HBS Under Attack…By A Silly VC?

HBS may be having a tough winter, but the money is flowing

HBS may be having a tough winter, but the money is flowing

Harvard B-School Under Attack…By VC?


“You want the truth? You can’t handle the truth!”

This week, a “code red” was called on aspiring entrepreneurs at Harvard Business School. It all started Sunday during a speech given at a conference organized by Harvard’s venture capital and private equity club. There, Chamath Palihapitiya, founder of the venture capital fund Social+Capital Partnership, dropped a bomb on the Harvard community about what VCs really think about Harvard alums:

“It’s really unfair to you guys, but I think you’re discriminated against now… I would bet a large amount of money that the overwhelming majority of us would not look favorably on a company started by one of you.”

Say that again?

In political circles, operatives equate a ‘gaffe’ with speaking the truth. Whether Palihapitiya was full of himself – or the wine – he tore the gauze off a cauterized wound. Sure, Harvard alums have a reputation for old money and running established companies. But Harvard’s entrepreneurship program is among the best in the nation. They’ve taught entrepreneurship since the Great Depression, established the Rock Center For Entrepreneurship, and sponsored the renowned New Venture Competition.

In fact, Harvard MBAs were responsible for over a third of Poets and QuantsTop 100 MBA Startups, more than Stanford and three times more than MIT Sloan. Shouldn’t that track record give Harvard serious credibility among the start-up and venture capital communities?

Apparently not to this out-of-touch VC.

Alas, Palihapitiya believes there are three industries where Harvard students could launch companies: Health care, education and financial services, since “they’re not actually totally technologically led.” To add fuel to the fire, Palihapitiya noted that if an entrepreneur wanted to solve a heart disease issue, he’d fund their venture “on the spot” if that person lacked medical experience.

Let’s just hope he’s only paying out in bitcoins.

Of course, Palihapitiya’s comments inspired the usual soul-searching (and piling on). Fortune’s Dan Primack examined the ‘unicorn’ list, “a group of 39 tech companies founded since 2003, and which were valued at $1 billion or more by the private or public markets.” Of those companies, only three (Yelp, Zynga and Gilt Groupe) had a founder from Harvard Business School. That said, only 12 of 39 unicorns had founders who held MBAs, giving slightly more credence to Palihapitiya’s claims.

Then again, maybe Palihapitiya should chew on this stat. While MBAs may only account for 30% of unicorn founders, that number shoots up to 82% when you factor in MBAs who serve as members of the top executive teams of unicorn companies according to analysis by Jeff Bussgang and Juan Leung Li. As Max Nisen emphasizes in Quartz, “It’s worth arguing that the growing reliance on MBAs represents a maturation of Silicon Valley’s attitude toward the business side of technology. Executives with MBAs like Sheryl Sandberg at Facebook and Ali Rowghani at Twitter were essential figures in growing their companies. And the highest paid executive at Google in 2012 was business lead Nikesh Arora, who has an MBA from Northeastern.”

Jules Pieri, founder and CEO of the product launch platform The Grommet, also made headlines by echoing Palihapitiya. She claimed that 90% of Harvard Business students make a certain mistake when pitching her on startups. What is it? They “bury the lead.” Sounds more like a critique for a J-school grad. Pieri adds that it often takes her “a full five or 10 minutes to figure out “the point” when students pitch her.

But let’s give Pieri some slack. She actually cared enough to offer advice. Revealing that she makes snap judgments based off a presenter’s polish and perceived capabilities, she encourages students to have a working prototype ready and “hone your story until it’s the shortest possible length with maximum clarity.”

In fact, she highly encourages budding entrepreneurs to participate in product pitch competitions. Why? For starters, it teaches students to remove unnecessary details in their pitches and learn how to answer tough questions in areas like marketing and supply chain.  What’s more, competitions create an excitement around a concept. “Putting yourself in front of an audience and a panel of judges will help you remember why you took the big risk in the first place,” she says.

Bottom line: Even if an MBA doesn’t prepare you to start a company, it sure teaches you how to build one. And remember: We’re talking about students here. They’ll learn to be succinct, swift, and savvy soon enough.

Sources: Quartz, New York Times, Fortune, Quartz

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