Tech Investor to Entrepreneurs: A Harvard Degree Is a Liability

FEBRUARY 10, 2014, 11:04 AM  3 Comments

Tech Investor to Entrepreneurs: A Harvard Degree Is a Liability

By WILLIAM ALDEN

BOSTON — Baked into the curriculum of Harvard Business School is a course in entrepreneurship. A number of students and alumni of the school have started successful companies of their own.

But on Sunday, a prominent start-up investor had a sobering message for the elite entrepreneurs of Harvard: You are at a disadvantage when it comes to attracting capital.

“It’s really unfair to you guys, but I think you’re discriminated against now,” Chamath Palihapitiya, the founder of the venture capital fund Social+Capital Partnership, said at a conference organized by the business school’s venture capital and private equity club.

Referring to his colleagues in the venture capital industry, he added, “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.”

It was a jarring message to punctuate a day premised on the prodigious talent contained in the elite halls of Harvard Business School. The distinguished guests — luminaries of finance, technology and the law, many of whom had received an M.B.A. from Harvard — often took for granted that the students there would soon hold positions of power.

Mr. Palihapitiya, the closing keynote speaker, who was visiting Boston from Palo Alto, Calif., is not alone in expressing skepticism about the value of a business degree in the technology-heavy world of start-ups. In their quest to invest in “disruptive” technologies, many venture capitalists tend to look askance at entrepreneurs whose résumés are stacked with traditional markers of success.

“To see the credentialing of the entrepreneur is a little bit worrying,” Hugo Van Vuuren, a partner at the Experiment Fund, which is based in Cambridge, Mass., said on a panel at the conference on Sunday.

Even for students looking to be venture capitalists, a passion for technology is far more important than financial experience, according to Alex Benik, a principal at Battery Ventures. “Here are things I don’t care about,” he said on Sunday. “Ebitda” — earnings before interest, taxes, depreciation and amortization — “capital structure, leveraged multiples.”

Dressed casually in jeans and occasionally using profanities, Mr. Palihapitiya seemed to relish a role as a provocateur at the conference, which was in its 20th year. At one point, he said the chief executive of Apple, Timothy D. Cook, was simply “trying not to screw up.” (A spokesman for Apple declined to comment.)

He also sounded off on a recent controversy surrounding Tom Perkins, a founder of the venture capital firm Kleiner Perkins Caufield & Byers, who said that protesters criticizing the wealthy “one percent” were similar to Nazis.

“The guy is just out of his mind,” said Mr. Palihapitiya “It’s like a cautionary tale of don’t mix Paxil, Viagra and Xanax.”

On the subject of start-ups, Mr. Palihapitiya told the Harvard students that there were three industries in which they were “capable” of founding companies. These were health care, education and financial services.

“The beauty of those three things is that they’re not actually totally technologically led,” he said.

One quality that Mr. Palihapitiya likes in an entrepreneur, he said, is naïveté. If someone in the audience decided to try to solve a problem in heart disease, without any prior medical experience, “I’d fund it on the spot,” he told the students.

But a crucial trait is technological prowess, said Mr. Palihapitiya, an early employee at Facebook. He pointed to examples of programmers who were instrumental in Facebook’s early life.

One of these was a rogue hacker who attacked Facebook several times before the company eventually hired him, Mr. Palihapitiya said. Another was an idiosyncratic programmer who would take off his shoes and socks and manipulate a computer mouse with his feet.

“Those are the people who are going to come up with those ideas that change the world,” he said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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