Michael Baum Has Big Hopes for Gen Z Unicorns

The dawn of the internet flooded the business world with a tsunami of opportunities and unexpected challenges, and Michael Baum was ready for all of it. A serial entrepreneur who helped shape the Silicon Valley ecosystem, Baum figured out how to make sense of data that countless transactions and mouse clicks generate for companies, organizations and governments around the globe.

Baum is known for co-founding Splunk, a big data software company formed in 2003 to help companies index, search and analyze machine data. As the digital universe expanded, Splunk software made it possible for companies to burrow inside — or spelunk — a dizzying volume of information generated by servers, apps, mobile devices and websites to make sense of it all.

Though Splunk isn’t a familiar name to most, its software is indispensable to entities worldwide.
Baum retired as Splunk CEO in 2010 but remained a big supporter when the company went public in 2012, at a $3.28 billion valuation. In September 2023, the networking and communications behemoth Cisco announced that it would buy Splunk for $28 billion — its biggest acquisition ever.

The entrepreneur traced his career journey during a visit to Drexel’s University City Campus last year. He spoke to computer and engineering students at an event that commemorated the 40th anniversary of a pioneering 1984 partnership between Drexel and Apple, a historic public relations spectacle in which Drexel students and faculty became the first in the country to receive the newly unveiled Macintosh computer (see the full history here).

“Every large company in the world uses our software, coming full circle all the way back to Apple,” Baum told an auditorium of first-year engineering students. “Apple is our largest customer, too. Today, they use us to keep the App Store up and running, every minute.”

Declaring himself “just like” the undergraduates filling Mitchell Auditorium, Baum exhorted them to focus on their “unbounded potential” and revealed the secret to his success: “If you want to build a really big outcome, solve a really big problem.”

For more than a decade, Baum has nurtured student-led startups at Drexel and beyond because he knows firsthand the promise they offer, persistence they require and the paltry resources they usually receive.

Voyage Without a Map

As a first-generation college student and Philadelphia native who launched his first startup at Drexel, Baum understands the challenges of starting a venture at a young age.

During his final year studying computer science, Baum, his older brother — then a Wharton student — and one of his brother’s classmates were dazzled by the proposition that software could prepare executives for diverse business scenarios and outcomes, just as flight simulators train pilots for takeoff under different conditions. They launched a startup, Reality Online, using algorithms shared by venture capitalist Michael Aronson, who was then a lecturer at Wharton.

This was in the early days of microcomputing, when Philadelphia was a venture-capital desert. Baum and his co-founders relied on a bank loan, investment dollars cajoled from a few professors, and their own instincts to pursue their dreams. The company’s first product, Business Simulator, showed such promise for training executives to make informed production, marketing and sales decisions that corporations quickly took note. The former BusinessWeek magazine marketed it to readers.

Reality Online’s second product, Wealth Builder, applied a portfolio optimization technique known in academic circles to eight decades’ worth of performance data for stocks and bonds, handing wealth managers a powerful tool for advising clients with varied goals and appetites for risk.

“The notion that an individual money manager could have their own computer running this software, doing their own client management, was completely novel at the time,” Baum says, recalling pre-broadband days when data was downloaded over phone lines via dial-up modems.

By 1994, the company came to the attention of media and finance giant Reuters, which ponied up $13.8 million for a majority stake.

After Drexel, Baum picked up an MBA at the Wharton School of the University of Pennsylvania, and then headed to California. In Silicon Valley he launched a string of startups, beginning with Pensoft, which aimed to meet mobile computing technology needs. “A complete failure,” Baum says of it; the company was purchased by AT&T before the communications giant grasped its limitations, giving investors a payday and inspiring the entrepreneur to develop software for web-based computing and application servers. His third startup, focused on e-commerce, was snapped up by Disney, which wanted a competitive online presence. Baum then designed software for online payment systems, which became his fourth startup, dotBank. Yahoo! acquired the venture and hired Baum to launch and lead Yahoo! Pay Direct, Yahoo! Auctions, Yahoo! Wallet and Yahoo! Stores.

As Baum dived deeper into the scaling Internet he realized that the vast trove of data it unleashed could render systems impossible for humans to understand. Recognizing that companies the world over were spending billions of dollars annually to manage data centers — and doing so “very inefficiently” — Baum and two collaborators hatched a plan to launch Splunk.

“Every company has a huge amount of information that is being generated by every one of its computers, and there’s lots to be learned from that data,” says David Hornik, a venture capitalist and founding partner of Lobby Capital, based in Palo Alto, California. “Michael and his co-founders created a solution, and it changed the way that companies were run.”

Before Splunk came along, “nobody was talking about big data,” adds Hornik, who made one of two $4 million investments that got the startup off the ground.

Calling Baum “a force of nature,” Hornik says he combines the intellectual curiosity needed to innovate with the persuasive power to overcome doubts: “He was able to raise money with an idea, was able to build a team when they were just getting started and was able to convince giant companies to use this software when that was risky and uncertain and unproven.”

Ally to Young Entrepreneurs

But Baum could see the limitations of the venture capital community, which had a tendency to invest only in surefire money makers. And he never forgot about the power of universities — which he calls “bubbling cauldrons of solutions to problems” — to promote innovation.

In 2012, Baum established Founder.org, a nonprofit foundation that supports young entrepreneurs based at universities. Since its launch, the foundation has invested in 125 student-led businesses at 50 universities, including four startups at Drexel. The companies have gone on to raise more than $3 billion in additional funding.

Collin Cavote, BS ’15, founder and CEO of Biome, a company that produces patented hardware devices that remove moisture from ambient air to autonomously grow plants and maintain biodiversity indoors and outdoors, was stunned to gain support from Founder.org in 2014.

An embryonic business idea based on biomimetics — applying models from nature to solve complex problems — Biome was not an obvious choice for most investors, but Baum provided mentoring and a $250,000 seed investment.

“There is a surprisingly small amount of capital and resources for concept-level, big ideas that can change the status quo,” Cavote says. “A lot of investors have preferred writing big checks to startups that are just doing things incrementally better than the competition. Early-stage capital has become so concentrated that it’s no longer worthwhile for investors to write small checks to founders pursuing big, untapped opportunities.”

Cavote completed Founder.org’s yearlong company-building process, which includes online courses and quarterly conferences in San Francisco, Boston and Stockholm, where international cohorts of young entrepreneurs soak up energy from peers and wisdom from seasoned experts.

In the process, Cavote learned to think beyond the product he had so carefully designed.

“What Michael helped cement in my mind was this idea that — while you’re building — keep absolutely fixated on the people you’re actually building for,” says Cavote, whose customers include J.P. Morgan Chase & Co., Cushman & Wakefield, TIAA and Fidelity Investments. “That has served us well at Biome, because we’ve developed an entirely new product category and — through listening closely to our customers — found the first market for it.”

When Pramod Abichandani, MS ’07, PhD ’12, wanted to launch a company that builds low-cost robots to help teach coding to high school students, Baum braced him for harsh realities.

“Academia is very forgiving; business is not,” says Abichandani, who received support from Founder.org to launch LocoRobo with three undergraduate students while working as a teaching professor in Drexel’s College of Engineering. “That’s something he explained to me.”

Now an assistant professor at New Jersey Institute of Technology, Abichandani credits Baum with enabling him to craft a viable strategy for generating revenue in the finite educational marketplace. Academic mentors provide guidance and polish, Abichandani says, but Baum’s approach is “10 times more intense…the role he played in my life has been absolutely pivotal, both as an entrepreneur and as a human being.”

LocoRobo now has a six-person team developing and marketing programmable robots and drones for classrooms as well as freestanding math and science curricula. His products have found their way into nearly 10,000 schools and are used by more than 250,000 students, with a trajectory of slow but steady growth, according Abichandani.

A Forward-Looking Partnership

In Drexel, Baum recognizes a mutual determination to stoke innovation.

“Of all the schools I see everywhere in the world, I think it’s extremely unique,” he said during his recent visit to campus.

Features built into Drexel’s Charles D. Close School of Entrepreneurship and the Baiada Institute for Entrepreneurship that it operates align closely with Baum’s foundation. The Close School, which launched in 2013, promotes skills that apply to innovation in business as well as any career pathway that plows new ground. The Baiada Institute has helped more than 110 businesses launched by Drexel students and recent graduates get off the ground by providing guidance, mentorship, a dedicated space to collaborate and multiple competitions each year where entrepreneurs pitch their ideas to investors.

In 2023, the University launched the Innovation Fund, investing as much as $600,000 annually in up to four student and postgraduate startups as well as those that commercialize the results of scientific research at Drexel.

This year, Baum renewed his commitment to young entrepreneurs, pledging to give Drexel and nine other universities $100,000 apiece annually to support student-led startups for the next five years.

“I see the Close School as a fertile incubator for where Drexel needs to go in the next 50 to 100 years,” Baum says, observing that the requirement for students to complete minors in disciplines unrelated to entrepreneurship creates “tentacles of integration” across the entire University. “I’m really excited about what they’re doing at Drexel.”

Baum’s support creates even more opportunities in Drexel’s entrepreneurial ecosystem, says Donna DeCarolis, founding dean of the Close School.

“We have this place on campus where students can come and try out their big ideas,” DeCarolis says. “Michael is extremely supportive of it, and it really complements Drexel’s strategy and strategic plan as a very innovative entrepreneurial University.”

For student entrepreneurs in particular, layering mentorship atop money is “a wonderful combination,” says Charles Sacco, vice dean of the Close School and director of the Baiada Institute.

Meeting the Moment

During Baum’s March visit to Drexel’s campus, he announced Founder.org was rebranding with a new name and a heightened focus on cultivating leadership skills in entrepreneurs who seek to solve massive challenges, from climate change to healthcare inequities.

Renamed Yope (for You are the Hope), the foundation aims to inspire and empower the next generation of startups to help heal the world.

“A decade ago, we saw many entrepreneurs with clever ideas wanting to become unicorns,” Baum says. “Some of them were to better society, some of them were just to make money.”

The landscape has changed, Baum explains, as Gen Z grapples with challenges that are unfolding rapidly.

“We see young people in their early 20s struggling with the mess our generation left them and feeling a real sense of responsibility to do something about it,” Baum says. “We see more and more young innovators, young entrepreneurs very focused on the well-being of people, the well-being of the planet.”

Yope will reward entrepreneurs who consider the consequences of their innovations and those who find ways to use technology to benefit society.

“We’re more focused today on the impact of the ventures that we’re getting involved in,” Baum explains. “Can they articulate their reduction of CO2, the number of lives touched, or whatever their measurement is, and do they have a core innovation that can really make a difference in that area?”

While Founder.org emphasized tactics to build out entrepreneurs’ businesses, Yope aims to also inculcate mindfulness and an awareness of the societal environment where startups reside.

Baum, who became aware of meditation and mindfulness in the last decade, says he has witnessed how these practices can improve teamwork.

“Some time ago, I was in Germany with one of the companies I’ve worked with for 11 years,” Baum says. “We’re brainstorming a solution to a problem, and everybody’s kind of stuck. And we take time out to do a quick breathwork session. Fifteen minutes later, the ideas are just flowing.”

Young entrepreneurs will benefit from such practices, Baum contends.

“Our focus with our new program is on building a generation of conscious young leaders,” he says. “In the next 10 years, if we can create an army of 10,000 conscious young leaders — regardless of the outcome of any of the ventures we get involved in — we will achieve our mission.”

Leading that charge is Baum protégé Andreas Loy, who knows firsthand how a company’s success can carry costs all its own. With early funding support from Baum, he cofounded Konux to use AI and sensor data to increase rail networks’ capacity, reliability and cost efficiency — then wound up in the hospital with heart problems at age 29.

“I was pushing, pushing, pushing,” says Loy, who stepped away from the company that had raised $180 million, created more than 100 jobs and optimized railways across Europe and beyond.

Loy is now helping to build out Yope’s conscious leadership program as the foundation’s “chief consciousness officer.”

By giving the next generation of entrepreneurs the tools to build resilience while staying true to their impact on people and humanity, the program aims to make entrepreneurship itself more sustainable.

“What [Baum] actually started subconsciously or consciously is a seed for an ecosystem of next-generation innovators that get support and then give back,” Loys says, tallying 10 entrepreneurs who built companies worth more than $100 million with Baum’s help. “They are now also feeling called back to support the next generation… Imagine them supporting 10 more. It ripples, in a good way.”

In the meantime, Cavote says that Baum’s philanthropy can ignite optimism in a generation that desperately needs it.

“Most young people think this world is too big, the problems too complex,” Cavote says. “‘We’re just little cogs in this wheel. How are we actually going to create any change in this failing world?’”
The support and affirmation Cavote received for his venture altered his thinking.

“This has been an opportunity to carve out a different, hopeful reality,” he says.