75 percent of student startups don’t survive post-college
In the 2016-2017 school year, the Lassonde Entrepreneur Institute helped to launch 329 student startup teams. Over 7,800 students got involved, pitching at competitions, raising capital and developing products and services. Five years later, less than a quarter of these student startups are still up in running.
But some are attracting big investors––like Neighbor, a peer-to-peer storage platform, and Blerp, an audio clip sharing app––and others are maintaining steady streams of revenue, like Thirst, a drinks and treats shop.
What made these three companies, who all started at the same time, in the same state, and the same school, stay standing?
Success can be, in its most simplified form, attributed to something your business professors, Shark Tank heroes, and Ross from “Friends” have tried to hammer home: pivoting.
Blerp started as a soundboard app that played funny sound clips during Aaron Hsu’s undergrad at the University of Utah. While the soundboard found some success, when Hsu pitched the idea to investors, he got lots of pointed feedback: you’re in the wrong market.
Hsu and his team took the advice and made the decision that would ultimately lead to their success: abandon the decentralized app they’d worked for months to create in favor of searchable soundbites for Twitch streamers.
“It wasn’t that the soundboard app was wrong,” he says. “There was just a better version of it, in a different market. That’s what we’ve created now with Blerp, and one of the main reasons I think we’re still raising capital and expanding our team: we listened when someone said our idea could be better, and then we changed.”
Pivoting is just something startups––and student startups, especially––don’t do, he says.
“There were so many interesting companies sitting alongside us at Lassonde. Lots of those people were smarter than me, more charismatic, and plenty had way more funding than us,” Hsu says. “But they were stuck on the idea that their products were perfect, that they knew more than the market, that the feedback they were getting in business competitions was wrong. Now they’re not around anymore.”
Ethan Cisneros, founder of Thirst, also started his company while at the University. When he launched his first location, he had already built the ability to pivot into his business plan. Five locations and a $5 million valuation later, he’s grateful for it.
“I named my company ‘Thirst’ because it can be associated with anything,” he says. “When the world decides tomorrow that they don’t want to drink soda at all, we’ll sell juice. I’ve had people suggest switching to a drive through club, selling cocktails. We could totally do that without needing to rebrand.”
Pivoting alone isn’t the secret sauce for successful startups. When asked about why companies around them failed, all three sets of founders pointed next to motivations.
Neighbor co-founder Joseph Woodbury was a senior in college at Brigham Young University starting to raise a young family when the startup began.
“Starting a company is hard,” he says. “To keep going, you need a good reason for getting started at all––and by ‘good’ I mean that it can’t be that you want to be a millionaire. I don’t know that anyone can be successful with that sole motivation.”
When the peer-to-peer platform lost their Get Seeded rounds, raising funding by the skin of their teeth, Woodbury and his co-founders did the opposite of what the student startups around them were doing: they kept going.
“If you’re going to go build a long standing, venture-backed company, you need to believe you’re making the world a better place––when we started Neighbor, we wanted to connect communities, and we’re doing that now because we stuck to that mission.”
Cisneros also traced his motivation on day one to his current success.
“I’m not necessarily passionate about owning a drinks and treats shop,” Cisneros said. “But I am passionate about being a business owner, about building something like Thirst from nothing. That’s why I started this company, and that’s why I’m still doing the work.”
Student startups face a unique roadblock that older entrepreneurs don’t often face: graduation day. Both Blerp and Neighbor’s all student teams had a big question to ask one another: after we walk across the stage, are we willing to take this into the real world?
“It totally feels like proposing marriage, asking our team to stay on after school,” Hsu laughed.
“I know founders who were excited to keep their companies going, but quit once they found full-time jobs that they loved more. They thought the startup world was what they wanted, but they hadn’t experienced anything else yet.”
That wasn’t the case for Blerp, though––they all said “yes, yes a thousand times, yes” to Hsu’s offer to stay on board. “It was easy for us,” he says. “We love working on Blerp, so why would we leave?”
Colton Gardner, co-founder of Neighbor, also noticed that successful startups during his time at school ended for no reason other than a tassel moving from right to left. “There are so few student startups that decide to stay alive after graduation,” he says. “I don’t think students know that they don’t have to stop their companies from taking full-time job offers––your startup doesn’t need to die at graduation.”
Unlike Blerp, the Neighbor co-founders already had clear career plans post-graduation––plans they all decided to sabotage together. The two founders with accepted job offers pulled out, and Gardner, who had already been working full-time for six months, sent in his resignation letter.
“I had done some investment banking and worked for a private equity firm for a bit, and that was all cool,” Woodbury says. “But Neighbor was the best work I’d ever done in my whole life. Of course, I wanted to stay after graduation––why work for years trying to find a place where I could work with people like my co-founders doing awesome things when I could just stick with them today?”
Embrace being a student
More than anything, though, these three startups were quick to identify their resources and put them to use. For Neighbor, just talking about being students helped them build their networks.
“People love to support university-founded companies if you’ll ask,” Woodbury says. “They’ll advise, consult and help out students at their alma mater, and that’s something that lots of student-run companies don’t tap into.”
Student startups can also get funding and support directly through business competitions like Get Seeded and the Utah Entrepreneurship Challenge. “As a student startup, you have much easier access to those,” he says. “They were invaluable to us, to get the perspectives of different judges before you go to investors. It’s fast, good, and inexpensive feedback, something that other startups are clamoring for.”
The ease of access may contribute to a higher amount of failed companies, he says, but the participation pays off. “Our early seed investors saw us at these competitions and gave us the funding we needed to get started,” he says. “That wouldn’t have happened if we weren’t in school.”
Part of navigating campus resources is learning how and when to use them. While at the U, Cisneros was one of the few startups given an office at the Lassonde Studios –– a status symbol and fairly coveted piece of recognition for startups. The Thirst founder, though, was never at his desk.
“I was busy running my company,” he says. “So many other students just sat in those glass offices, thinking about strategies. At the Studios, there were people to talk to, information sessions and panels, all of it for free, and people would lounge around, feeling like an entrepreneur instead of being one.”
Hsu says that his classes are at the core of what he’s grateful for about starting Blerp while in school. “I studied computer science to learn the skills to build Blerp,” he says. “The chance to go to school, to develop this knowledge base, it’s why Blerp exists. It’s a student startup at its core, and I’m happy it worked out that way.”