Vol.24, No. 03	Sept. 18, 1998

School of Hard Knocks in Ivory Tower: Columbia Student Enterprises

CAMPUS ENTREPRENEURS, A CASE STUDY

By A. Dunlap-Smith

Professor Asim Ansari asked his Marketing class in Uris Hall a question without a definite answer. It demanded some familiarity with risk and some comfort with its uncertainties - the kind of question an entrepreneur faces.

Bob Welsh, a senior history major at Columbia College last year, scanned the room full of M.B.A. candidates as they leafed through their notes. "The question made them squirm," Welsh said. "They seemed to want a formula to punch into their calculators that would eliminate uncertainty."

Welsh, however, was at ease. As an entrepreneur, he had already learned to accept risk in business. This lesson he was taught at Columbia - but not in a classroom. He learned it as a manager of Inside New York, one of several student-run agencies in an organization unlike any other on an American campus: Columbia Student Enterprises (CSE).

A CONGLOMERATE OF STUDENT BUSINESSES

Created in 1976 to gather the University's diverse student-managed agencies under one umbrella organization, CSE is today a conglomerate of about a dozen businesses. Among them are many familiar to the Columbia community, such as the Bartending Agency; The New York Times Delivery Service; CUTTA, the tutoring and translating agency; The Columbia Virtuosi, which provides musicians from the Columbia-Juilliard program to play at parties and functions; Internet Solutions, and the Souvenir Agency, frequently seen peddling C.U. gear on College Walk.

CSE operates somewhat as a holding company does. It provides these agencies with general clerical and accounting support. It also provides them with offices in a narrow space overlooking Morningside Drive on the ground floor of East Campus. And for the start-up companies whose business plans pass its muster, CSE can offer seed money in the form of a $200 loan. In exchange, it takes a 40 percent cut of their profits.

CSE's agencies collectively generate gross revenues of between $800-$900,000 per year. And with approximately 625 student employees, CSE has the biggest student payroll at the University.

Paying student wages, which run around $15 per hour, and agency operating expenses swallow 85 percent of the gross. The student managers divvy up 60 percent of what remains; CSE gets the rest.

For the agencies that turn a profit, managers can make from $2,000 to $25,000 - not including bonuses - depending on how good a year they had; although rumor has it that in a boom year a few student-managers have raked in as much as $40,000.

Asked how he did last year, Welsh just smiles. He would say, however, that Inside New York is one of CSE's most successful businesses, letting it be understood that his earnings reach the high-end of the above scale. In fact, Inside New York did so well that after turning over his position to a new manager last spring, Welsh was paid a consultant's retainer - the size of which he also refuses to divulge.

ONLY AT COLUMBIA

"Everyone is talking about and teaching entrepreneurship, but at Columbia, college students are actually doing it," said Bob Reiss, an entrepreneur who got his first taste of business risk as a student at the College in the early 1950s, before CSE was created. While studying and playing on Columbia's nationally-ranked basketball team, Reiss worked for the Student Laundry Agency and later ran the agency that sold programs on game day at Baker Field. The work not only paid for his room, board and books, but also taught Reiss "how to run a business and the importance of time management."

Reiss went from Columbia to an M.B.A. at Harvard Business School ('56) then to a job with a manufacturer of stationery products; or as he archly put it: "four years at Columbia plus two at Harvard-and I sold pencils." Reiss has since started nearly 15 small businesses, two of which have become case studies in both Harvard and Columbia Business Schools' entrepreneurship curricula, and has also been profiled in the Enterprise section of The Wall Street Journal.

His experience as an entrepreneur gets Reiss frequent invitations to teach guest seminars at Columbia, Harvard and other business schools as well as to speak to students in business clubs at colleges throughout the country. Yet he has never come across another school that provides its students the opportunity to be entrepreneurs as Columbia does. "Columbia Student Enterprises is unique," Reiss said, "no other place gives college kids the chance to start and build their own businesses without a safety net, like in the real world."

PROFIT OR PERISH

In the summer between his sophomore and junior years, Welsh became one of two managers at what was then The Columbia Guide to New York, a post usually reserved for seniors. His task was a simple one: profit or perish. Because CSE receives no financial support from the University, it cannot afford to prop up money-losing ventures.

"That is why," Welsh explained, "the committee at CSE that reviews the business plans for new student-run agencies is very worried about sales."

Moreover, as a manager, Welsh's compensation was directly tied to his performance. He would receive, as do all managers of CSE agencies, just one check at the end of the fiscal year. If his agency didn't turn a profit, he would earn nothing and the business would fold.

The Columbia Guide was for the 16 years since its founding distributed to students to help them discover the city. But Welsh and his co-manager Meredith Safran (CC '97), whose father Frank Safran (CC '58) had started and run the now-defunct Student Stationery Agency, thought the book could appeal to a broader audience. "For $200 we had the printer wrap the title Inside New York around the same contents-suddenly we could market to every school in the city," Welsh said. Sales rocketed from 9,000 to 20,000 copies.

After Safran graduated, Welsh continued alone in '97-'98 and Inside New York kept growing. In the past two years the book's pages jumped from 160 to 248 to 332. (The just-released 1999 edition runs to 367 pages, and 2000's is slated to reach 400 pages.) The sales staff doubled to 10 ad reps. Writers at other area schools were hired. A new title was added, Inside New York International, with a 32-page supplement for foreign visitors and students.

Sales of Inside New York and its permutations ran to 40,000 copies last year, at a top price of $12.95. Also, its client list grew to include more than just area schools. Big law firms, such as Skadden Arps and Cleary Gottlieb, and the investment banks Morgan Stanley and Bear Stearns order several hundred copies at a crack. Recently, the Waldorf Astoria and Hyatt hotels have bought copies, as has the bookstore chain Barnes & Noble. And having just signed a deal with a national book distributor, Inside New York will soon be sold coast-to-coast.

For Welsh, there has been a downside to his experience as a student entrepreneur, however. "After running my own company, I don't know how easy it'll be to have a boss," he said. But after graduation last spring, Welsh didn't bother to find out. He took the summer off instead, and bicycled across the country.