I was reading Dan Primack‘s Term Sheet this morning and saw the part about Chamath Palihapitiya making waves at HBS by telling current MBA candidates that “the overwhelming majority of us would not look favorably on a company started by one of you.”

Chamath is correct in making that statement, especially if you’re careful to note that his statement is qualified by overwhelming majority, and not by all. In addition, I’ll add that there are always exceptions.

The #1 criteria for K9 Ventures is that I work with technical founders. Or better described as “founders who are capable of developing their own product.” When asked about MBA’s, I too use the common quip that I subtract from the pre-money valuation if there is an MBA on the team. The more serious answer is that I have nothing against MBA founders provided they have a technical background, have been engineers before, and are still willing and able to get their hands dirty.

One of the best pieces of advice I ever got came from Chuck Holloway, the Director of the Center for Entrepreneurial Studies at the Stanford Graduate School of Business. Here is that story:

In late 2001 I decided that I was burnt out from doing 10 years of school and startups — 5 grueling years at Carnegie Mellon, and then another 5 grueling years doing two startups: SneakerLabs and iMeet. I’m not the kind of person who would go chill on a beach — I would get bored with that very quickly. I’d rather go hang out with smart people, and so I decided that the best thing for me to do would be to go back to school.

However, I was split between whether I should go back for a PhD in Computer Science, or whether I should try and do something more on the business side. Getting an MBA after doing two startups felt like a step backwards, and I’d already attended all the core business school classes while I was doing my Masters in Software Engineering at Carnegie Mellon. So I was considering getting a “PhD in Business.” I didn’t really know what that meant at the time, so I decided to learn more and reached out to chat with some professors.

One of the professors who was kind enough to meet with me was Charles (Chuck) Holloway. Now, it’s quite likely that Prof. Holloway may not remember me, but I remember my meeting with him quite distinctly as it had a significant impact on my decisions and the path I took. In that meeting, Prof. Holloway asked me: “What do you want to do when you’re done [with the academic program]?” My response was, “I’ll go back to doing startups, because that is what I love to do.” To which, Chuck responded (paraphrasing): “If you want to start a company, go to the Engineering school. That’s where most of the companies get started. And then they hire people from the business school to run those companies.”

The response from Chuck was enlightening for me. Not only had he given me a framework to make my next decision, but also provided the ability to understand that there is a fundamental difference between starting a company and running a company.

What follows is my opinion after reflecting on this for many years.

I believe that the foundation of “Business School” lies in training individuals to become better managers and to provide them a framework for how to think through and evaluate business decisions (in some extreme situations this happens without sufficient regards to ethics, morals and the long term and that’s why I like the idea behind the MBA Oath). I say that I believe that because I haven’t taken the time to dig through the history of business schools to verify this. It’s just my definition of what business school do, and should continue to do. An MBA after all is a Master of Business Administration.

Somewhere along the way, people, and especially B-school graduates, began to think that “if we know how to run a business, then we know how to start a business.” They felt like because they have spent two years sitting in classes, pouring over cases and talking about companies, that they’re now qualified to start a company. That sense of entitlement is what makes most VCs and true entrepreneurs weary of MBAs. Conflating running a business with starting a business is what I consider to be the problem with getting an MBA (for founders).

In practice, starting a business requires a very different personality and skill set than running a business. This is why we so often see that the founders of a company step aside (and sometimes they are forced to — a practice I’m not a big fan of, but that’s the subject of a future blog post) and let other people who are better at running a company take over. Note, I’m careful here to not use the term a “professional CEO” as I don’t believe there is such a thing.

Of course there are founders who not only start a company, but also succeed in growing themselves with the company to become phenomenal leaders. Those are the companies that become hugely successful, but those individuals are a rare and cherished breed. I’ve been lucky to work with some such individuals in the K9 portfolio and it’s an absolute pleasure to see them grow and execute. The founders who successfully make that transition ultimately operate like conductors of an orchestra delivering a masterful performance.

To start a company and make it succeed you need a level of passion and conviction that is nothing short of extraordinary. There are a lot of people who want to start a company (wantrepreneurs) and some of them do. But there is a difference. The startup ride is an emotional roller coaster that is unlike any other. And the only thing that makes you hang on for dear life on that emotional roller coaster is your passion and conviction.

A startup founder needs to be able to do whatever is necessary (but still ethical and legal) to make the company a success. In fact, in my first startup I often described my role as C*O, and on weekends, the * would sometimes be a J, for Chief Janitorial Officer, as I would often be taking out the trash too.

The problem with getting an MBA is that once someone has done an MBA, they’ve spent two years learning about companies and “management,” they’ve probably accumulated a pile of debt, and most importantly they’ve likely gained a sense of entitlement, which often prevents a roll up your sleeves and get shit done mentality.

The MBA education itself is actually very helpful for a startup founder. That’s why I feel like I was very lucky to get the best of both worlds, by sneaking my way into business school classes, yet not actually getting an MBA degree.

In the startup world, there is no substitute for doing it yourself. If your goal is to start a company, then don’t waste your time and money by going to business school. Instead, start something first and then spend the time and the effort to build a network of trusted advisors and mentors who are willing to coach you along the way.

The day to day of running of a business is not rocket science. In fact, a lot of it is common sense, and things that you can easily derive from first principles with an understanding of basic economics and psychology (that latter if often under-estimated). That’s probably why engineers tend to do well in the role of being founders and founding CEOs (there are exceptions there to, and I’ve had my share of those as well!).

My advice to anyone who has an MBA but wants to be a founder, or work at a startup, is simple — be ready and willing to earn your stripes.

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