Scale Matters: How to Make Startups Sustainable

GG Blog 033116

Wherever I go in the world, everyone is desperately seeking innovation and they’re looking to Silicon Valley for inspiration. This is true for places as different as Tokyo and Dubai, Amsterdam and Mumbai, Beijing and Singapore.

It is also true for Wharton students. Our MBA for Executives program in San Francisco has developed its own entrepreneurial ethos and West Coast vibe. The Semester in San Francisco for our MBAs, as well as the winter week for undergraduates at our campus under the Bay Bridge, are both oversubscribed.

The graduates of business schools are no different. The Bay Area has been the second top “first job” destination for our Philadelphia-based MBAs for the past few years, only after New York (which is just an hour away by train). And while there is more than a smattering of banking and consulting in the job mix, most of our West Coast-bound students end up in the heart of Silicon Valley, with Google and Apple topping the list.

Business students are simply responding to what Silicon Valley has been demonstrating in their hires over the last few years. Wharton alums, for example, are CEOs at Google, LinkedIn, and Oracle, as well as senior partners at big venture capital firms like Benchmark, Greylock, and NEA – not to mention the San Francisco-headquartered tech practices of Goldman Sachs and McKinsey. Indeed, based on LinkedIn’s data, Wharton ranks #2 behind only Berkeley when it comes to alumni in Silicon Valley c-suites.

The simple lesson I draw is this: while ideas are essential to innovation, it takes real business skills to turn a great idea into a sustainable business that can change the world. Not only to survive but also to successfully compete, companies must be able to grow beyond early stage and scale the venture.

Slick apps may be the front-end of lots of new businesses today. But if they are to thrive, the back-end is their engine room for growth and sustainability:

  • Developing business models to attract investors
  • Identifying and developing a talented workforce
  • Finding and keeping customers
  • Managing just-in-time supply chains
  • Negotiating with myriad stakeholders
  • Navigating complex regulations, taxation, and reporting

This is Wharton’s sweet spot. In fact, we are experimenting with a “Scale School” concept at Wharton San Francisco, starting with workshops to offer solutions like these to companies seeking to move beyond initial product-market fit to build larger enterprises of greater value.

When the world thinks Silicon Valley, they still think startups. But Google and Apple are the two biggest companies in the US by market cap, with massive global footprints. It is the combination of a startup mentality with sophisticated big business savvy that empowers the Bay Area today. We at Wharton are certainly poised to influence this. And there is more to come.

Editor’s Note: The original version of this article appeared on LinkedIn on Mar 31, 2016.

 

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