Entrepreneurship at the West Point of Capitalism

A new book on Harvard Business School entrepreneurs

Journalist Bill Murphy Jr.  Interviewed more than 100 Harvard Business School entrepreneurs from the classes of 1997, 1998, and 1999, years in which many MBAs launched companies either right after graduation or in the first few years afterward. He chose to focus his new book, The Intelligent Entrepreneur, on three of them—Marla Malcolm Beck, Chris Michel, and Marc Cenedella. This is an excerpt on how entrepreneurship—once viewed with scorn and skepticism–became popular at Harvard.

While working on this book, I was sometimes asked: Why are you writing about Harvard Business School alumni? Why not Stanford, for example, in the heart of Silicon Valley? Or why not write about MBA programs at places like Babson College or the University of Southern California, which pride themselves on their entrepreneurship curricula?

In truth, I don’t think places like HBS have a monopoly on teaching intelligent entrepreneurship. But even during the early days of my research, I kept hearing stories about several hugely successful entrepreneurs from the HBS classes of the late 1990s. Moreover, it became clear as I dug deeper that HBS itself had gone through an impressive process of reinvention, after its academic leaders realized how important serious research about entrepreneurship was—and the extent to which it was lacking. HBS launched its inaugural business-plan competition in those years, and several of the winning student teams attracted millions of dollars in investment before their members even graduated. A decade later, entrepreneurship is a big part of the school’s curriculum, as will be apparent to anyone who walks around the campus, talks with the professors, or visits the entrepreneurship page on the HBS website. There is now a $25 million Arthur Rock Center for Entrepreneurship on campus. And in the course catalog, prospective students will find 25 MBA Entrepreneurial Management electives, from “Venture Capital and Private Equity” to “Building a Business in the Context of a Life,” a course dedicated, in part, to helping students “understand and apply a process and framework for developing an integrated life plan.”

Clearly, Harvard Business School is deeply committed to teaching its MBA candidates how to become successful, intelligent entrepreneurs. But that hasn’t always been the case.

Let’s go back to the mid-1940s. It was just after World War II, and soldiers streamed into colleges and graduate schools on the GI Bill. HBS had to shift quickly to a three-times-a-year entry program just to keep up with demand. Professors added more courses. New faces joined the faculty. Among them was a member of the HBS class of 1938 named Myles Mace, just back from service with the army air forces in the Pacific. He was in a special position to understand what the military veterans who were attending the school aspired to. They’d faced death and the horrors of war. They’d seen how fleeting life could be, and they wanted to make their mark, control their destinies,. But they were fed up with bureaucracy and big organizations. They were saying (as one veteran put it), “When I got out of this damn uniform, I can tell you that I’m never, ever going to work for a large corporate organization and just be another number!”

Mace listened. He developed a course designed to help HBS students start their own businesses. When “Management of New Enterprises” appeared in the 1947 course catalog, it was the first time any course at HBS had used the world entrepreneur in its description or focused on problems faced by people in new businesses. The course proved wildly popular, and HBS had a great opportunity to be at the forefront of entrepreneurial research and teaching.

But the school allowed that opportunity to fall by the wayside.


Why? Well, because it was the 1950s, and Harvard Business School was practically a flagship for the era of corporate America and the man in the gray flannel suit. As a latter HBS account of its own history put it, an inclination toward entrepreneurship was seen as a “personality defect,” and the prototypical entrepreneur was presumed to be “a chronic malcontent.” The HBS placement office loved big companies; after all, their recruiters showed up, made offers, and kept the school’s employment stats high. Professors who wanted to win tenure focused on subjects that the employers of HBS graduates wanted them to master—corporate finance, for example, and general management of large organizations.

Professor Howard Stevenson sparked an entrepreneurial revolution at Harvard

Now scroll forward in the 1960s and 1970s. HBS students pushed back, at least a little. A group of them raised $5,000 to run a full-page ad in The Wall Street Journal asking small, entrepreneurial businesses to come interview on campus. But while students over-subscribed just about every entrepreneurship class the business school offered, the subject had “almost no stature among academics,” as one history put it. By 1980, very few entrepreneurship courses were offered at HBS at all. Those that did exist  were often listed in the course catalog with the initials “TBA”—“to be announced”—where the processor’s name would normally go.

Finally, in the early 1980s, the school started to change. Howard Stevenson, a veteran HBS professor who had left for a career in private business, returned at the invitation of the school’s new dean and began to develop a real entrepreneurship curriculum. Around the same time, the school surveyed its alumni, and the results were a shock. Half of its graduates claimed to be entrepreneurs fifteen years after graduation. Entrepreneurs, the school learned, tended to be happier, healthier, and less likely to be divorced than their classmates who worked for large firms. For the most part, they loved what they did. As Stevenson put it, “They never wanted to retire.”

The curriculum he and his colleagues designed, Entrepreneurial Management, was broken into five sections, each representing a stage in the process of entrepreneurship.

Evaluate the opportunity.

Assess required resources.

Acquire the resources.

Manage the venture.

Harvest the value.

Most important, Stevenson and his colleagues became evangelists for their cause. Their core conviction, reflected in every aspect of the new curriculum, was that entrepreneurship could be learned.

“It was no longer a case of ‘if you’re not a born entrepreneur, you’re out of luck,’” as the official HBS history put it. “Instead, it was, ‘these are skills and attributes that you can learn, and upon which you can draw when circumstances require you to do so.”


At Harvard Business School, the core belief about entrepreneurship is quite simply this: it can be taught, and it can be learned. Entrepreneurship is, to use HBS’ quasi-official definition, “the pursuit of opportunity without regard to resources currently controlled.” It is not so much a set of skills as it is a process, a belief, and a commitment. It is a mode of thinking and acting—a way of observing the world, of figuring how to change it (hopefully for the better), and perhaps most important, of becoming the person who is capable of implementing that change. Skills are important—the HBS catalog is filled with courses on funding and managing entrepreneurial ventures—but skills are commodities. Besides, the non-MBAs among us can hire MBAs to perform or advise us about such business functions as finance, marketing, and human resources.

Entrepreneurship itself, however, is more valuable, more challenging—and sometimes more difficult to explain, even for those who practice it and teach it. And as you will see, becoming a successful entrepreneur requires courage, character, and faith.

“One of the reasons people get very excited about entrepreneurship is that nobody really knows what it is,” says Stig Leschly, a HBS 1998 graduate-turned-entrepreneur-turned HBS lecturer. “There is no stable definition for this thing, and so the focus is on technical components—mostly entrepreneurial finance, the specialized vocabulary of term sheets and valuations and so on. We strive to put as high a conceptual bow on it as we can.”

Howard Stevenson has been back at HBS for more than a quarter of a century, and the school now has three dozen faculty members specializing in entrepreneurship, making it the second-largest department on campus.

There were false starts. “One guy made a big deal about the fact that 44 percent of entrepreneurs were firstborn,” Stevenson recalled. “It turns out that 44 percent of the population is firstborn. So that wasn’t a very remarkable finding.”

But professors like Stevenson, William Sahlman, and Joseph Lassiter developed innovative courses and performed valuable research. By the mid-1990s, the entrepreneurship department at HBS had become a powerhouse. Students had always wanted the school to get serious about entrepreneurship, but now the HBS alumni—many of whom were successful entrepreneurs—wanted it, too.

You can’t talk with many of the faculty in the entrepreneurship department at HBS without a sense that they view their role as more than simply teaching courses and offering occasional career advice.

“What we do is plant these time bombs,” Stevenson told me. “We say, ‘Go to Goldman. Go to McKinsey. But when you find that’s not what you really want, think about launching a new company as a legitimate use of your talents.”

As I continued my interviews with the professors at HBS, I came to understand that they see the entire discipline of entrepreneurship as necessary, life fulfilling, and at times almost spiritual. They’re not just teaching business strategies and processes; they’re inspiring students to embrace a way of life.

“My hope,” Lassiter said, “is that we help our students find the courage to actually take the leap. It’s extremely easy to follow an established, well-traveled path, and their lives can matter and they can find fulfillment and all of those other things. But some people want to take a different path, and yet they hesitate because they’re fearful about the consequences—because they can’t explain it to their mom and dad, because it’s riskier than another path, because it’s lonelier than another path. But I would much rather that they die regretting what they have done than what they have not done.”

Granted, HBS has many other strengths and disciplines. Want to make a mark in venture capital? Roughly one in seven American venture capitalists is an HBS grad. Want to run a huge corporation? About a fifth of Fortune 500 CEOs have an HBS degree on the wall. Even during the entrepreneurial heyday of the late 1990s, a large majority of HBS graduates took positions with big institutional employers—investment banks, consulting firms, and large companies—all of which offered the big salaries and signing bonuses that almost anyone would be reluctant to pass up. Furthermore, many of the HBS graduates who thought of themselves as entrepreneurial often took a job with someone else’s startup as a relatively early employee, instead of starting a venture of their own.

Even so, entrepreneurship at HBS has grown from its origins as little more than an afterthought to one of the school’s most important disciplines. When you walk into the lobby of the Arthur Rock Center today, you’ll find a prominently displayed glass case filled with baseball caps—memorabilia from companies launched by HBS alumni.

Those baseball caps were created for companies started by people like Thomas Stemberg (class of 1973 and the founder of Staples), Scott Cook (class of 1976 and the founder of Intuit), and David Thompson, Bruce Ferguson, and Scott Webster (all class of 1981, and the founders of Orbital Sciences Corp.) But the caps and the names associated with them don’t begin to explain what drove would-be entrepreneurs to attend HBS. As I began interviewing alumni, I asked them about their childhoods, their college years, and their hobbies, all versions of a very basic question: Who are you, and how did you get here?


One HBS alumnus told me that he’d figured out how the school decides who to admit: find people who will clearly achieve great things no matter what, accept them, and take credit for their inevitable success. Then there’s the 3M theory: some are convinced that HBS is especially inclined to admit those who have worked at McKinsey, served in the military, or are members of the Mormon Church. Other observers express a mixture of admiration and disdain for the degree to which the school seems to fill each section with precisely calculated percentages of former consultants, investment bankers, armed forces veterans, men, women, ethnic minorities, international students, and a small handful of people with quirky, unusual backgrounds. They call it the Noah’s ark theory of admissions.

Stig Leschly, a 1998 HBS grad who is now a lecturer at the school

But the more HBS alumni I talked to, the more I became convinced that for the most part, the people who attend the school are pretty normal. Sure, they are high-achievers. They had good grades as undergraduates and they crushed the GMAT. Moreover, only about one in ten applicants is admitted, and that’s from among a self-selecting group. But, even so, they’re really not all that different from anyone else who is serious about succeeding in business. And if those HBS students who are determined to make it as entrepreneurs do indeed have something of an advantage because Harvard Business School is on their resumes, plenty of people start wildly profitable companies without ever having graduated from HBS or any other business school.

“Do you need to go to HBS? Asks Stig Leschly, a 1998 HBS graduate who went on to found a $200 million company that he sold to Amazon, before returning to HBS to teach for several years. “Of course not. Warren Buffett didn’t go to HBS. Bill Gates didn’t go to HBS. The answer is no. But that is not to HBS doesn’t add any value. Thank God we do it the way we do it. We teach by the case method, grounded in good examples, and force students in class to interact the way that they will in the real world. You don’t need HBS, but we do what we do very well.”

Adapted from The Intelligent Entrepreneur: How Three Harvard Business School Graduates Learned the 10 Rules of Successful Entrepreneurship by Bill Murphy Jr.