Savvy Middle East investor makes strategic investment in Twitter

By Xavier Forneris

More data on the front of valuation of social media companies, but this time for a private company: Twitter Inc., the microblogging service. It was reported earlier today (Dec. 19, 2011) that Saudi Prince Alwaleed bin Talal made a $300M investment in Twitter through his investment company, Kingdom Holding (95 percent owned by the prince).

The strategic investment was a secondary market transaction meaning that shares were purchased directly from existing shareholders/founders. Prince Alwaleed’s stake is estimated to be between 3% and 4%.

Several media have noted the irony of an investment by a Saudi prince in a social-media site that has served as an outlet for uprisings and dissidence in the Arab world.

I was interested in that aspect but also in the opportunity this gave to get a new valuation for Twitter. The investment gives Twitter a valuation exceeding $10 billion. Last August an $800M financing round led by DST Global valued Twitter at $8 billion.

Not bad for a company that has earned only about $45M revenue in 2010 and is forecast to earn about $150M in 2011 and $250M in 2012, according to an eMarketer article.

This type of “rich valuation” –for Twitter today and for the other social media and internet companies I have discussed in previous posts over the past two weeks- is precisely what leaves many analysts wondering whether a new “tech bubble” is in the cards.

And since Twitter is still a private company, little is known about its actual financials and its “market value” will be revealed once it goes public.

The initial public offering (IPO) is not expected before a year, maybe two. In the meantime, the investment gives Twitter time to pursue growth before going public.

Prince Alwaleed bin Talal is the richest Arab businessman and has holdings in Apple, News Corp, Citigroup, and General Motors. Reuters quoted him as saying:

Our investment in Twitter reaffirms our ability in identifying suitable opportunities to invest in promising, high-growth businesses with a global impact.

Twitter now has over 100 million active users who log onto the service at least once a month. A potential threat, which could take users away from Twitter, was the recent introduction of Google+, the social network service of Google.

Oh, one more thing: I tried but failed to say all this is less than 140 characters…Sorry.

Source / Read more:

Saudi Prince Alwaleed buys Twitter stake, Reuters US Edition, 19 Dec. 2011.

http://www.reuters.com/article/2011/12/19/us-twitter-alwaleed-idUSTRE7BI0EF20111219

Twitter’s Fit for a Prince, Wall Street Journal, online edition dated 20 Dec. 2011:

http://online.wsj.com/article/SB10001424052970204791104577107733831343976.html

Twitter Ad Revenues to Soar This Year, eMarketer Digital Intelligence, 24 January 2011:

http://www.emarketer.com/Article.aspx?R=1008192

Advertisements

Zynga’s first trading day (Dec. 16, 2011)

Credit: Zynga (Dec. 16, 2011)

By Xavier Forneris

In a previous post, on Dec. 13, I talked about the question of valuation for social media and other internet businesses. In that post I mentioned the imminent IPO by Zynga, maker of games for Facebook such as “Farm Ville” or “Mafia Wars”. Today was Zinga’s first trading day and I wanted to provide a follow-up on this. So how did it go?

Well, on the one hand, Zynga met its objectives which was to raise $1 billion through its initial public offering. It sold 100 million shares at a price of $10 each, i.e., at the top of the $8.50 to $10 range that was expected. But, on the other hand, after an early surge to $11.50 the share price (listed on NASDAQ under the symbol ZNGA) fell and closed at $9.50, or 5 percent less than the initial price. This was also in sharp contrast with LinkedIn’s first trading day after its own IPO, closing at $122.90 from a starting price of $45 per share.

Although the IPO gives Zynga a $7 bn valuation, the drop was significant but not entirely surprising: shares in Japan-based Nexon, which also makes games for Facebook platform and went public earlier, have already registered a 15 percent drop since Nexon’s flotation. The questions thus remain “are the valuations justified; are shareholders paying too much?” Zynga’s valuation of $7 bn represents a multiple of 6.8 times in relation to its annual revenue (for the 12-month period ending Sept. 30). In comparison the market capitalization of Electronic Arts, maker of games for mobile devices, was $6.9 bn on 12/15/2011 but this only represents about 1.8 times its one-year sales. Why does one have a multiple three times that of the other, when these firms seem fairly similar? Do investors have reason to believe that Zynga’s growth potential is three times bigger than Electronic Arts’?

Another way to answer the “Are investors paying too much?” question is to look at the stock price of companies operating in the same “social space”. Interesting data on this was offered in a Bloomberg Business Week piece on Zynga’s IPO also published today. The article quotes Kevin Pleines, an analyst at Birinyi Associates who wrote in a December 13 research note:

Sixty percent of the Internet or social-media companies that completed U.S. IPOs since 2010 are trading below offer price. Buyers of the shares at their opening trade in the public market have lost an average of 32 percent.

These numbers should give investors pause. No doubt, Facebook’s IPO in the new year will be watched very closely.

Source: Zynga Declines in First Day of Trading After $1 Billion IPO, by Lee Spears and Douglas MacMillan, for Bloomberg Businessweek, Dec. 16, 2011.

Valuation multiples in social media companies

By Xavier Forneris

In a recent post I discussed the issue of valuation for internet businesses in general and social networking companies in particular. I mentioned several examples of successful and not-so-successful initial public offerings (IPO’s) to illustrate the valuation issue. An IPO is not a requirement to make valid observations on the value of firms. When these companies are still private, what private equity, VC firms and other investors pay for a share of these companies, in private transactions with the founders (usually) allows to determine their overall value. The topic of social media valuation is not an acamedic but a very practical one. Implicit in my question is the concern that the public may be paying too much for a share of the social media boom and some have asked whether a new “internet bubble” reminiscent of the collapse of the dot-com market in 2000 was in the works.

And I’m sure many of you are familiar with the case of Skype, which eBay purchased in 2005 for $2.6 bn. At the time that represented 350 times Skype’s annual revenues. About 2 years later eBay took at $1.4 bn write down on its investment. In 2011, it was purchased by Microsoft for $8.5 bn, which meant a much more modest multiple (about 10, down from 350).

I must admit that I find the valuation multiples in the sector a little nerve-wracking. What matters is not the size of an IPO or how much a company is valued at, but what the valuation represents relative to the company’s annual revenue (sales). For example, when LinkedIn was valued at $9 bn after its successful IPO, this means that it was valued at 45 times its annual revenue of $200 m, or in “finance speak”, a multiple of 45. With annual revenue of $150m, Twitter‘s recent valuation at $7.7 bn means a multiple of 50. Zynga, the San Francisco-based maker of social games (such as CityVille and FarmVille) is due to have its IPO and start trading this coming Friday (Dec. 16) on NASDAQ. Zynga said it plans to sell 100 million shares at a price range between $8.50 and $10 per share. That would raise $1 bn, making it the biggest US Internet IPO since Google in 2004 (which I mentioned in my previous post) and giving the company a total market cap of $7 bn. For the nine months ended Sept. 30, Zynga claimed total revenue of $829 m.

If Facebook does an IPO in early 2012 that values the company at $100 bn, that would mean a multiple of 50, based on annual revenue of about $200 m. Based on its recent valuation at $75 bn, Facebook’s current multiple is about 37.5.

Looking at “typical” multiples, industry by industry, would help put things in perspective. Unfortunately, there’s no “commonly agreed multiple”. Different experts use different valuation methods. Valuation multiples vary from industry to industry; even businesses in the same industry sell for widely ranging multiples. Multiples also vary with the state of the overall economy, the stage of development of a company, or the reliability of its financial statements.

This being said, I want to quote a post by Michael Gravel on “Internet Application Software Business Valuation Multiples” (June 24, 2011):

A review of the 47 announced transactions within the Internet software and application software sector for the past eighteen months establishes a range (per individual announced deal) of business valuation multiples from .06x on the low side to 9.3x of gross revenues on the high side with the majority of the deals falling within 1.8x to 3.4x multiple of gross revenues.

These multiples, in an industry that is not too distant from the one we’re discussing, are much, much lower. But this does not necessarily mean that valuations for social media and internet firms are wrong or deceptive, nor that people behind these vlauations are over-optimistic or delusional. But it’s certainly justifies wondering whether investors are paying too much and whether such sky-high multiples can be sustained over a long period of time. Hence the concern, often raised in the blogosphere, of a possible “social media bubble”.

Another way of looking at this is to ask whether the social media companies will eventually realize the potential that investors have seen in them, in other words if their revenues will go up significantly, which would then bring the multiples to a more “reasonable” level. At least the companies I mentioned above have revenues. In his May 26, 2011 blog post “INFOGRAPHIC: The Soaring Valuations Of Social Networking Companies”, Kris Holt mentions two companies that have no revenues and a nice valuation (although not in the billions): Color Labs, valued recently at $41m and delicious valued between $15m-$30m, also with no revenues. Investors in these two companies are evidently betting that this situation will change and that they will be able to cash out.

I encourage you to read Kris Holt’s post on Scribbal, which includes a great infographic published by G+ (gplus.com). Below my post I provide the links for both Kris Holt’s post and for the original source of the infographic. I also welcome your views and comments on the tricky question of valuation for social media and internet businesses.

Sources / Read more:

http://www.imergeadvisors.com/2011/06/internet-application-software-business-valuation-multiples

http://www.scribbal.com/2011/05/infographic-the-soaring-valuations-of-social-networking-companies/

https://www.gplus.com/Editorial/Detail?seoName=INFOGRAPHIC-Is-there-a-Tech-Bubble&topicNames=Social-Media

http://www.minyanville.com/businessmarkets/articles/thestreet-zynga-zynga-ipo-internet-stocks/12/2/2011/id/38190

The Base of the Pyramid: An Overview of the Concept

By Xavier Forneris.

Yesterday, I wrote on a competition co-sponsored by IFC and the G20 on doing business at the “Base of the Pyramid”, or BoP. Some of you may wonder what is the base of the pyramid and if my eclecticism has now led me into Egyptian archeology.

The Base of the Pyramid –some call it the “Bottom of the Pyramid” but I prefer the term ‘base’-, or BoP, is simply used to describe the very large segment of the population who lives (or survives) on a low income. If we organize the world’s population according to income levels, it takes a pyramid shape, with few people at the top of the pyramid (mostly living in developed economies) and a majority of people at its base (mostly living in developing economies), as represented here:

There is no consensus on how many people live at the BoP because economists, governments and development institutions define poverty in different ways. Depending on whether one places (rather arbitrarily) the poverty line below $1 a day, $2 a day, or $10 a day, the BoP will include more or fewer people.

A 2005 World Resources Institute (WRI)/International Finance Corporation (IFC) study estimated the BoP population at about 4 billion people by defining the BOP population segment as those with annual incomes up to $3000 per capita per year (2002 PPP).

But whether it’s 3, 4 or 5 billion people, everyone agrees that the BoP hosts a very large population, mostly residing in Africa, Asia, Eastern Europe and Latin America.

The term is not new. According to wikipedia the term was used by President Franklin Roosevelt in a 1932 radio address during which he stated:

These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power…that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.

The term resurfaced at the end of the 1990s when two professors of management and corporate strategy, the late C.K. Prahalad (Michigan’s Ross School of Business) and Stuart Hart (then with the University of North Carolina’s Kenan-Flagler Business School) published what is viewed as the first paper on the BoP: ”Strategies for the Bottom of the Pyramid: Creating Sustainable Development” (1999). Prahalad (who is known for his HBR paper on “The Core Competence of the Corporation” co-authored with Gary Hamel) and Hart are often considered the “fathers” of the BoP theory and essentially wrote about the BoP as a new strategy for multinational companies.

Before them, many development economists focused on the same socio-economic segment, without using the term BoP. For instance, when Hernando de Soto, the famous Peruvian economist (not to be confused with the Spanish conquistador!), wrote about “dead capital”, i.e., the $10 trillion in informal assets that are in the hands of the world’s poor (e.g., land without legal property titles) but cannot be mobilized to borrow money from financial institutions, he was concerned with the lowest echelon of the global socio-economic pyramid. And when Muhammad Yunus pioneered micro-credit with Grameen Bank in Bangladesh around 1983, what was he trying to do if not expand access to credit for people at the base of the pyramid?

As a concept, the BoP has gained traction with both the business and development communities over the past decade.

Multinational corporations which for a long time have been focusing on the middle and the top of the pyramid, i.e., people who could afford buying their products and services, are seeking new markets in a context of global economic crisis and this quest led them to pay attention to the BoP. What is interesting is that they are not only looking at the BoP as a source of new customers but also as a source of supply, partnership, and innovation. This is part of the notion of “inclusive business” (IB) which I will address in a forthcoming post.

And development economists and institutions whose primary concern is poverty alleviation are also very interested in the BoP approach for they have been looking for ways to offer targeted support to those at the base of the pyramid, the ‘poorest of the poor’.

The BoP as a framework thus offers a unique opportunity for these two worlds (the private sector, on the one hand, and development institutions, on the other) to collaborate and search for solutions to their respective challenges.

When I was introduced to the BoP concept in 2009 during a seminar given to our MBA class at UNC by prof. Ted London (University of Michigan’s Ross Business School), I was struck by how he summarized the key challenge for he private sector and development instiutions in one sentence:

How can business motivations for growth and profits be aligned with the development’s community’s effort to alleviate poverty?

I let you reflect on this question. In addition to further explaining the concept of Inclusive Business, I’ll prepare a list of ‘must-reads’ for those of you who are interested in further exploring the concept of BoP.

Sources:

Chindia : The Dragon vs. the Tiger, or the rise of two giants

By Xavier Forneris.

Among the “BRICS” – a group of leading emerging economies comprised of Brazil, Russia, India, China, and South Africa – two countries stand out for their large population (of well over 1 billion each), rising economic clout and rapid growth: India and China, or Chindia, as the pair is now known. An Indian politician, Jairam Ramesh, Minister of State for Commerce, Government of India, claims to have coined the term Chindia in 2005 to evoke the simultaneous rise of China and India and their fierce competition for global economic dominance. Yet, the countries could not be more different. Even their focus seems to be placed on different objectives. While India’s energy appears concentrated on outpacing China’s rate of growth, China seems intent on capturing the title of “top global economic power” from the U.S.

At this stage, I have to put a few numbers on the table, just give a sense of the relative size of Chindia’s economies to the rest of the world. Please don’t sue me over these numbers. Depending on the source and method used to compute GDP, the numbers and relative positions in the ranking can vary. This particular dataset is from the World Factbook.

We’re a culture fascinated with ranking and benchmarking, so let me indulge by giving you the “Top 10”, ie., the 10 largest economies in 2011 (by Purchasing Power Parity – or PPP- GDP): 

Rank Country Population GDP/PPP
1 United States  312 million $14.66 trillion
2 China   1.34 billion $10.09 trillion
3 Japan  128 million $  4.31 trillion
4 India    1.21 billion $  4.06 trillion
5 Germany    82 million $  2.94 trillion
6 Russia  143 million $  2.22 trillion
7 U.K.    62 million $  2.173 trillion
8 Brazil  192 million $  2.172 trillion
9 France    66 million $  2.145 trillion
10 Italy    61 million

$  1.774 trillion

We can see that China’s economy is not very far behind the US, and that India’s economy is already larger than Germany’s or Russia’s, but still less than half the size of China’s.

Several economic projections I saw suggest that India and China are likely to become the two largest economies by 2050 and that China should seize the top spot (overpassing the US) around 2017-2020.

I thought it would be interesting to compare the two giant countries, India and China, in an effort to determine whether one is best positioned than the other for future global leadership. But I will not compare their growth rates. Like Amartya Sen, the Indian Nobel Prize in Economics, I find the debate on which of the two countries has the higher growth rate a little silly. Both countries still face many challenges incluing access to education and health, infrastructure, and inequality.

Commonalities

The size of the domestic market and the relatively low-cost labor  are well known commonalities. A more strategic one is their thirst for resources. Both India and China will require enormous resources to fuel their growth and feed their enormous population. The demand for natural resources (such as as oil, gas, coal, copper, bauxite, aluminum, iron and steel) but also for industrial equipment and food products will be here for a long time; and they also create opportunities for developing countries that produce these resources. Africa, for instance, has become a more important source of natural resources for China. As the global resource pool is finite, this thirst from resources will inevitably create tensions with Europe and the U.S. A second less discussed commonality is the emergence of Chinese and Indian MNC’s as global players and even global leaders. From FDI-importing countries (China more than India), the two nations have become sources of FDI.

Differences

India is a democracy, perhaps not a Jeffersonian one, but a democracy nevertheless. China is generally considered as less advanced and open politically than India. There are, however, clear advantages to the discipline that China can impose to its population and bureaucracy. Implementing deep policy reforms or massive infrastructure projects is easier in an autocratic regime than in a Western-style democracy where all sorts of resistance may impede the process. But it would be a mistake to think that everything gets decided in Beijing by a handful of leaders.There is in China an increasing involvement and participation of local levels of government in decision-making, which explain why the Chinese political system is often described as one of “pluralism within a single party system”.

The economic models are also very different. India’s model relies on the private enterprise whereas China practices a form of “State Capitalism”, with strong government backing of large state-owned enterprises (SOEs). At some point in their development, companies such as Haier, Lenovo, China Development Bank, China Mobil, Petro China, among others have all benefited from this strong government backing. Even a fully private company such as the telecom infrastructure giant Huawei – which I had the opportunity to visit in Shenzhen – seems to have benefited greatly from its close ties to the Chinese government. And its ownership structure remains quite opaque.

China has significantly better Infrastructure and logistics than India and has made a very smart use of the “Special Economic Zones” (SEZ) to develop certain provinces or districts and test economic reforms before extending them to the entire nation. Shenzen is one example of such utilization of SEZ status.

China’s economic growth is largely driven by FDI, exports, and manufacturing; whereas India’s growth seems driven by domestic consumption, capital markets, and IT/Services. I often hear that “if China is the world’s workshop; India is its back-office”. As convenient as this statement is, it is a bit of an over-simplification. The services sector is rapidly developing in China and, conversely, India’s economy can not be reduced to outsourcing.

Demography, on the other hand, is an area where India seems to have a significant advantage over China. China’s population is rapidly aging. This could cause its impressive rate of economic growth to reach a plateau, as has happened in Japan and several European nations. Although China’s fertility rate has been below replacement level for almost 20 years the “One Child policy” is still in place. But this might be changing; I was told that the Shanghai province would have renounced this policy and would already be encouraging couples to have more than one child. Yet, some demographic studies suggest that China’s work force will peak in absolute terms in only 4 years before dropping. In contrast India is a much younger nation. According to demographic studies cited in a JP Morgan Chase study (2007), 58% of the Indian population will be under 29 years old by 2015 vs. only 33-35% in China. This is a significant difference and, again, this one seems to favour India.

Finally, the integration of local firms into the “global business world” should also occur very differently. It is reasonable to assume that India’s businesses will be more easily integrated in the global economy, through large acquisitions of eminent “Western” companies with the technology, the manufacturing capability, and the other assets that Indian companies need. Suffice to cite the acquisition of Arcelor by Mittal Steel or of Corus Steel by the Tata group, among many other large-scale acquisitions of Western firms by Indian companies. In contrast, Chinese companies are facing more obstacles in in their attemps to acquire foreign companies, particularly in the U.S and when technology or intellectual property rights are involved. Several attempted Chinese acquisitions failed because of strong political resistance. Two examples are Haier’s attempt over Maytag and CNOOC’s plan to acquire Unocal. This last argument is not without flaws: a case in point being Lenovo’s success in acquiring IBM’s PC division. But a commonly held view among many observers of Asian business is that growth for Chinese companies will be more organic and will come less from international acquisitions than would be the case for Indian companies.

Conclusion

Given the two countries’ impressive growth and enormous markets, there is little doubt in my view that Chindia will play a central, expanding and perhaps or probably dominating role in the global economy. But I will not go as far as some who declare that “The West is finished”, a form of “neo-Spenglerism” thinking. And I also think that the focus on growth rates in the two countries is excessive and probably misplaced. Economic history shows that growth can not last for ever and, as the adage goes: “The bigger the booms; the more spectacular the bubbles and devastating the busts”. Also, both countries would be wise to pay more attention to the quality of the growth, how to reduce the inequality gap, and how to improve access to education and health, transparency, and the environment. All these things are needed for sustainable growth. 

Read More:

Amartya Sen’s sentiment about the excessive focus on growth rate was well summarized in a recent FT article: Is India growing faster than China? Financial Times, April 18, 2011. See:  http://blogs.ft.com/beyond-brics/2011/04/18/is-india-growing-faster-than-china/

Jairam Ramesh, “Making Sense of Chindia: Reflections on China and India” (India Research Press, New Delhi; May 2005)

On Spengler: http://en.wikipedia.org/wiki/Oswald_Spengler

BOP News: G20 and IFC launch competition

By Xavier Forneris

The purpose of my blog is not to promote the activities of the organization where I work – IFC ( a member of the World Bank Group)- but I’m starting a new series of posts on doing business at the “Base of the Pyramid” (BOP) and IFC happens to be the co-sponsor of an interesting competition launched in that field, last month, by the Group of 20 (G20). It is an online competition to find the best examples of ventures in developing countries that provide critical goods, services, and livelihood opportunities in financially, environmentally, and socially sustainable ways to those living at the base of the pyramid, what I will refer to in the forthcoming BOP posts as ‘Inclusive Businesses’. Launched as part of the G20 Leaders Summit in Cannes, France on November 3-4, 2011, the G20 Challenge on Inclusive Business Innovation seeks to recognize businesses with innovative, scalable, and commercially viable ways of working with low-income people in developing countries. Winners of the competition will be announced in Mexico (country hosting the G20 meeting) in June 2012. Stay tuned.

Will Harvard Business School succeed in reinventing its legendary MBA?

 By Xavier Forneris

Harvard Business School (HBS), one of the most prestigious producers of MBA’s worldwide, has introduced a big change to his curriculum. As reported in The Economist (12/3/2011), the “Field Immersion Experiences for Leadership Development” whose acronym is, conveniently, “FIELD”, is supposed to become as important as the well-established case method that Harvard has pioneered and was adopted by most business schools. It applies to the new cohort of 900 full time MBA’s who started their two-year program at HBS last summer.It apparently consists of 3 components, all introduced in the first year (the second year part of the FIELD is still under development):

  1. Team-building exercises. Each student is expected to lead a team for a specific project, with the objective of learning how to collaborate, give and receive feedback. 
  2. Field work: each student would be sent to a firm, among 140 in 11 countries, to work there for a week, in a sort of “structured learning by doing”. HBS alumni would certainly be mobilized to host students in their respective companies and HBS has vast network of alumni, dispersed globally.
  3. Each student will receive $3,000 in seed money and have 8 weeks to launch a small business. A vote will then take place among all students to select the most successul or promising venture(s), that will receive more funding.

Looking at these three items, my first observation was “Why, they didn’t have team-building exercises yet”? In my own MBA program, at the University of North Carolina’s Kenan Flagler School of Business, team-building was one of the first things we did, at the outset of the program. I’m surprised that HBS MBA’s didn’t have that until now. In fairness, I don’t have enough detail about what each item really entails so it’s difficult to judge how innovative that is. Also, my MBA was for Executives and the article is about the full-time MBA program. But I would be surprised if full-time MBAs at UNC do not have team-building exercises already built in their curriculum for year 1.

The Economist raises a good point when it says, talking about item #2 “It is unclear how much the one-week working assignments will achieve”. I fully agree. The idea of being embedded in company, whether a domestic or overseas one, is a great concept, but shouldn’t they make this a longer experience? The Economist quotes a management guru, Pankaj Ghemawat:

Litterature suggests that an immersion experence needs to be at least 2-3 week experience and be backed up with time in the classroom”.

Clearly HBS must have access to this research. It often is one of the leading and most prolific sources of management literature. By the time you get to China or India, get over jet lag, orient yourself in the company, it’s basically time to come home…I’m slightly exaggerating here, and it’s true that a lot of ground work preparation can be done over the course of several weeks before the actual student’s departure. Yet, one week seems very short, and with the pressure of the MBA course requirements one can question how much time the HBS students will actually devote to this preparation.

As The Economist also points out, it remains to be seen how item # 3 (seed money for start-up) is different from the traditional business plan competition. I don’t have the details but the difference may be the actual start of a business. In a traditional business plan competition, one does not actually have to start a business before the competition; if you win, you can then use the prize money to implement your project. Here, it seems that students will be required to actually start a business, not just dream one on a business plan, and do so in a relatively short period (2 months). To me, it seems to be the most innovative aspect of the FIELD initiative, the one I would have enjoyed doing if it had been part of our curriculum. What is often lacking in many MBA programs is the practical application of what you are learning in class and also a focus on entrepreneurship. There are some MBA specializing in entrepreneurship but it is my impression that most MBA’s are really designed to teach you how to operate within, manage and grow an existing business rather than how to start your own.

Finally, The Economist article explains that the initiative was approved by faculty, in a vote that was apparently not very enthusiastic, and only for a 3 to 5-year period to “experiment”. Finally, it says that the experiment should add 10 to 15% to the cost of the course, borne by HBS, at least in the beginning.

 Source/Read more: The Economist, Dec. 3, 2011