You're Funding Student "Startups" All Wrong

Penn State is a huge research university. That’s great - unless you don’t like research. In branching out into areas other than research, this strong history is creating a lot of problems - specifically in how Penn State is encouraging entrepreneurship.

Research is expensive. I’m not going to try and say that it isn’t. You need materials, equipment, subjects, there’s a lot there. You also need to maintain the labs. None of this is cheap. When people are looking to start new projects they need funding. This is the reality of research. This style of thinking is strangling the entrepreneurship ecosystem at Penn State.

Most student companies don’t need funding out of the gate. People think they do because the media highlights astronomical seed rounds and ignores those who are bootstrapping away - until they make it big. Startup life is also portrayed as this lavish party where investors bankroll you until you fall ass-backwards into success. This misconception lines up perfectly with the research mentality of needing money to get started.

As a result, in order to support entrepreneurship, the University is wrongly focusing time and energy into securing thousands of dollars to hand out here and there - most of the time it is distributed through pitch competitions (I could write a whole other post on these competitions, they are the fastest way for the University to squander away money. Most students do them just to pocket the money and never intend on moving forward with their ideas). The Summer Founders Program is the best way I’ve seen funding for early stage student ventures be done. Student teams go through a rigorous interview process, and then if accepted, are given $10,000 to work full-time on their idea. This removes all distractions and lets the teams move very fast.

These thousand dollars here, thousand dollars their efforts (pitch competitions) are not effective. I haven’t actually seen them achieve their desired outcome before. You get the vanity metrics of business cards, t-shirts, and Onward State articles, but after a few weeks, these teams disappear and are never heard from again.

Here is the assumption Penn State has made and not validated: student startups need funding to get up and running. Now I don’t think any faculty member would say, “yes, startups always need funding”. But that is how they are all acting. This causes a lot of harm. Resources are already incredibly limited, and are being handed out in large sums to a select few - so only a handful of students get to see any benefits. Of the teams that get resources, 95% of them are either doing it for the money and/or an ego boost. In order to win these competitions you just have to be the loudest, not the most qualified. As a result, the students that are busy building cool things get overpowered by the wantrepreneurs who just want to live the Hollywood depicted startup lifestyle. This is detrimental to the entrepreneurship community.

The wantrepreneurs and the University like vanity metrics, and that’s what they bond over, which creates a vicious cycle that will ultimately deplete the resources without creating anything - except business cards and newspaper articles. The students the University claims to and wants to support become marginalized and eventually disappear, often upset and demoralized.

The Solution

Students are stereotypically poor, and giving us a few dollars for our side-projects (usually mislabeled as startups) can be extremely useful. We don’t need $3000, but only $50 to cover 5 months of server costs or $15 to pay for a domain name. I bought a second monitor, a few months ago, for $40 from Lion Surplus. A little can go a long way if you really want it to. When students come knocking for these micro-grants, the University needs to push back a little at first too. Ask them “Why?” a whole bunch of times. You’ll be able to tell pretty quickly if they are just stealing $50 or are really trying to do something big with your money.

Students should also be taught how to write cold emails asking for discounts or free credits. Most companies have great student deals that no one ever seems to utilize.

Penn State could leverage it’s size to help students out and not even have to put up its own money. They should put together an “Entrepreneur Launch Kit”, or whatever they call it, which is a collection of free credits or downloads that the University has gotten companies to provide for their students - similar to the Github Student Developer Pack. The companies get students into their ecosystems early on and the University helps remove barriers for us students - it’s a win-win.

A $50 grant is more powerful than what it can buy. It shows students that Penn State cares and thinks they are worth investing in. It makes them feel like they are a part of something - this is huge for the entrepreneurship community! Now instead of 3 teams with $2000 each, we have 120 people who are excited to be a part of something awesome. But the University can’t see a direct return on investment in excitement, community, and belonging, so they’ll never invest in it. To them, it’s the companies that make money, not the students. They’ve forgotten that there are people behind those dollars.

From "You" to "I"

I want to highlight something that is very important and rarely talked about. I noticed that all four Elevate workshop facilitators hit on it, but it wasn’t until I was talking it through with William the other day that I really got it.

Have you ever had someone offer you advice that felt irrelevant, cliche, or even the opposite of what you were going for? In some cases, the advice was even to go and have experiences that you were intentionally trying to avoid for good reason. Being in College, I’m pretty sure that every other thing out of the mouth of someone over 23, that is intended for me, is advice. It’s terribly frustrating. Especially when the advice is based on a future that I don’t plan on having. For example, I have returning alumni always tell me to, “live it up before I get to the real world because the real word is just not fun”. No, I’m sorry you made some poor choices and are doing things you don’t want to do, but I’m not you.

That’s the problem. Advice often comes from a place of “you”. “You should do this…”, “You should do that…”. That advice is only relevant to the giver. It’s a projection of what they miss, regret, or wish they had the courage to do. It’s not helpful, and in some instances it can cause harm. No one knows anything. We have experiences and perspectives that we can share with others, but no one has the answers. We need to share from that place. The place of “I”.

When you speak from a place of “I” you make yourself vulnerable. You’re sharing a personal experience and what it meant for you. This makes your advice become more “take it or leave it”. “This is what happened to me, this how I responded, and this is the outcome/takeaway. Take it or leave it, I was just sharing a story.”

We’ve all lead very different lives and live inside realities with different goals and possibilities. By speaking from a place of “you” we are trying to force the rules and expectations of our reality on someone else instead of welcoming them into ours. And who knows, when you let people in with an “I” they may find the answers and help that a “you” could never have provided.

Maslow's Basement

Have you ever taken a survey in hopes of winning a $50 gift card or an iPad? I haven’t either. Why these campaigns are ever run in the first place has always puzzled me. Here’s an excerpt from “Made to Stick” that sheds a little light on why people run these offers.

So imagine that a company offers employees a $1,000 bonus if they meet certain performance targets. There are three different ways of presenting the bonus to employees:

  • Think of what that $1,000 means: a down-payment on a new car or that new home improvement you’ve wanted to make.
  • Think of the increased security of having that $1,000 in your bank account for a rainy day.
  • Think of what the $1,000 means: the company recognizes how important you are to their overall performance. They don’t spend money for nothing. Which of these 3 positionings would appeal most to you? Most people answer #3. It’s good for our self-esteem to think how important we are to the firm. Here’s the other question: Which of these positionings would work best for other people? Well, that yields a different answer. People put #1 first, #2 second, and #3 third. In other words, WE are motivated by self-esteem but other people are motivated by a down-payment on a car.

Here’s an image of Maslow’s Hierarchy of Needs for those who are not familiar. This study from “Made to Stick” shows that we are motivated by appeals to our higher level needs - things at the top of the pyramid, while we believe that others are living in Maslow’s Basement - motivated by physical things.

Maslow

I’ve always been confused as to why people use gift cards and iPads to incentivize survey responses or to try and drive attendance at free events. Maybe there is data behind those moves, I doubt Penn State student organizations have data for that, but maybe large corporations do. Or maybe large corporations should stop giving their employees GoPros and start incentivizing them from the top of the Pyramid.

If you’re not motivated by an incentive, chances are neither is anyone else. That’s something I am always going to check myself against.

An Online Course is Not Just a Taped Lecture

I’ve taken quite a few online courses from sites like Lynda, Udemy, and Treehouse. Nothing frustrates me more than when a course is just a videotaped lecture. That is so much potential being squandered away.

Right now, I’m enrolled in a Udemy course that my friend Steve produced, on creating amazing talks. Something that really stuck out to me about how his course is designed is that he gives you two options. You can either watch the course, take in the information, and move on; or, by the end of the course, you can have created your talk.

The first few videos in each section walk you through the new concepts and teach you how to do the attached exercises. Then you can either move on to the next section (if you just want to keep being exposed to the new ideas) or you can stick around for the last video where he walks you through the exercise, giving you prompts and hints along the way.

It sounds simple but it makes a HUGE difference. Online courses, when done with thoughtful intention, can be incredibly engaging and effective. They should feel more like a 1-on-1 session than a lecture.