," says Liu, CEO of the Seattle start-up, "but you don't know how much flexibility or leverage you have until you do them." The classes "don't tell you what the standard in the market is these days" for deal variables like interest rates and covenants, he continues. Liu and Niu say returning to school isn't totally out of the question, though they don't plan to break into their schedules for a while. "I might go back," says COO Niu, "to take a breather."
BACK TO THE BOOKS
Below are some leading business schools' policies on granting leaves to MBA students.
|FULL-TIME MBA STUDENTS||STANDARD MAXIMUM LEAVE GRANTED DURING PROGRAM|
|Babson College (Olin)||451||6 years|
|University of Chicago||1,058||5 years|
|Columbia University||1,155||Case by case*|
|Dartmouth College (Tuck)||400||5 years|
|Duke University (Fuqua)||670||1 year|
|Harvard Business School||1,767||5 years|
|Northwestern University (Kellogg)||1,200||5 years|
|University of Pennsylvania (Wharton)||1,542||5 years|
|Stanford University||740||Leaves are highly discouraged|
|University of Virginia (Darden)||488||2 years|
* Typical of most schools without formal leave policies.
SOURCE: The schools
A MATTER OF DEGREE
An MBA is hardly essential for becoming finance chief.
- 35% of Fortune 500 CFOs are MBAs
- *20% are CPAs
- 5% are both MBAs and CPAs
*As of June 2000; all numbers approximate.
Source: Spencer Stuart