The Dropouts Return

What B-school can't teach.

A failed initial public offering may seem like bad news all around. But for Kevin Ward, who slaved over the S/1 last summer as PaperExchange.com’s director of business development, the firm’s September decision to stay private was a blessing in disguise. It spurred him, he says, to return to the MBA program he’d dropped out of when he first joined Boston-based PaperExchange in 1999.

“I left with the desire to come back and finish the MBA,” notes Ward, “but the big questions were when and how.” When he found that the online business-to-business exchange had limited capital, making it difficult to pursue strategic partnerships, those questions were answered for him. And, thanks to the University of Chicago policy that gives students five years to earn their MBAs, and the interactive Webcast class the school offers through a relationship with MIT, Ward was back in class right away. He’s been back at the university since January, and expects to get his degree by June.

Ward was part of an exodus from MBA programs that took place in the late 1990s–a time when every business plan dreamed up for a professor seemed to be a candidate for real-life Internet success. But in these days of dot-com disillusionment, some of those jilted schools are reopening their doors to the students who dropped out and signed on with corporate high-fliers–often in finance posts–only to see funding fizzle and options drown in the past year or so.

“It’s a testament to the idea that they still think there are things left to learn, that maybe they don’t know as much as they thought they did,” says Ellen Rudnick, executive director of the Chicago Graduate School of Business’s entrepreneurship program, who kept in touch with Ward by E-mail while he was away. She is now trying to do the same with other dropouts, she says, to help keep them on the degree track, just in case.

Duke University’s Fuqua School recently expanded its yearlong leave- of-absence program to make it easier for entrepreneurs to test the waters and return. And Stanford University–which, to stem the flow of MBA dropouts, has stuck by its no-guaranteed-return policy–was “not unreasonable” when it decided to readmit two or three students who asked to come back after having left for a shot at dot-com stardom, says dean George Parker.

To cater to returning students’ desire for more real-world experience, and to slow the dropout rate, some schools are also adding to their entrepreneurial curriculum. Business-plan development is now a core area for first-year students at Dartmouth College’s Tuck School. For its part, Babson College has attracted more than 20 MBA students to its new Entrepreneurship Intensity Track, which requires the launch of a business before graduation.

SIGN OF IMPATIENCE

Far from being stigmatized as dropouts, students who come back are often seen as a rich resource for classmates. They “bring home the real- world situation of how difficult, or easy, it is to raise money,” says Rudnick, who teaches a lab on new ventures that Ward is now taking. The students also share first-hand their experience of the “decisions you have to make when a business doesn’t have the money it expected.”

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