The Entrepreneurship Racket

American colleges and universities are feeling the entrepreneurial spirit. The number of formal programs (majors, minors, certificates) in entrepreneurship is well over 500, quintupled in the past thirty years according to a Kauffman Foundation report. Entrepreneurship courses for students and faculty numbers top 5,000, taught on more than 2,500 campuses — up from only 250 courses in 1975. In 2013, roughly 400,000 US students took courses related to entrepreneurship taught by 9,000 different faculty members.

The following year nearly a quarter of all incoming college freshmen declared they “wanted to be entrepreneurs” of some kind. Meanwhile, faculty hiring and tenure decisions at research universities are increasingly based on professors’ entrepreneurial ability to generate revenue streams.

Zeal for entrepreneurialism is growing. Yet the number of new business start-ups per capita in the US has steadily declined over the last thirty years, and the US ranks twelfth in global start-up activity, according to Gallup and the US Census Bureau. So what exactly are these programs preparing students and faculty to do?

Many mission statements from entrepreneurship programs claim to teach subjects like “entrepreneurial problem-solving skills,” “innovative thinking,” and “value creation.” But this training is not necessarily geared toward creating real businesses. As Bill Aulet, MIT’s managing director of entrepreneurship admits, the programs are designed to “prepare students [and faculty] for the rest of their lives,” inculcating “entrepreneurship as a cultural value, not a goal or outcome.”

In other words, the rush to embrace entrepreneurship is ideological rather than practical.

The ideology of entrepreneurship certainly seems to be a draw. Today there are over two hundred brick-and-mortar installations for entrepreneurship embedded on campuses across the US, and more are being built every day.

The National Consortium of Entrepreneurship Centers (NCEC) mushroomed, from ten schools in 1996 to sixty by 2001. Cornell University now has 364,000 square feet of campus space allocated to student and faculty incubator and accelerator programs; Penn State has 200,000 and Berkeley has 108,000.

The push for entrepreneurial values is not just a campus-by-campus decision either. Every campus of the State University of New York (SUNY) — the largest university system in the US — has adopted the state’s 2013 “Start-Up New York” campaign.

The campaign demands a state-wide entrepreneurial “culture shift” for SUNY’s sixty-four campuses and almost half a million students. It promises to give more than $7 billion (along with a ten-year, tax-free incentive) to science and technology companies who build or relocate offices or manufacturing adjacent to their campuses.

New York taxpayers are also partially funding the $17 billion College of the Nanoscale at SUNY Utica, a new college that includes classrooms but also college-owned factories for manufacturing nanoscale microprocessor chips in a public-private partnership with IBM, GE Research (its anchor tenant), and others. And at SUNY Albany’s campus, construction is already underway on its $187 million Emerging Technology and Entrepreneurship (E-TEC) Complex, which opens in 2020.

Higher education’s rush toward embracing entrepreneurship is well underway in private research universities, too. Many research-driven universities with already vibrant entrepreneurial cultures — Stanford, Princeton, Carnegie Mellon — have begun rebuilding campuses around entrepreneurship, creating new networks that place entrepreneurship at the center of campus life.

At Carnegie Mellon, for example, the new $201 million David A. Tepper Quadrangle, which broke ground in October 2015, unites its business school with its Swartz Center for Entrepreneurship and a campus welcome center. Its largest benefactor, hedge-fund manager David Tepper, hails it as “not just a new building,” but “a new vision of education.”

The Entrepreneurial Turn

The problem with the entrepreneurial turn in higher education is not simply that faculty and students are absorbing a corporate work ethos: seventy-hour workweeks, a lack of job protection, proprietary secrecy, non-disclosure agreements, the tyranny of team leaders and “mentors,” an oppressive shouldering of risk (including crushing student loan debt), fear of lawsuits, and the illusory sense of power sharing or control.

The entrepreneurial turn also signals deeper shifts in the way research universities work. Increasingly, research university systems have gone from Fordist to Toyotist structures of research production.

In the postwar university, faculty operated in Fordist frames, generally producing students with prefabricated degrees designed for the benefit of various industries, to build sustained economic growth and widespread material advancement for the United States upon graduation. Under that model, in addition to teaching, many faculty also conducted process-oriented research, largely for disciplinary or professional interests, or for government and military contracts on a grant-by-grant, piecemeal basis, with minimal interference or oversight.

But that model is changing. A key catalyst was the 1980 Bayh–Dole Act. The act changed the de facto ownership of inventions created by university researchers with federal funds. Previously, federally funded contracts and grants obliged researchers to disclose inventions and relinquish patent rights to the US government and its taxpayers. The Bayh–Dole Act changed all that by giving schools, small businesses, and nonprofits the right to patent their inventions exclusively for the benefit of their respective institutions, and to license student and faculty inventions.

In other words, US patent law was radically altered to encourage universities to claim intellectual ownership of potentially profitable research, to license it, and to develop, build, and market inventions for the sake of profit.

Since then, at many research universities the model for teaching and research faculty has shifted to something more closely resembling a Toyotist, or just-in-time structure. The university now communicates and coordinates in near–real time with science, tech, and venture capital markets through its centers and executives. Universities actively respond to the flow of industry demand, in the same way that an assembly line is programmed to respond to real-time demand for parts, adapting to industry’s shifting preferences for the kinds of innovation it desires.

Michael Hardt argues that Toyotist models of production are “not simply a more rapid feedback loop . . . but an inversion of the Fordist relationship.” In the entrepreneurial university, this means that the decision to pursue a particular line of research (or to prototype a particular widget) actually comes after and in reaction to a market decision that has already been made. Even pedagogy must change in response to fluctuating market “interests,” oftentimes with consequences for campus culture and resource allocation.

The upshot of this rapid feedback loop between industry and the university is the stifling of academic freedom and creativity as companies determine what innovative ideas or technologies are praiseworthy.

Moreover, more and more campuses are being transformed into just-in-time research service sites for commercial science and technology.

Toyotist models of research production allow universities to take advantage of valuable intellectual property (IP) and creative labor generated both in and outside of the classroom by students and faculty. Universities encourage their workforce of faculty and students to research and develop salable products in their spare time, including market research, product research and development (R&D), and business plan development for free.

The majority of student opportunities to innovate on campus or in the classroom increasingly fall within undergraduate programs. From biotech to web apps, these student ideas must solve industry or consumer “pain points,” and be both scalable and monetizable. Programs will help some students and faculty to create spinout companies, patented inventions, software and hardware prototypes, and more.

Entrepreneurial programs teach students to focus on novel solutions for early, project-based business challenges, particularly those related to the development of IP. Although “innovation” is present in name, real innovation is usually absent because programs and their directors only respond to the market, and teach existing business models to students because this minimizes their risk of failure.

Most student and faculty projects rarely succeed in either starting up, or in acquiring funding, but those that do can do so spectacularly. Commonly cited examples include Genentech, Google, Sun Microsystems, and Yahoo, who act as success stories to help establish entrepreneurial research role models.

Student and faculty start-ups that seem most profitable to the university will have resources poured into them through a process called “funneling.” For example, in 2014, the University of California (UC) system of twenty-three colleges created a venture fund of $250 million to funnel into start-ups based on university research, at the same time their regents voted to increase student tuition by 5 percent per year for the next five years.

In exchange for their support, schools negotiate revenue-sharing arrangements comparable to those in private start-up incubators, typically taking 5 to 10 percent. One difference between the two, however, is that most for-profit research businesses operating as nonprofit universities pay few or no taxes on their profits at all.

Schools can even appear generous; for instance, Stanford University’s StartX incubator/accelerator fund matches up to 10 percent of any funds a campus-affiliated student or faculty start-up can raise, provided the new company is also willing to give Stanford a stake.

Universities are manufacturing start-ups at an alarming rate. They created 914 start-up companies in 2014, up from 818 start-ups in 2013, 705 in 2012, and 670 in 2011, according to the Association of University Technology Managers. But most of them fail; in fact, 92 percent of all start-ups fail within three years. The businesses that succeed are usually purchased outright by giants like Alphabet (who owns Google), Amazon, Apple, Facebook, Microsoft, and others.

These US-based companies notoriously deploy tax gimmicks to shield their profits from benefiting US citizens. And truly disruptive or valuable start-ups are appropriated before they can become either disruptive or profitable by tech monopolies that burn the competitive landscape by buying up anything that could pose a threat to either their market dominance or vision for the future.

Most students will never start a public company, so classes and entrepreneurial extracurricular activities really train students to perform not as entrepreneurs but as intrapreneurs, learning how to think and act like an entrepreneur when working for large corporations, or as a minion to venture capital.

By imbuing students with entrepreneurial values, big tech and their investors plant seeds in students to harvest in later seasons. And many courses across the disciplines, from the arts to the sciences, now include an entrepreneurial component meant to extract more and varied forms of value from young people paying to be in school.

For example, San Jose State’s College of Engineering (SJSU) works directly with tech leaders to offer students hands-on, project-based “learning opportunities.” One prototyping challenge at SJSU, sponsored by Intel, partners faculty and students from science, engineering, business, and arts programs to design imaginative prototypes from next-generation chips and costly materials.

Students get the opportunity to work with state-of-the-art tech — and get free swag like hoodies, hats, and backpacks — but in exchange Intel receives valuable feedback and free product testing of their new chips, as well as inspirational prototypes they can appropriate, alienate, or steal.

On the face of it, experiential learning opportunities championed by entrepreneurial programs — and indeed much of the entrepreneurial agenda — seem not only practical but also beneficial to students who want to work in these industries. But these experiences are necessarily more beneficial to science and tech companies than to students, and we should be asking whether industry or the university should be benefiting from this kind of labor at all.

Higher education now seems inexorably linked to the spirit of entrepreneurialism and its values. As one MIT senior, Theodora Koullias, put it in a recent interview on WGBH News: “If you’re not starting a company, there’s something wrong with you. If you’re not working on a start-up, you’re nobody.”

Today, the culture of entrepreneurialism in higher education claims both students and faculty’s creative energy and ideas at their source, and when challenged insists this is what students and faculty really want, or what they really need.

This is a perversion of the values of education, especially when students are paying for the privilege of having their labor appropriated while at university, and many are going deep into debt to do it. Entrepreneurship in higher education masks increasingly exploitative and super-exploitative types of institutional practices.

As Jeffrey J. Williams asked in the Winter 2016 issue of Dissent: What is innovation for? And for whose interests? Similarly, we should ask what good is the entrepreneurial spirit in higher education, if it brings us exploitation? Innovation has become a buzzword that points to a corporate ethos and co-opts the positive rhetoric of change for its own ends; while entrepreneurialism indicates a deeper and more intractable installation of business values, remaking our universities through its physical places as well as policies.

More and more universities are turning to the creative labor of students and faculty as a source of funding, transforming higher education into a research service for the tech industry. We need to foster a different spirit of innovation in the university — one that serves the shared social welfare of students and faculty and recaptures the ideals of education.