The road to Hell

By Isaac Lewis on September 17th, 2012

NACUE, the National Association of College and University Entrepreneurs, is an umbrella organisation representing the UK’s university enterprise societies. Founded in 2009, it has grown in a few years from a rag-tag coalition of students into a fully-fledged, publicly-funded quango, with its own policy advocacy unit and a total of £1.8 million in Government funding, spread over two rounds.

For a long time, NACUE was an ineffective, albeit well-meaning, organisation. The people behind it were committed to “promoting entrepreneurship” – though, as was often said, they were somewhat less committed to actually practicing it. You know the kind of people: those who favour talking over doing, who prefer feel-good talks on passion, inspiration, and “personal branding” to the ugly nitty-gritty details of day-to-day business. Still, the organisation didn’t do any harm.

But now that public money is being spent on this outfit, the pertinent question is not, “Has NACUE added value?” (the organisation loves the phrase “adding value”); rather, the question is, “Has NACUE added £1.8 million worth of value?”

Under a Government that has abolished over 100 quangos since election, it must have been a hard sell to justify public funding for a new one. In its report, “Enterprise Education in a Smaller State”, NACUE cannily pitched itself as the grassroots approach to encouraging entrepreneurship; that by exposing more students to the idea of an entrepreneurial career path, NACUE would help kick-start economic growth.

There is no reason to be cynical about NACUE’s overall approach. More numerous and more effective university enterprise societies would have an undeniable impact on students. The quality and quantity of startups that have emerged from well-run societies such as Manchester Entrepreneurs, Oxford Entrepreneurs and Cambridge’s CUTEC attest to that.

But as much as NACUE likes to attach its name to their successes, these groups were doing fine long before the organisation came into existence, and despite NACUE’s attempts to spread “best practices” across UK campuses, enterprise societies at most universities remain small and highly disorganised.

How small? Well, NACUE claims to represent 40,000 students, a figure it reached by aggregating the membership numbers of its affiliated societies. However, as most student societies grossly inflate these numbers, NACUE’s numbers are likely similarly inflated. It’s a simple wheeze, followed by student societies of all stripes. Offer people free or cheap membership during freshers’ week, gain hundreds of “members”, most of whom never attend an event, and use your enhanced membership figures to entice corporate sponsors or university funding.)

NACUE has simply performed the same trick on a national level. Based on my experience at Warwick Entrepreneurs, where roughly a quarter of official members regularly attended events, I’d put NACUE’s active membership figure at less than 10,000.

The default state for student societies is for them to be badly organised, so NACUE cannot be blamed for the chaos in regional student groups. But despite having spent significant resources developing the “NACUE Sustainability Model”, “Succession Framework”, and other comically pompous-sounding best practice documents, NACUE does not deliver sufficient support to struggling societies to help them execute on its own recommendations.

NACUE offers two main forms of direct support for societies. The first is the assistance of its regional co-ordinators, who divide their attention between multiple campuses. The second is the annual Leader’s Training Conference, where society presidents and vice-presidents descend on London for a weekend of “skill-building”. On returning to their home university, though, a society president needs exceptional dedication to bring other executive members into line.

Few students would ever bother to read NACUE’s lengthy documents. As a result, most societies struggle with basic organisational issues. NACUE’s high-level guidelines thus prove fairly irrelevant. If this all sounds trivial (students are badly organised, news at 11), keep in mind that NACUE’s government funding represents some £20,000 in taxpayer cash for every society they support.

NACUE has made one great achievement at the society level. For a long time, the stereotypical member of a university enterprise society was the Accounting and Finance student with zero interest in start-ups but a passionate interest in CV-padding and investment banking internships. To their great credit, NACUE has gently pushed such individuals aside, and successfully recruited students with a genuine interest in entrepreneurship, many of whom are running successful, profitable businesses.

But the average NACUE business is a small business. Think Apprentice-style projects: selling customised umbrellas, developing new ice cream flavours, that sort of thing. One of NACUE’s justifications for taking public money was that supporting student enterprise would help drive economic growth. You might be sceptical about the notion that former polytechnic students selling tablecloths somehow represent the future engine of national productivity. If so, you’re not alone.

Scott Shane, author of The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors and Policy Makers Live By, has persuasively dismantled the myth that encouragement of entrepreneurship for its own sake is a net benefit to the economy. Instead, he argues for a focus on the subset of high-impact start-ups that have a disproportionate effect on economic growth.

“When governments intervene to encourage the creation of new businesses, they stimulate more people to start new companies disproportionately in competitive industries with lower barriers to entry and high rates of failure,” he writes.

Shane’s conclusion is that governments should “stop subsidizing the formation of the typical start-up and focus on the subset of businesses with growth potential. Getting economic growth and jobs creation from entrepreneurs isn’t a numbers game. It’s about encouraging the founding of high-quality, high-growth companies.”

NACUE’s egalitarian ethos means it will always support any student that wants to start a business – any business. It’s an admirable aim, but it puts off those students with greater ambitions. NACUE-affiliated societies should strive to be like the Homebrew Computer Club, where Steve Jobs met Steve Wozniak, but in their current form they have a habit of driving the best people away.

The NACUE organisation itself, based in East London, is an even more interesting beast. Around half its full-time staff have experience in other corporate roles, and the other half are made up of former society presidents and executive committee members who got sucked into increasing involvement at NACUE before eventually taking full-time positions after graduation. For example, Hushpreet Dhaliwal, NACUE’s chief executive, originally joined as an intern.

The inherent danger in NACUE’s bureaucratic aetiology, and the concern that is now being expressed by entrepreneurs, is that the organisation will become a springboard for students with a genuine interest in start-ups to end up following an “entrepreneurial” career that is in fact nothing at all to do with actually starting companies.

The basic career trajectory goes something like this. Use your experience at NACUE to sell yourself as an “expert” in student enterprise or a “leader in entrepreneurship”, scoring yourself positions as a board member or advisor at government bodies, think-tanks, and other organisations tangentially related to enterprise.

If, along the way, you somehow manage to start a business – one that actually makes money – mention it as often as you can to bolster your credentials as a bona fide entrepreneur. Pray that no-one ever looks the company up on Duedil. And remember that, unlike real entrepreneurs, you’ll have plenty of time for self-promotion and schmoozing: play your cards right, and you’re almost guaranteed a pass into the TED/Davos/international thought leader jet-set.

An impressive start to your career, for sure. The only trouble is it’s not an entrepreneurial career at all. Yet since you keep calling yourself an entrepreneur, bright students see you as someone to emulate. And that’s the problem with NACUE: the nature of the organisation is such that, even if it doesn’t intend to, it holds up wantrepreneurs – people who prefer chatting about entrepreneurship, rather doing it themselves – as role models.

Building a profitable business is difficult, unglamorous and risky, whereas the global speaker circuit promises early and easy glory. NACUE is a slick operation, filled with smart, passionate people. And that’s what makes it dangerous. At an age where career ambitions are still unclear to many, and the traditional options so unpromising, the siren call of NACUE is strong. But students with aspirations of building sustainable, scalable businesses would be well advised to steer clear.

Starting a high-growth, potentially world-changing business has never been easier. So ignore the wannabes and the lifestyle entrepreneurs and just get on with it.