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8 The Role of MIT Alumni Companies in the U.S. Economy For some time, anecdotes and research have indicated significant entrepreneurial impact from MIT. In 2003, along with professional staff from MIT, the authors set about to attempt to quantify through surveys and research the actual economic impact of entrepreneurship among MIT alumni. The results presented here—the first disclosure of this research— are supplemented with some detail on the history, institutions, and culture that have combined to influence entrepreneurship at MIT. In 2001, MIT sent a survey to all 105,928 living alumni with addresses on record. MIT received 43,668 responses from alumni. Of these, 34,846 answered the question about whether or not they had been entrepreneurs. A total of 8,179 individuals (23.5 percent of the respondents) indicated that they had founded at least one company. In 2003, we developed and sent a survey instrument focused on the formation and operation of these firms to the 8,044 entrepreneur respondents for whom we had complete addresses. Of this group, 2,111 founders completed surveys. The database reported on in this report was created from these surveys, as well as additional detailed analyses, including verification and updating of revenue and employment figures from the 2006 records of Compustat (public companies) and Dun & Bradstreet (private companies). The Appendix provides further details on the survey and estimation methods. Based on our extensive data collection and analyses, we conclude that, if the active companies founded by MIT graduates formed an independent nation, conservative estimates indicate that their revenues would make that nation at least the seventeenth-largest economy in the world. A lessconservative direct extrapolation of the underlying survey data boosts the numbers to some 33,600 total companies founded over the years by living MIT alumni, of which 25,800 (76 percent) still exist, employing about 3.3 million people and generating annual worldwide revenues of $2 trillion, the equivalent of the eleventh-largest economy in the world. For conservatism of our projections, we have deliberately excluded from the database companies in which the MIT alumnus founder already had died, even if the company still survives, such as Hewlett- Packard or Intel. If the founder is still alive, we have excluded from our database those MIT alumnifounded companies that had merged with or been sold to other firms prior to 2003, such as Digital Equipment Corporation, which had peak employment of 140,000 people prior to its merger with Compaq in 1998. Nor do the numbers include MIT alumnifounded firms that had closed prior to our 2003 survey. These estimates similarly ignore all companies founded by non-alumni MIT faculty or staff. In addition, we do not examine the impact of MITgenerated science and technology on the overall innovation and competitiveness of government and industry beyond alumni-founded firms. Clearly, entrepreneurship likely has benefited from additional spillovers from the scientific and non-scientific advances emerging from MIT, its faculty, staff, and graduates. Thus, we attempt to portray only an aspect of MIT’s entrepreneurial impact. Companies founded by MIT alumni have a broad footprint on the United States (and the globe). While more than a quarter of these active companies (projected to be 6,900) have headquarters in Massachusetts, nearly 60 percent of the MIT alumni companies are located outside the Northeast. These companies have a major presence in the San Francisco Bay Area (Silicon Valley), southern California, the Washington-Baltimore-Philadelphia belt, the Pacific Northwest, the Chicago area, southern Florida, Dallas and Houston, and the industrial cities of Ohio, Michigan, and Pennsylvania. ENTREPRENEURIAL IMPACT: THE ROLE OF MIT
The Role of MIT Alumni Companies in the U.S. Economy Table 1 Estimated Employment and Sales Data for All Active MIT Alumni Companies Jobs Percent of Companies Median Employees Median Sales (Millions) Estimated Total Employees Estimated Total Sales (Millions) More than 10,000 0.3% 15,000 1,523 1,339,361 1,389,075 1,000–10,000 1.8% 1,927 308 1,043,932 235,532 Less than 1,000 97.9% 39
Page 1 and 2: Entrepreneurial Impact: The Role of
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Page 5 and 6: Table of Contents An Evolving MIT I
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Page 15 and 16: Percentage of Entrepreneurs 20 18 1
Page 17 and 18: Number of Firms 50 45 40 35 30 25 2
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Page 21 and 22: Percentage Global Markets 80 70 60
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Page 25 and 26: Percentage of Revenues 60 50 40 30
Page 27 and 28: Percentage of Capital Coming from E
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Page 31 and 32: MIT—Its Unique History, Culture,
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Page 53 and 54: The I-Teams model, initiated by Ken
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Table 16 Primary Universities Doing
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Recent MIT Institutional Broadening
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$20 million from Jaishree Deshpande
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entrepreneurship, media, and even b
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lectures, facilitated by direct “
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epresented in the survey responses
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Notes ENTREPRENEURIAL IMPACT: THE R
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ENTREPRENEURIAL IMPACT: THE ROLE OF
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