Northwestern Kellogg: Where MBA Ventures Go To Thrive

When you think “entrepreneurship,” certain schools leap to mind.

Stanford GSB sits in the heart of Silicon Valley. Babson College has been U.S. News‘ number-one for more than a quarter-century. Washington Olin in St. Louis is Poets&Quants‘ number one this year, as it was in our inaugural ranking in 2019. Abroad, Spain is home to a pair of well-known startup incubators in ESADE and IE.

How about a school where one-third of the full-time MBA electives are 100% entrepreneurship or innovation-focused? Where more than three-quarters of MBA students are members of the school’s main entrepreneurship club, and 70% are enrolled in an entrepreneurship class? A school where 10 entrepreneurs-in-residence mix with more than 80 mentors in an environment where one-third of a million dollars is available annually to enterprising ventures?

The entrepreneurship ecosystem at Northwestern University’s Kellogg School of Management has all that and more, including more than 45,000 square feet of space and a popular and successful fellowship program — which is why the school, ranked in the top 10 in our 2021 ranking of the top 50 global entrepreneurship programs, is rapidly becoming known as a place where ventures go to thrive.

So when you think “entrepreneurship,” perhaps Kellogg is what should leap to mind.

“I did not have a clear vision that I was going to be part of this VC entrepreneurship world,” says full-time MBA student Adam Wolford, who came to Kellogg from a tech consulting background. “I was toying around with going into retail, I was looking at marketing. I think I initially was coming in focused really on VC, and I think this was an opportunity to see the other side that I always knew I was going to take advantage of, but I didn’t imagine it to have the impact that it did.”

CORONAVIRUS CAN’T STOP KELLOGG’S ENTREPRENEURS

Karin O’Connor

Northwestern Kellogg has been growing its reputation as an entrepreneurial hotbed for the better part of a decade. In 2012 it launched the Kellogg Innovation & Entrepreneurship Initiative, which has led to the creation of 64 entrepreneurship-related courses across the full-time 1- and 2-year MBA programs and the part-time Evening and Weekend program. Built on the foundation of the Levy Institute for Entrepreneurial Practice, the KIEI has overseen more than 350 individual mentorship relationships and 30 clubs and organizations supporting entrepreneurship on campus and beyond. Soon after the unveiling of the KIEI, Kellogg introduced the Zell Fellowship program as part of the larger Zell Global Entrepreneur Network; since 2014, 96 Zell fellows have created 75 ventures and more than 1,300 positions through more than $300 million in funding and awards.

All that and more were humming along nicely in March when coronavirus hit and shut down B-school campuses across the U.S. and the world. But it wasn’t long before the Kellogg startup ecosystem revved back up, and MBA students started putting their lessons to the test.

Through spring and summer and now into fall, Kellogg’s Innovation and Entrepreneurship team approached virtual learning with the same entrepreneurial spirit as students and faculty had during in-person experiential courses. The school responded to the new normal with a new approach: increased meetings with students, more guest speakers, thoughtful and impactful startup ideas, deeper dives, feedback and critique, peer learning. They have found that the virtual experience has its advantages, from more flexibility and opportunity to learn and hear from entrepreneurs and business owners around the world to greater opportunities in working with clients and companies, including real-time inside looks into how different types of entrepreneurial companies handle a major crisis.

Karin O’Connor saw it from ground zero. Kellogg’s clinical assistant professor of innovation & entrepreneurship and executive director of the Heizer Center for Private Equity and Venture Capital teaches the Growth Strategy Practicum, an experiential course that allows students to work on a real-life project with a growth-stage company. When Covid-19 hit in March, O’Connor was teaching 37 students across 11 projects, “which is roughly the max of what we deal with.”

The pandemic inspired heightened engagement, O’Connor says, bringing real-time, social impact-based problems and solutions to class — and offering the latest evidence that Kellogg thrives in times that demand innovation.

“It was actually a really interesting turn of events when we transitioned to virtual, and I didn’t lose any students,” O’Connor says. “So we came in with a full class and I think that first day they realized that the world still exists, business still moves forward, a lot of good things are happening out there, positive things are happening out there. I think everybody took a deep breath and a sigh of relief and said, ‘Okay, now let’s move forward.'”

‘THESE PROJECTS ARE ABOUT THE FUTURE’

O’Connor says her students immediately showed their skills in adapting to new challenges, which Kellogg’s experiential courses have especially sought to cultivate — which is why the school’s faculty saw Covid-19, the ultimate challenging environment, as a chance to give students a competitive advantage in how they’ll run their own companies in the future.

“My course is the Growth Strategy Practicum, and it is an experiential course designed for students who have an interest in taking on operating roles in growth-stage companies,” O’Connor tells Poets&Quants. “So these are companies that are beyond startup — many of them are actually pretty mature businesses, family-owned, private equity-owned, as well as VC-backed. And the idea is that this gives them an opportunity to try on that role in the context of a deep dive into a project with a client company.

“So what happened with us is that I had taught the course winter quarter, we had just gotten everything wrapped up when things were starting to shut down, and we were told we were going to be going online for the spring. And so the timing actually was pretty good in that regard.

“I had assigned projects to my students, because they were already enrolled, and there’s a long lead time on sourcing the project. So I had 11 projects teed up and ready to go. They were all with Chicago-area companies because we’ve always wanted them to meet in person. So we’ve restricted the class to local companies. So we had assigned these 11 projects, and then we basically had three weeks in between that final period and when the class was going to kick off again.”

Suddenly going virtual presented problems, but with the help of information systems staff, the dean’s office, curriculum designers, and coaches, the class successfully went online — and quickly went back to work growing their businesses.

“Everyone was very involved,” O’Connor says. “There was a lot of coaching, a lot of dry-run practices, a lot of tutoring on the tech, some re-jiggering of content to play better online. The big issue for me, with my class, is that I had 11 companies ready to go and of course their world was thrown topsy-turvy — including two of the 11, a hospitality business and a personal services company, that were shut down. So things had changed dramatically.

“And I thought, ‘Well, I don’t even know whether they’re going to be able to keep going with this and work with the students.’ So I waited a week and gave them some time to get settled and then called the businesses. And it was crazy because all 11 wanted to move forward — very eager to work with the students. The universal idea was, ‘Hey, look, this projects are about the future, long-term strategy. We need to be prepared for this coming out of this. So we’re dealing with what we need to deal with now, but we’ve got to keep our eye on the future and long-term, and that’s where the students come in.’

“Having that, I was able to then go back to the students, who were on break, and I was shooting them notes, saying, ‘Here’s what’s going on with the companies and they all still want to work with you. So we’re moving forward. And by the way, this is going to be a unique opportunity for you to see entrepreneurs handling a crisis situation in real time, which is really cool, as well as you playing what they consider to be an essential role in getting them prepared for what’s next.'”

‘TODAY IT’S THIS TYPE OF CRISIS, TOMORROW IT’S ANOTHER’

Maria Ribeiro

Among those playing an essential role was full-time 1Y student Maria Ribeiro, who would graduate weeks later. Ribeiro, who prior to Kellogg worked in retail corporate strategy in her native Portugal, says the virtual experience actually allowed for more opportunities to connect with her team and build client relationships.

“The quarter was shortened, so we had nine weeks with still the 10 classes fit in those nine weeks,” Ribeiro tells P&Q. “All my classes were super seamless. Obviously it would always be nicer to be physical, but you really can’t fight the context. But in terms of the technical aspect and even content-wise, my favorite class in the quarter was actually during the spring.

“I don’t think that the learning experience lost any quality. I don’t think it was damaged in any way. With the clients, obviously it’s nicer to have at least the first and last meeting in person. That was the biggest difference, because everything was fully virtual. But the check-ins are virtual. Reflecting back, I think that it’s also a learning experience to understand what it is to work virtually, especially for me — I had never done virtual work. Those weekly check-ins from a virtual standpoint were very interesting, and I don’t think the experience was damaged.

“In Growth Strategy Practicum, we went through various topics about scaling operations, how to measure and evaluate a growing company. All those topics were always supported by guest speakers. I think maybe in a physical environment, you can have a speaker coming in to talk about each one of these topics, maybe a few, but in a virtual environment there was a speaker from the entrepreneurial growth-stage company world where they were giving 100% practical examples of what their experience was. So I think that was super valuable.”

Ribeiro had some exposure to entrepreneurship in her previous work, having worked to launch new products and businesses within a grocery retail group. Her work was focused on health and wellness: organic groceries, healthy food service, pharma-beauty, and all things health retail. Entrepreneurship, she says, is something that she knew she wanted to do, and she wanted to use her time at Kellogg to expand her understanding of that world.

Covid-19 couldn’t derail that.

“I’m sure that in a physical world we would have a topic and maybe a guest speaker once in a while, but here we had a topic and a guest speaker all the time,” Ribeiro says, pointing to leaders from Clorox, Hasbro, and Gallo, among others. “Obviously there is time for Q&A, and understanding how growing companies were adjusting their operations, how they were handling it as growth-stage leaders was always a topic that even as students we wanted to know more about.

“Coronavirus was top of mind — you can’t ignore it. Why not learn in class, outside of class, by understanding how different leaders are making decisions? Different challenges, what went well, what went wrong — because today it’s this type of crisis, tomorrow it’s another type of crisis. It’s really relevant to understand those learning experiences of those leaders. What would they have done differently?”

Social distancing in the classroom at Northwestern Kellogg. Kellogg photo

Between 70% and 73% of full-time and part-time degree-seeking students at Northwestern Kellogg enroll in an entrepreneurship course offering during each academic year, according to data provided by the school. In the spring quarter, through the KIEI, Kellogg offered 11 entrepreneurship courses, with often multiple sections offered for more popular courses; six were experiential. During the previous winter quarter, 12 entrepreneurship courses were offered and seven were experiential. This is in addition to other courses run through the other departments, like VC & PE lab courses. In all, 5.6% of the Class of 2018 and 4.4% of the Class of 2019 launched a startup while earning their MBAs or within three months of graduating from Kellogg. Data for 2020 is not yet available.

David Schonthal, clinical associate professor of innovation and entrepreneurship, is the faculty director of Zell Fellows program. He teaches New Venture Discovery, a class designed to help students navigate the earliest stages of starting a new venture. He says in terms of educational value, last spring was one of the most productive quarters he can remember.

“Remarkably, it turned out to be one of the best sections of New Venture Discovery I think I’ve ever taught,” Schonthal tells P&Q. “And I’ve been at it for nine years. So I guess that says something.”

Schonthal’s class is “all about the fuzzy front end of starting a new venture,” he says: identifying an interesting problem that you want to solve by creating a new business. That meant something entirely different at the beginning of the quarter than it did in March.

“Almost overnight, the world was presented with a bunch of meaningful new problems as a result of Covid,” he says. “What was really interesting is that my students decided to respond to the moment instead of pursuing problems they might’ve been interested in with the world in steady state. Many of them turned their attention to trying to solve problems that were presented by the new environment that we worked in: telemedicine, remote therapy, helping people age in place at a time of loneliness. So they adjusted their problems to fit the moment and I think it made for a particularly impactful experience.”

BAD TIME TO START A BUSINESS? THINK AGAIN

David Schonthal

A layperson might look at the current business environment and see a bad time to launch a new venture. David Schonthal’s MBA students know differently.

“I think it’s a great time to think about starting a business, for a bunch of reasons,” Schonthal says. “But maybe at the top of the list is that one of the reasons that it’s hard to get somebody to adopt a new product, or adopt a new service, or an organization to adopt a new product or new service, is because those organizations and individuals seem to be pretty ingrained in their ways and in their habits. And the status quo bias typically stands in the way of them trying something new.

“But we now live in a world where habits are being broken hour by hour, day by day. People are having to find new ways to get things done. And so what used to be relatively intractable behavior is now all of a sudden up for discussion. So people’s receptivity to trying new things is at an all-time high, for as long as I’ve been working in entrepreneurship. So I think there’s tremendous opportunities to solve problems, old problems in new ways, and new problems in new ways.”

Which is not to say that huge challenges don’t exist, or persist, for entrepreneurs.

“I think the challenge is seeking investment for those businesses, because in the world of venture, one of the key ways you diligence a business is by spending time with an entrepreneur and getting to understand how they work and how they operate,” Schonthal says. “And that’s a little bit tricky to assess in this world, where it’s hard to get together face to face with a business. So while there may be a lot of opportunity in the market, there are some challenges in terms of how you capitalize a business. But that’s not insurmountable relative to the opportunity, I think.”

Based on his experiences in the spring, Schonthal says the school tried some things out of necessity that will stick in the course longer-term. Among them: video conferencing and video diaries as a means of doing research.

“In the analog world, in the world that we normally live in, when we teach students how to discover a new business opportunity or solve a problem, much of the front end of the class is learning research methods that uncover insights that maybe other companies haven’t figured out,” he says. “And traditionally that would be things like interviewing and ethnographic research, but there’s always a bit of a barrier to how much people will let you into their lives to do that research.

“And one of the interesting things that we learned this year is that by being on video and having people be in their homes when you’re doing these interviews and when you’re actually asking them to show you how they solve the problems today, there’s a lot more transparency. You get a lot more contextual information about how these things fit into their lives, by virtue of the fact that you’re interviewing them while they’re in their living room or while they’re actually going through the process of struggling through the problem.

“So I find it’s a more interesting and powerful window into the world of the users we’re trying to help than just doing something in the way that we would have done it in the analog world. So that, I think, will very likely stick in the class in the longer term. The other thing that I would say will likely stick is, I found I interacted with student groups more in quote-unquote ‘office hours’ because their schedule was more flexible and my schedule was more flexible. We could have more one-on-one interaction time. And that was something that Zoom facilitated and teleconferencing facilitated. It would have been a barrier or a challenge were we trying to get together in person, and it allowed us to have more frequent check-ins as they were working through their ventures. So I think that will also be something that will stick around in the longer term.”

A CRISIS REVEALS NEEDS & ACCELERATES TRENDS

Evening & Weekend student Will Notini, who will finish his MBA next year, was in David Schonthal’s New Venture Discovery class and says he enjoyed the challenge of virtually discovering and prototyping a new venture.

“I think it’s a great time to be an entrepreneur,” Notini tells P&Q. “I think there are a lot of problems worth solving. I think there are a lot of people who really have the energy and a lot of desire to help solve them. I think it’s a great time to do that sort of work.”

Before coming to Kellogg, Notini was in a market research role, doing primary research for the food service industry. What entrepreneurship looked like there was helping restaurants and food and beverage manufacturers innovate. Coming to Kellogg, he was looking to expand not only his entrepreneurial but also his intrapreneurial skillsets.

But he also planned to continue to work full-time — and that’s what he was doing when Covid-19 happened.

“The sort of purpose of the class is to identify a problem worth solving and then find product market fit within some sort of new venture or service product, whatever it may be. I think I was heartened, and impressed, by how the curriculum was adjusted, and how the classes were run. The thing about being remote is, it flattens geography. For me as an Evening & Weekend student, I was anticipating taking Friday off from work in order to manage to go up to Evanston and back. But this allowed me to support and show up for my team at work, and also show up and support my team at Kellogg. It really made it quite simple actually. That was one of the positive things.”

Another positive: how quickly Kellogg adapted to the new situation. “I was really impressed with my classmates, and my teammates, and how dedicated and enthusiastic we were in working remotely,” Notini says.

“David Schonthal’s class is about discovering problems worth solving. I think in moments of crisis, there are a lot of great innovations that come out of it — in part because these moments of crisis lay bare a lot of the needs that exist in the world that may have been concealed beforehand, or less obvious. In addition to that, it also accelerates a lot of trends. For instance, the project that we were doing was regarding restaurants. So it accelerated this trend toward off-premise dining. In that light, we were encouraged to think about not only problems that were existing within the context of the pandemic, but also, what are problems that can continue to be worth solving in the new normal, whatever that looks like? I’m not sure any of us know yet.

“And the second sense is that I think there was an appetite for, and a sort of spirit of, thinking how learning can be done in the best way. There was this moment of opportunity to co-design what classes could be like in a remote setting. I think there was just a positive attitude around that as well.”

Kellogg students in the Summer Term

When Covid-19 hit in March, Northwestern Kellogg’s classrooms became virtual. But that wasn’t the only major change that occurred. Among the school’s MBA student entrepreneurs, change happened fast.

Zell Fellow Michelle Zighelboim, Class of 2020, transitioned her fashion brand Zéta to manufacture personal protective equipment for front-line health care workers. Zell Fellow Adam Cohen, Zighelboim’s classmate in the Class of 2020, leveraged his technology for his company Stemloop to test for Covid-19. And Kellogg alumnus Michael Aposta, Class of 2012, the CEO of Factor, supplied local hospitals with prepared meals to help feed overworked staff. The crisis has spurred innovation and growth for other Kellogg entrepreneurs. More long-term, another Class of 2020 Zell Fellow, Olivia Cameron, launched UnifiHealth, a next-generation Third Party Administrator for small businesses to self-insure their health benefits, lower health care costs, and provide a better healthcare experience for their employees.

In fact, coronavirus turned the whole Kellogg campus into a kind of startup, with risk mitigation and a radical pivot to new models of instruction and learning, says Rick Desai, adjunct lecturer of innovation & entrepreneurship. Desai teaches New Venture Development, in which students continue the startup process by testing and validating growth hypotheses; his class is composed of a small group of student founders who want to aggressively test the viability of their startup in the real world, regardless of whether it’s off-line or virtual. The shared end goal: to determine whether they should pursue their ventures post-Kellogg.

“To that end, our students were best positioned to navigate the uncertainty as it very likely shapes their career decisions,” Desai tells P&Q. “The students pushed the boundaries on testing their assumptions and validating their hypotheses virtually — all the while, building strong relationships with their remote teams. And Kellogg operated very much like a startup, very quickly mitigating key risks for each of its many stakeholders. The pivot to virtual and preparation for Zoom training was immediate and immersive.”

A CHANCE TO LOOK INWARD & CLEAN UP SHOP

Rick Desai

In turbulent times, Desai says, people flock toward stability. (For proof of his theory, see the surge in applications to MBA programs in the United States and globally.) That’s why it’s a good time to launch a business: success now means a much greater likelihood of success in the long term.

“For MBA students who likely are graduating with student loans, positions in consulting, banking, and tech must mitigate considerable risk,” Desai says. “If you look back to 2009, 95% of students pursued traditional career positions. However, the small cohort of Kellogg students who did launch a startup are part of a historically high performing vintage of startups that followed the recession, such as FourKites founded by Matt Elenjickal ’14, which uses mobile, cloud and analytics software to improve supply-chain efficiency; or HotelTonight founded by Sam Shank ’02, whose mobile app that let travelers book last-minute lodging from the convenience of their smartphones.

“The driving factor is that if you can make it through economic and macro volatility at a startup’s launch, you can likely make it through any future period of the business.”

His best advice to MBAs or others planning to launch new ventures?

“Allow the discomfort to persist. When status quo arrives, the drive to innovate evaporates. Continuing to have a relentless focus on the problem at hand is the mentality that drives the best founders.”

Adam Wolford believes Desai’s class fundamentally changed his career trajectory — especially because the virtual environment allowed him more to focus and reflect on the class takeaways. Wolford, a former Deloitte consultant, came to Kellogg in 2019 with no clear plans to launch his own startup. Then he took New Venture Development, and then coronavirus happened.

“Overall, it was a super powerful experience,” Wolford says. “The Covid pivot, honestly, was great for us. I think we were really going to be focused this semester on connecting with resale stores, getting them to sign up for our platform, see how it was going to drive traffic. I think in lieu of having that experience — since a lot of those stores were closed and were applying for PPP loans and trying to survive — we had a really awesome opportunity to look more internally at our team and our organization, and figure out what we were doing to survive during the time. We actually started collecting our own inventory and selling it in an online platform.

“Basically, our thesis was to develop the brand and develop the platform and we could add in the stores later, so we reached out to our Kellogg community and asked if anybody was Marie Kondo-ing their place, and whether they would donate any clothes to us and allow us to start selling. Out of that, Ciclo was born, which is our startup.

“I would say that the spring quarter created a really awesome opportunity for us to slow down and take some time to think about our brand and how we were going to launch. I also think it was, personally for me, a really great time to be able to kind of engage with classes and then take my own time to reflect. I think when you’re on campus, there’s obviously so much going on, which is the beauty of Kellogg. But in that, you lose a lot of time to personally reflect and think about how opportunities are influencing the way you think.

“So I really used the opportunity to disconnect and think how my experience was going to influence my career, and how I would think about approaching Kellogg next year once we go more into this hybrid/in-person and start having a lot more opportunities. So actually, this class influenced me to go work at a startup this summer, which I am now I’m engaged with, which is really awesome. It’s really made me reconsider my approach to, not only business school, but my career as a whole.”

A CHANCE TO GET CREATIVE & TAKE SOME RISKS

Adam Wolford

Wolford came to Kellogg in the fall of 2019 thinking about the cross-section of venture capital and entrepreneurship, and wanting to understand how companies were funded and how they were started. Through Kellogg’s experiential VC lab he worked for two different VCs. And he discovered that he definitely wants to double down on entrepreneurship.

“I imagine myself doing more experiential classes, definitely leaning into getting more background in this entrepreneurship, connecting more with the local community in Chicago and seeing what I can plug in,” he says. “I think this opportunity has created a lot of great room for experiential internships and in-semester experiences that maybe didn’t exist before, simply because of the space capacity. But I think it’s going to be positive for me in my experience. I will never say that I’m glad Covid happened, because I don’t think anybody is glad that it happened. But I think born out of it was a lot of really unique opportunities that I don’t think I otherwise would have had.”

The silver lining, Wolford says, is that out of the hardship caused by coronavirus, tough businesses will emerge. As MBA students, the experience was invaluable.

“It allowed us to really focus on our brand and our business internally before we started interacting with them,” he says. “I feel like now once things start to open up or things are starting to move, even now we’re thinking about reaching out to a couple resale stores. I think we’re going to be able to better accelerate our product forward, as opposed to building with them.

“This really created an opportunity for us to understand how we worked as a team virtually and interacting with stakeholders. So Rick is still involved with our startup, we meet with him every other week, we have a board of advisers we meet with every month. So we were already enabled to do it virtually, thus making the transition for us to go from semester to summer super seamless.

“Airbnb was born out of 2008, right? So this is actually the best time, because people have more time on their hands and get very creative, which is how I feel we approached it at Kellogg. We were like, ‘What are we going to do? We are a startup based off of brick and mortar.’ So it forced our hand to be creative, which I think made us all grow as leaders. Obviously, Kellogg made it easy.”

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