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Entrepreneurial Ecosystems: Cultivating Successful Businesses at MIT

By Joseph G. Hadzima Jr. '73, SM '77

I have been involved with entrepreneurship at MIT since my undergraduate days in the early 1970s. When I graduated in 1973, the New England economy was in the doldrums, the PC had not been invented, and the talk was of the tragedy that textile mills were moving to the South. My first job was with a startup that spun out of Pugh-Roberts, a consulting firm founded by Sloan Professor Ed Roberts '57. Little did I know that I had contracted a life-long viral infection called entrepreneurship.

Among MIT's accomplishments is the success of its graduates in commercializing new technologies through entrepreneurship. In the 1997 publication "MIT: The Impact of Innovation," the first national study of the economic impact of a research university, BankBoston reported that graduates of MIT had founded 4,000 firms that in 1994 alone employed at least 1.1 million people and generated $232 billion in sales worldwide. A nation formed of these MIT-related companies would rank as the 24th largest world economy.

Over the last 25+ years, I have met with many people and groups who have trekked to MIT to discover how we do it. They want to know how they can replicate the success of MIT in creating new businesses. Some of these groups have included other research universities that receive more federal research funding than MIT. Others are from foreign countries that have stellar universities with excellent research programs. Why, they want to know, is MIT so much more successful? Is it that MIT has such a better faculty and student body? We would like to think so, but the truth is that many of our graduates are the leading professors at these other institutions, and MIT certainly doesn't have a monopoly on the smartest people on the planet. So what is going on?

What I tell these visitors is that MIT has developed and continues to evolve an entrepreneurial ecosystem. It starts with our founding motto: Mens et Manus--Mind and Hands. It is about solving problems and making a difference. It is a system in which experimentation occurs in the lab and in the world. There is no master plan to this entrepreneurial ecosystem, it evolves from perceived need. For example, in 1990, when some engineering and management students decided they needed to work more closely together to turn their ideas into commercial reality, the $10K (now $50K) Entrepreneurship Competition was born. The $50K has facilitated the birth of more than 60 companies with an aggregate value of over $10.5 billion. Nine years later, when the student organizers of the $50K decided that the idea was working, they invited students from other universities to the first Global Startup Workshop (GSW) at MIT. The 2004 MIT $50K GSW attracted more than 230 participants from over 30 countries, spreading the success of the MIT program around the world.

The MIT entrepreneurial ecosystem has many components and is constantly evolving. There is the Technology Licensing Office headed by Lita Nelsen '64, which facilitates commercialization of inventions. There is the Deshpande Center for Technological Innovation in the Engineering School headed by Krisztina Holly '89 (a two-time $50K alum), which was established by the Deshpandes to fill a perceived gap between idea conceptualization and implementation. That gave rise to the I-Teams academic program in which teams of engineering and management students work with Deshpande Center grant recipients. There is the Venture Mentoring Service (VMS) founded by Alec Dingee '52 and MIT Professor David H. Staelin '60 to provide mentoring in entrepreneurship to members of the MIT community. VMS now has over 90 successful MIT entrepreneurs mentoring more than 125 new entrepreneurs, a number of whom got their start in the $50K competition. Numerous student organizations play roles in this evolving entrepreneurial ecosystem: the MIT Entrepreneurs Club, the Science and Engineering Business Club, the Innovation Club, TinyTech, TechLink, and the MIT Venture Capital and Private Equity Club, to name a few. There is the MIT Entrepreneurship Center at the Sloan School that fosters and develops entrepreneurial activities and interests through research and education, alliances, and networking. There is a local community of knowledgeable accountants, consultants, lawyers, angel investors, and venture capitalists who play key roles.

So I tell those visitors to MIT--you need to create and foster your own entrepreneurial ecosystem that works in your culture. A penguin thrives in Antarctica but you can't transplant it successfully to Hawaii. The MIT Alumni Association has played and continues to play a key role in enabling entrepreneurial ecosystems around the world through the MIT Enterprise Forum. Last September, I had the honor of becoming chairman of the board of the global MIT Enterprise Forum, which for over 25 years has produced educational programs about entrepreneurship through a network of 23 worldwide chapters and through its Satellite Broadcast Programs. MIT Enterprise Forum programs and broadcasts reach more than 30,000 participants per year. We are currently actively working to expand the reach of the MIT Enterprise Forum, which has had over 20 requests for new chapters in the last two years from as far away as Beijing and Buenos Aires. Our goal is for the MIT Enterprise Forum to become the Global Broadcast Network for Entrepreneurship and Innovation. The MIT Enterprise Forum seeks to do with real world entrepreneurship education what MIT has done for academic knowledge through its heralded OpenCourseWare program. This is all a result of dedicated effort by MIT alumni over the years in implementing the Mens et Manus tradition of MIT.

Joseph G. Hadzima Jr. '73, SM '77 Photo by Justin Knight About the Author Joe Hadzima is managing director of Main Street Partners, a venture development and technology commercialization firm located in Cambridge, Massachusetts, and chairman of the Enterprise Forum board. He's also a senior lecturer at the MIT Sloan School of Management, where he has taught entrepreneurship and law since 1984, and has been a judge of the MIT $50K Entrepreneurship Competition since its founding. Hadzima received his master's of science in management from MIT's Sloan School of Management in 1977 and his law degree cum laude from Harvard in 1979. Throughout his career, he has been involved as founder, investor, board member, or officer in more than 100 companies.

Published June, 2005.

What Matters is a guest opinion column written by a different MIT alumnus or alumna each month. The views expressed in What Matters are entirely those of the author and do not necessarily represent the views of the Association or of MIT. For previous columns, please see the archives. Would you like to contribute a What Matters column?
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