Putting the green back in New Haven

Student entrepreneurs know that New York isn't the only city with a Wall Street.

"Depending on the last phone call of the day, you could be the happiest person on earth or absolutely down in the dumps," Michael Stern, CC '02, said. He took another bite out of his sandwich and casually shrugged. "It changes every single day."

Emotional stability for most students at Yale probably doesn't dangle on the whims of NASDAQ, but Stern isn't like most students. In fact, these days he isn't a student at all. He still lives with his roommates from last year in a typical off-campus house on Crown Street trimmed with red roses ("We're floral people," he said), but he spends his days working as a venture capitalist at an incubator called Aquarium Ventures, Inc. Stern was recently profiled in the Wall Street Journal as a young entrepreneur, and on Wed., Sept. 27, he was one of the feature speakers in a panel on New Haven's "new economy," headed by Mayor John DeStefano, Jr. and sponsored by the Yale Entrepreneurial Society (YES).

Stern is a self-professed "technology nut." While some Yalies lounge smugly in front of the TV, supplying million-dollar answers for Regis Philbin, Stern is out there in New Haven playing for the real thing. His company currently has $1 million in commitments from five backers who have already contributed $250,000. "If you work as an I-banker, chances are, you'll probably make a lot of money," Stern said. "But that's a very prescribed path. In running a start-up, you also have the potential for huge financial gain, but also a tremendous degree of instability, which can be really exciting for a lot of people."

The so-called "dot.com dropout" craze has gained momentum at a number of universities across the nation, where internet start-ups are becoming more and more commonplace. "Some people make a lot of money—it becomes sort of a gold rush mentality," said Sean Glass, TD '01, of the financial services company Unect. Last year, Glass and his business partner, Miles Lasater, SY '01, founded YES, the organization that has fueled the recent upsurge of student start-ups in New Haven. In addition to creating a forum for entrepreneurial education, YES provides a valuable venue for student business networking. The organization runs team-building sessions, called "mixers," in which students can meet and form business teams. After brainstorming a business plan and strategy, a team can enter the annual Y50k competition. Modeled after competitions at MIT and the Harvard Business School, the Y50k annually awards $100,000 in prizes to both standard, for-profit businesses and to winners of a special Social Entrepreneurship Prize, which goes to the team whose plan most benefits the public.

Running these start-ups has extended well beyond the realm of an extra-curricular activity for a growing number of Yalies. "Students think of it as a career path rather than just a hobby," Stern said. It's a path that is leading more and more students to pursue business opportunities which sprout up close to Yale, a dynamic shift that could have far-reaching ramifications for New Haven in the "new economy."

Hooking up to a new network

As some YES members transfer their ambitions outside of Yale's parameters and into the flow of city businesses, a new network is beginning to stretch across New Haven. Instead of feeding Yalies upward to New York and Boston, to be gobbled into the so-called "old-boy network" of established companies, the start-up alternative is causing "an upheaval in an entrenched hierarchy because it's something that moves so fast," Nathan Taft, program director of the Office of New Haven and State Affairs and a mentor to YES, said. "YES is another ingredient of building a network of people who see New Haven as a viable alternative" to centers like New York or Boston.

"Before, if you were an Econ major, or just a student who's pretty smart and interested in business, you graduated Yale and were almost definitely going to head to Wall Street. It was a pretty solid, structured career path you'd fall into," David Pozen, TC '02, the current president of YES, said. "Now, that's all been blown open. It's an amazing change. If you're a capable kid now at Yale, and you're into business, you're getting together with some of your friends and forming your own start-ups." As Bruce Alexander, BK '65, director of the Office of New Haven and State Affairs, sees it, "All those people sitting on lousy furniture and eating pizza—those rooms are full of computers and full of potential for New Haven."

This incipient network of entrepreneurs is reaching out to include the recent biotech arrivals to Science Park as well. These firms are taking root in vacated buildings like the old SNET building on George Street, which is being renovated to make room for labs. This type of development is intended to attract more biotech firms into the area. "We're all working together to promote the cluster—you need scientists and busi- nessmen, people who don't usually know each other," said Dr. Carolyn Kahn of Connecticut Innovations, a key force in the efforts to revamp Science Park. "Things like the technology dinner that Connecticut Innovations sponsors gets together many local New Haven companies to booze and schmooze together. I think that there is a community developing here."

KATIE ALDRICH/YH Steve Barrows, ES '02, and Tom Wiesner, ES '02, discuss the panel on New Haven economics sponsored by YES on Wed., Sept. 27.

The developing synergy between business and science brings to mind hotspots like Silicon Valley, Calif. Early on, Silicon Valley was ideal for starting a company because costs were low and it was an easy place to locate. "Today, it's overcrowded and expensive, and people only go there because there are other people established there already," Metaserver CEO Richard Shultz, said. YES maintains that the convenience of New Haven could make it the next great hotspot for entrepreneurs. "We've found that there are a lot of people, especially in management, who commute into New York, and they're sick of it," Lasater said. "They hate being stuck on I-95. Why not do a reverse commute? New Haven doesn't deserve its reputation anyway. Stanford created Silicon Valley. There's no reason Yale can't create a biotech crowd on the East Coast."

In line with this vision, some members of Wednesday's YES panel expressed hope that this "new economy" might someday attract venture capitalists and other powerhouse businesses to New Haven. Mintz Levin, a major Boston law firm, is now opening a branch in New Haven—and they're not the only ones to recognize the city's economic potential. Henry Fernandez, LAW '94, the chief economic director of New Haven, announced to Wednesday's panel that "Crossroads," a venture fair previously held in Stamford, Conn., will likely be held in New Haven instead sometime in the spring.

Starting up and sticking around

Right now, though, young college kids are the most likely to stay in this city. "New Haven has a number of advantages as a city," Pozen said. "It's pretty well positioned between New York and Boston. It doesn't have the sort of vibrant business community that those places have, but it's lower cost for doing business, lower rents, lower service, everything is cheaper. It has a great pool of intellectual capital—there's a lot of smart people around. In the wealthier suburbs around New Haven there are people who could commute here to be the CEO types as well."

In addition to its affordability, Pozen said that New Haven is strategically positioned to be an internet center as well as biotech center. "Metaserver is a local internet e-commerce software infrastructure developed by YES members Richard Shultz and Henry Yeger. It's based in New Haven, it's staying in New Haven—they just raised $25 million, and they're hiring new employees every week," he said.

If these kinds of businesses stay, support services are expected to follow. "In science park, the support-type services are starting to sprout, although it hasn't occurred as quickly as we thought it would," Walter Esdaile, director of Small Business Initiative for the city of New Haven, said. "You'll start to see restaurants, drug stores, convenience stores, retail, apparel." The idea is that these services will convince entrepreneurs to stick around. "I think it's great that we have become a breeding ground for entrepreneurship. I hope that young people will want to stay here—it's an exciting, vibrant place [for] both business and social entrepreneurship," Fernandez said.

Jonathan Leibovitz, LAW '02, founder of the web-based company Yellowpen, said that if he had a magic wand he would like to conjure up something like "my favorite bar in New York. They play French rap music. I think this is the kind of culture people my age are looking for. I mean, the Long Wharf [Theater] is nice, but what we're looking for is a nice drink, you know?" New Haven may be lacking the New York nightlife, but it does have cheap dining options that are already appealing to young entrepreneurs. Glass, who now runs a financial services firm called Unect, lives in an apartment above Ivy Noodle, where he eats lo mein for dinner every night. In general, he sounds happy in New Haven. "You have to sell people on New Haven too when you start a business here—there can be a negative perception, but it's just a perception."

Glitches in the network?

In the beginning, women and minorities were noticeably sparse links in the Yale-New Haven entrepreneur network. While YES attracts students with a variety of interests and expertise, like most specialty groups at Yale, there was a certain prototype—that is, the white male—that initially rushed onto the scene. A good number of this majority have family members that are also involved in business. "Half my family is lawyers, the other half is entrepreneurs," Glass remarked. Right now, however, Pozen estimates that approximately one-third of all YES members are female. "The number of female YES members has jumped dramatically since last year, and several women now run major units of YES," he commented. "The organization remains predominantly male at the top executive level, but that will certainly change by next year. I don't know when YES will become fully 50 percent women, but we are clearly moving in that direction."

At the reception before the panel, Maureen Burke, SOM '97, who helps run the Enterprise Center, and Brenda Toren of iEDI group, a business-to-business (B2B) e-commerce solutions company in New Haven, commented that women often seem to be more involved in social, non-profit entrepreneurship.

YES member Susan Tuddenham, CC '02, helped to found the organization Touch Base, which serves as a liaison between homeless people and professionally-run services and won $7,500 from the YES Y50k Social Entrepreneurship contest last year. This year, Tuddenham is helping to head the Y50k competition. "I definitely think more women are joining," she said. "I also think it's important to remember that entrepreneurship and social work are not mutually exclusive."

During the question period after the panel, an African-American woman who was not a YES member asked DeStefano what was being done to ensure that minorities were also benefiting from the "new economy." "I'll leave that to the six white guys on the panel," the mayor joked. After DeStefano backed into a discussion of New Haven initiatives like affordable housing, one of those men, Michael McKenna of the biotech firm Curagen, did offer one optimistic statistic: "Over 40 percent of the Curagen employees are minorities, most from around New Haven. I don't think that the new economy necessarily leaves minorities behind."

The end of the day

The city of New Haven will be making efforts not to be left behind in this new economy. Is Stern's business going to stay in New Haven? He shrugged. "I don't know," he admitted. At the end of the business day, nothing is ever certain. But there are hopefuls like Leibovitz, who is more openly optimistic about future prospects for his business in the city. "We're gonna give it a go. We're gonna stay in New Haven. We thought about Boston, New York...but we're gonna stay."

Photo by David Gest.

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