At Duke, I&E means no more business as usual

The Melissa & Doug Entrepreneurship Program gives students a chance to innovate and make change as it challenges some of the university's ways.
December 15, 2016

At two in the morning, Becky Holmes ’15 straightens her aching back and shoulders, rounded for the past few hours over the too-low steel of her food prep table, and starts to dance. The lime walls and stainless steel racks of the borrowed commercial kitchen space in Raleigh are a silent and familiar audience: The dance major spends at least sixty hours each week in their company.

When the music stops, Holmes resurrects the motivational YouTube videos she plays on loop when she’s preparing the raw vegan dessert bites she has made her business and her life. The twenty-three-year-old CEO of Ello Raw has a few more hours to go before hand-delivering an order, and she needs the voices in the videos to drown out the one in her head that’s saying, “If I were working a nine-to-five, I'd be in bed right now.”

It’s the words of the harshest video clips that really keep her going: the ones that admonish the quitters, that verbally shake the doubters. “Stop being a lazy, bum-ass person that’s full of excuses sitting around on the pity potty coming with every excuse in the world as to why you’re not winning,” admonishes a cold voice from a favorite montage. “I will,” Holmes tells herself.

She still needs to finish rolling 2,000 balls of cashews, gluten-free oats, coconut, coconut oil, raw honey, and cacao nibs into ping pong ball-sized bites, package them in boxes she specially orders from California, tuck them with black tissue paper, and pen handwritten thank you notes to her customers.

Soon, Holmes will struggle to keep her eyes open as she climbs into the giant gold 2008 Chevy Equinox her aunt handed down when Holmes graduated from Duke. As she battles its wonky transmission and her fatigue, her eyes will sweep over the mass of Post-it notes cascading down the edge of the windshield. Her own motivational eyesore.

“Fight Mediocrity.” “Go! Now! Fast! Go!” they say in straight lines of black Sharpie. “You will suffer pain from either regret or discipline. Which do you want?”

Perhaps her discipline isn’t a choice so much as a trait. Melissa Bernstein ’87 calls it “grit,” and she thinks it is one of the key attributes entrepreneurs need to succeed. That tenacity is a lesson she and her husband, Doug—founders and owners of wildly successful toy company Melissa & Doug—are passing down to a handful of Duke students each year as part of a highly experiential program that supports student-entrepreneurs as they launch their own ventures.

The Melissa & Doug Entrepreneurs program is part of the university’s efforts to tap into one of the fastest-growing areas in higher education. College students increasingly demand opportunities to innovate, and they expect their universities to provide the skills and knowledge that will get them started.

Millennials are keenly attracted to the appeal of an entrepreneurial life. They are young; their creativity is peaking; many have the support of their families; and they are willing to take risks. Entrepreneurship may not immediately generate the enormous salaries of a consulting or finance career, but it offers a host of other draws: the chance to be your own boss, to make your own hours, and to forge a career path independent of cubicles and coffee breaks. “We want more freedom, flexibility, and to feel like we’re making an impact,” says Holmes.

About four out of ten students in the U.S. want entrepreneurship education, according to a January 2016 Gallup poll. Universities are obliging. A December 2015 New York Times article discussed elite institutions’ engagement in an “innovation arms race,” fueled by the demands of students who hear the siren song of Silicon Valley.

Just two years after Duke created its Innovation and Entrepreneurship certificate program, 200 students have enrolled, making it the second-most popular certificate offered. The five available courses are all “wildly oversubscribed” according to vice provost and director of Duke Innovation and Entrepreneurship Eric Toone. “The students sure get it. They know what they want,” he says.

With these investments in student entrepreneurship, Duke is answering a call and setting itself up to be the proud institutional parent of the next success story. Yet the new arena also is challenging the university. In this new context, what constitutes success? Is it measured in investment, revenue, or buyout deals? Or is it the knowledge that comes from the experience—the ups and downs, the questions and fears, the problem-solving and self-motivation? And, if teaching entrepreneurship is really about learning, is failure a part of the lesson?

Holmes was raised on the processed and canned food her family brought home from shelters and food pantries in Lancaster, Pennsylvania. She remembers the meals her mom used to cook—usually lasagna or some other pasta that could go a long way, topped with water-thinned tomato sauce to turn a few meals into many. They added water to a lot of things when she was a kid. But Holmes remembers their penny-pinching with a smile, like the cabbage soup she knows is a poor man's dish but that fills her with warm memories of her French Canadian grandma.

None of the people she knew seemed to have the motivation or tools to escape their familiar lives of struggle and stagnation. Holmes knew she had to be the one.

In high school, Holmes was the bubbly class president, student council representative, ESL tutor, and rugby and soccer player. She won a full scholarship to Duke, where she followed her heart to a declared dance major but enrolled in economics classes, thinking she might go into consulting or investment banking. She started going to networking events and remembers one where she walked through the door into a sea of black suits. Holmes looked down at her green sweater and realized she did not belong there, for more reasons than fashion.

An education and social-justice class in her freshman-year Focus program got Holmes thinking about her responsibility to impact the world and help others. She started taking classes that focused on entrepreneurship. “I realized I just have this passion to make things happen,” she says.

Her interests were developing at the right time, as Duke was then beefing up its Innovation and Entrepreneurship offerings and the Melissa & Doug program was seeking its second cohort of fellows. Now three years old, the program has already attracted students to Duke; two members of the Class of 2020 specifically cited it as a reason they chose to come to Duke.

Howie Rhee, the program’s director, says about forty students apply every year; a selection committee interviews the top candidates for the dozen or so spots based on applications and interviews. The successful applicants get experience that comes with a $5,000 summer stipend and intense guidance to help them launch a business.

Holmes was accepted with an idea related to her dance major, and the program kicked off, as it does each year, with a spring-break trip to visit the Bernsteins at their multimillion-dollar Wilton, Connecticut, home for pitch practice and one-on-one feedback with the couple and their senior staff. Holmes felt tears well up in her eyes when they pulled into the driveway and the mansion came into view. It was a glimpse into what was possible. “It was just one of those moments you see what the future could be like,” she says.

The group also met with mentors in New York to kick around ideas and make connections but also get a reality check. “This was the first place where the rubber hit the road, and we were like, ‘Let’s make this happen.’ ”

Throughout the year, Rhee matches Melissa & Doug fellows with up to several dozen mentors drawn from a seemingly endless mental database who can help them with specific challenges. “I think of it as extremely custom education,” says Rhee, pulling up a color-coded spreadsheet that lists mentor-fellow pairings. (Bernstein jokingly calls him “Howie Rheestein,” since, she says, his matchmaking skills rival those of a Jewish mother.)

Rhee also asks fellows to write reflective journal entries and participate in weekly coaching sessions by phone with him during their “Melissa & Doug summer,” when qualifying students receive the stipend that allows them to turn down the prestigious internships and part-time jobs and focus—completely—on their idea. “There’s so much pressure to get a job. All their friends are going into investment banking or premed,” says Rhee. “By being part of a prestigious program and getting $5,000, we’re telling them, ‘You can focus on this.’ ”

Not everyone selected makes it to the summer funding and on to Demo Day, the final milestone of the program when fellows pitch their products to potential investors. Those who can’t prove market value are asked to leave. Some leave on their own.

That’s okay, Rhee says. He only wants the most driven students. To remain in the program, students must be hitting their startup milestones. Three students left the 2016 program because they couldn’t quite pin down their idea, did not make enough progress, or decided to take an internship offer.

Bernstein says a few of the students who make it to Demo Day are just résumé builders. But many are “off the charts”—willing to take advantage of the program in ways that sometimes surprise even her. One fellow in the 2015 Melissa & Doug cohort asked whether he could call Bernstein weekly to talk about his venture. She never thought he actually would. “There was not a week that he didn’t call for like an hour, just eating up every ounce of advice he was given,” Bernstein remembers.

That’s the kind of student-entrepreneur she wants in the program: those who are going to use the experience to find their passion and soak up the opportunity, whether or not their business succeeds. “I hope we can get these kids to look inside themselves and find what they want to do,” she says.

Holmes switched her idea partway through the program, and set out to create a plant-based cream cheese. “I never went into [the program] thinking I need to be the next Facebook,” Holmes says. “That wouldn’t keep me going at three in the morning.” But nutrition and healthy living had become her passion.

She had switched to a healthier diet after a breakup during her sophomore year left her yearning for control and positivity when it felt like everything was falling apart. She started going to bed early and waking up at 5 a.m. to hit the gym, eating mostly raw, vegan food and getting her fitness instructor certification. She earned a certificate in living nutrition. She was feeling really good. Even so, slaving over batches of cream cheese in her home kitchen didn’t feel quite right.

So when Holmes sampled vegan donut holes on a trip to the beach during her Melissa & Doug summer, it was an “aha!” moment. Her brother-in-law—who routinely chowed down on burgers and soda in between cigarettes—loved them. “You should make these, Becky,” he said.

After the strike of inspiration, Holmes anxiously called Rhee with her new idea. He told her to run with it.

Holmes developed her vegan dessert bites in three flavors and had friends taste-test to refine the recipes. Rhee made her call a few potential mentors each week over the summer and report back on her progress. For the first few calls, Holmes was so nervous her hands would shake inside the bedroom she’d locked herself in as she silently rehearsed the introduction, four questions, and closing she’d written down to get her through the exchange.

By summer’s end, Holmes had robust market research, a product she was proud of, and no more fear of cold calls. “I needed that to become an entrepreneur," she says.

She had especially good rapport with Tom Thekkekandam J.D. ’10, M.B.A. ’10 of Tom and Jenny’s caramels, and she offered to help him wrap caramels a few hours a week. They talked business while they worked, and Thekkekandam helped her think through concrete steps she needed to get her product to market. He gave her advice about finding kitchen space and about focusing on the product instead of the packaging. Finally, Thekkekandam suggested Holmes sign up for a farmer’s market to just get product into people’s hands to try. The real test was at hand: Did people actually like what Holmes was staking her career on?

When Holmes set up her booth at the farmer’s market it was pouring rain, but 95 percent of tasters ended up buying the product. “It went insane,” she says. “That’s when I knew: I have something.”

As the afternoon heat was starting to dissipate, Cade Netscher ’16 ran through the wooded trails around Duke, thinking about failure. One statistic estimates that 90 percent of start-ups fail. Which means that Neurun—the augmented-reality product for runners he’s trying to get off the ground—was likely to be one.

The neuroscience and philosophy major was graduating in a few days. His family, from Eureka, Missouri, would be there to watch him walk across the stage. He breathed smoothly, his pace quick and easy. Netscher was running barefoot; he did that daily at Duke, clocking about seven miles. It made him feel connected to nature and to life around him. It had been years since he had to think about the mechanics of running—the cadence and length of his stride, the alignment of his knees, the position of his neck.

Neurun gives runners a way to visualize racecourses before they reach the start line, allowing them to mentally prepare. The idea for it came to Netscher when, during his “Neuroscience of Movement” class, he learned the impact that visualization had on neuronal firing in the brain. It solidified after he shut down during a half marathon his body could handle but his mind could not. He was running the fastest he’d ever gone—a 5:40 mile pace—and was in third place with the next guy two and a half minutes behind him. Then, he just lost it. He slowed to barely more than a walk. His resolve was gone.

His mentor, Leonard White, an associate professor of neurobiology and faculty network member of the Duke Institute for Brain Sciences, later told Netscher that his unprepared brain overcame his physical ability when it couldn’t compute how much farther he’d have to go.

Netscher started working on something that would have helped his brain train for the Bull City half marathon. He co-created Neurun, initially conceived as a headset that used virtual reality to help runners visualize race courses. Athletes train themselves so specifically for their sport that football players practically look like a different species than swimmers, he says. They have maxed out on physical preparation. But the brain? That is a new frontier. The next advances in sports training will be mental.

Netscher was accepted as a 2016 Melissa & Doug fellow. The first milestone he agreed on with Rhee and the program’s two coaches seemed easy: He’d film the Tar Heel 10 Miler a few days before the race and turn it into a virtual-reality course.

Unfortunately, the GoPro cameras Netscher had attached to his bike with a rig he had created using a 3-D printer were too heavy and kept sinking and falling. “It was just terrible,” he says. With the race the next day and the milestone unmet, he worried he would be kicked out of the program or denied the funding he was counting on to work on Neurun during the summer.

He wasn’t, and Netscher continued to work on his product, testing out different camera configurations and eventually drone technology. He pitched Neurun to investors at the 2016 Duke Global Entrepreneurship Showcase in Seattle alongside seven older entrepreneurs. He was the only undergraduate to go before the judges and an audience poll, and he ended up with a second-place finish in the audience poll.

Now he has a team in California helping him develop a mobile app that will allow runners to download different roads and play high-definition video of points along a course; a New York-based videographer is helping him film the races.

Netscher spent his Melissa & Doug summer in New York, getting feedback from runners and race administrators who tested Neurun, and trying to raise money. He raised $60,000. He got positive feedback, but the pressure of meeting deadlines, managing team dynamics, and building long-term relationships with investors are constant stressors. “I’ve already accepted that this could be a failure, and visualized a reality where this didn't work out,” Netscher says. “But look how much I will have learned.”

The Melissa & Doug program is too young to say how likely its graduates are to produce successful business ventures, although several standout successes from just three cohorts augur well. But the program reveals a shift in higher education—one that allows failure to become a teaching point instead of an embarrassment. Learning from failure is a necessity for young innovators, who must be willing to test things and take risks. Traditional academic settings have rarely recognized or rewarded that process. But things are changing.

At Duke, the Innovation and Entrepreneurship Initiative is entering this failure-based approach into the undergraduate course bulletin with the upcoming course “Building Global Audiences,” which tells prospective enrollees to “expect to struggle” as they study and execute digital strategies. “We’ll learn as much from our failures as we will from our success,” the course bulletin promises.

The Innovation and Entrepreneurship capstone course asks students to reflect on what worked and, just as important, what did not.

So as much as the faculty, mentors, coaches, and benefactors involved in the Melissa & Doug program want brilliant successes, they recognize the learning that also comes from falling short. “A lot of the learning comes from the barriers that you face and trying to overcome them,” says Rhee. “I think of this as a very impactful way of learning.”

Netscher has had to shift course several times. When he realized virtual reality made runners motion-sick. When he discovered the average price people are willing to pay for it is zero dollars. When he got turned down for funding he really needed to keep improving his product before Demo Day.

As the only graduating senior in the 2016 Melissa & Doug cohort, Netscher found that his summer didn’t end with the familiar return to classes and dorm rooms and weekly coaching over pizza. It ended with a new life as an entrepreneur. No safety net. No guarantees. No meal plan.

His family is “super nervous.” But Netscher tells them this is the best time for him to try. Later, maybe he’ll have a job, want to start a family back in Missouri. Now is the time to learn, to try, maybe to fail. “There is pressure, but it forces me to be more creative, because that possibility of failure is so much closer,” Netscher says. “You have to be driven enough that you want your idea to manifest itself no matter the cost.”

When Bernstein and her not-yet husband set out to produce educational children’s material in 1987, they had little more than entrepreneurial spirit.

“It wasn’t like we had this wealth of mentors just wanting to talk to us,” Bernstein says. “We did it on our own and made horrible mistakes time after time. The only reason we didn’t [fail] is that we refused to. In business, that’s the only thing that really separates. Because there’s always someone with a better idea. Doug and I always said that: We will win on tenacity and perseverance.”

The company has since launched more than 5,000 products and this year brought in around $350 million in sales within a competitive industry.

“We started thinking about the challenges and hurdles and thought, if there’s anything we can do it would be to help people who are where we were twenty-eight years ago think through some things and not make the same mistakes we made.”

When they first looked into fostering an entrepreneurship program at Duke in 2011, Bernstein says the university wasn’t quite ready for them. “There was something missing at Duke, I really felt that it just wasn’t that accommodating to an entrepreneurial mindset,” she says. That soon changed. “The timing was amazing—I was getting in literally on the ground floor of this whole change going on at the school.” Later that year the Bernsteins funded the Cube (formerly InCube), a Selective Living Group where students interested in entrepreneurship live and ideate together.

In May 2012, philanthropist, financier, and trustee David Rubenstein ’70 donated $15 million to get Duke’s Innovation and Entrepreneurship initiative off the ground. When Toone asked what Rubenstein expected to be done with the money, Rubenstein said he wanted Duke to be recognized nationally as a leader in entrepreneurship within five years. “I think about that conversation every single day,” Toone says.

So in 2014, the Bernsteins worked with Toone and Rhee to create the Melissa & Doug program. “We really honed in pretty immediately on helping young people who have the germ of an idea get from A to B and figure out how to advise them and mentor them and hopefully inspire them a little on their paths,” says Toone, “so they don’t feel so alone, and by the end of our program have some more of the skills and drive and determination to really make it happen.”

The program, and other Innovation and Entrepreneurship initiatives, is a response to changing student interest, and by responding, the identity of the university and its role in education is changing, too. “The ground has shifted under our feet,” says Toone. “The recent reports of $1.3 trillion in student debt and the Massive Open Online Course [MOOC] movement—these things can be disruptive to a business model that charges kids $60,000 a year to go to school. For the university to be relevant in the twenty-first century, for it to earn society’s support, it's going to have to evolve.”

Toone says Duke will have to expand, at its core, away from what a university has traditionally done—namely the creation of knowledge—into a place where ideas are not just grown but translated into goods and services that do good in the world. When done correctly, this approach to entrepreneurship means more than investing in the next cool app to hit Google Play; it reflects Duke’s mission of using knowledge in the service of society.

“It’s not about starting companies and it’s not about making money. It’s a means to an end,” says Toone. Indeed, the Melissa & Doug program is just part of the Innovation and Entrepreneurship initiative’s stated goal of giving students the practical and theoretical knowledge to make a difference in the world: to recognize a problem and make the commitment, even at personal risk, to solve it.

Toone points to Melissa & Doug 2015 fellow Suhani Jalota as an example. She launched a foundation that empowers and employs women in Mumbai by creating jobs making sanitary pads, which also reduces the stigma surrounding menstruation. Her efforts won her Glamour magazine’s 2016 College Women of the Year Award and a $20,000 prize.

For many of the Melissa & Doug fellows, innovating for social impact is also the source of their passion for their product. Holmes wants to revolutionize the way people consume food, for instance. “Doing something that has meaning is what gets me up in the morning,” she says. Other examples abound: The 2014 fellow using drones to help farmers identify under-performing plots; the 2016 fellow working on T-shirts that make chemotherapy more comfortable for patients; another who is responding to the death of his cousin by creating a medical device and software to measure and track lung function to help asthma sufferers.

“If you don’t think your idea is going to benefit society, you’re not going to have the guts to push through,” says Netscher.

Yet there’s a side effect of this culture shift: Students with a good idea who feel empowered to pursue it might decide jumping into entrepreneurship is actually less risky than staying in school. Rhee recently got an e-mail from a fellow whose startup has made so much promise he went to Istanbul for the summer to think about his future and said he’s not sure yet whether he’ll come back to class.

In successfully creating the entrepreneurial opportunities so in-demand by millennial students, Duke must now grapple with the repercussions: that some of them will use it not to supplement their education but to supplant it. “We recognize it’s an issue, and it’s something we want to be incredibly sensitive about,” says Toone. “We would never, ever encourage people to leave school. I can almost guarantee the day will come when you will regret leaving your Duke education.”

Toone would like to see some rules changed, namely one that discourages students from taking leaves of absence. That way they could have the best of both worlds: time to work at using ideas to impact lives through entrepreneurship single-mindedly for a year or two, and the security of a chance to return to Duke. Currently, it’s one or the other.

By Demo Day in 2014, Holmes had just launched Ello Raw’s online sales. “It’s been a whirlwind, but it’s been an awesome adventure,” she said to the crowd sitting on sheet-draped bales of hay before her pitch.

Two years later, Holmes uses an aspirational “we” when she talks about her company. “We definitely could create a product with bigger profit margins, but that would be a compromise,” she says for instance. She talks about “our success,” “our product,” and “our desire to give back.”

But for now, Ello Raw is mostly still just Holmes, hustling. She has no marketing director, no accountant, no production assistant. Her sister designed the company’s logo, and Holmes paid five dollars to have it digitized. She designed her own website. “My to-do list doesn’t stop at five o’clock,” Holmes says. “It’s crazy, it’s exhausting, and it’s exhilarating.”

When things go wrong, she fixes them. Like when her bag sealer broke and she didn’t have the extra twenty dollars to buy a new one. Holmes sanitized an iron and for months used it to seal her dessert packages shut.

The business sat dormant while Holmes completed her senior year at Duke. “Being at Duke definitely took away from my company,” she says. She wanted to do more, but with no safety net, she knew she needed to get her degree. And she credits her college experience and the Melissa & Doug program with giving her a start as a business owner.

“The Melissa & Doug program is the reason I’m running a company right out of college,” she says. “I wouldn’t be this vested in entrepreneurship if it wasn’t for Duke and its support and resources.”

After graduating, Holmes bought membership in The Cookery, a culinary incubator in downtown Durham where food entrepreneurs can rent kitchen space to prepare food and expand their businesses. But the only shift she could afford meant using the kitchen from one to five a.m.

She was put in touch with a juice maker in Raleigh who had room in his space and was flexible on rent and time. It’s in an isolated part of town; Holmes was scared one night when the power went out, but she was more worried about not getting an order done in time. She turned on the flashlight in her cell phone and kept working in the dark room. “Those are the breaking points that matter,” she says.

Holmes has brought in about $40,000 in revenue since she started reaching out to retailers in September 2015. She sends them samples of her product, and tries to interest influential social media posters who could drum up interest. She has built a following on Instagram, thanks to people who love her bites and post about them.

She’s inspired, she says, by the feeling that already she’s able to help people. A girl with diabetes recently reached out with questions about nutrition, and Holmes felt great that she was able to send her resources. “Something you take for granted is the knowledge that you have.” she says.

The high demand she faces is a great problem to have. but she spends about sixty hours a week hand-making her product—and then there’s packaging, delivering, and promoting it. Recently, Holmes brought in two people to help. And, after hours of Googling, she discovered a piece of equipment that would enable her to go from making sixty bites an hour to 5,100. But at $3,000, that equipment remains out of her reach.

Holmes won admittance into an incubator program that offered co-working space and housing, but when it ended, so did access to an affordable room. Last summer, she kept her things in plastic drawers in the Chevy and crashed with a friend. But now she rents a room in downtown Raleigh, and through a network of friends and colleagues in the food industry, found a production space in North Raleigh.

She has faith. She can make Ello Raw a success if she just hangs in there long enough, if she just works hard enough. “I know this can be a million-dollar company,” she says.

But her dream is bigger than that. She wants Ello Raw to be part of a change in the way Americans think about food and health. “My vision is one day to walk into a grocery store and not have to look at any labels, because everything will be good for you,” she says. When healthy is the norm, she thinks, prices on good-for-you food will drop.

So she doesn’t give up. She endures the roller coaster ups and downs of being a young entrepreneur. And sometimes it pays off.

Early on a January morning when Holmes was still in bed, she reached groggily for her phone and saw an e-mail that made her think that just maybe the entire struggle was worth it. “Congratulations,” the message began. “Welcome to the Whole Foods family.” The corporate giant and organic food mecca had agreed to allow local stores to carry Ello Raw’s vegan dessert bites.

The deal has turned into a chance to be in every Whole Foods store in the Southeast. And in late September, Holmes took Ello Raw to the Natural Product Expo East. Her treats were named one the top seven new exhibitors. Currently, she’s raising seed money to fulfill her purchase orders.

The Whole Foods order was a milestone. It was the first time since launching her company in the Melissa & Doug program that Holmes felt like she could finally take a breath. It felt like validation—like the universe was telling her to keep going, that all the struggle and sacrifice, all the two a.m. packaging and handwritten notes would be worth it.

“We’re going to make it,” she thought.

Brookland is a freelance journalist based in Durham.