Universities Should Be Investors, Students Should Be Startups

This piece was published in The Wall Street Journal.

In my adolescent years, my single mother started two businesses and worked a third wage job in order to raise my younger brother and me. Eventually, I started working in these businesses—one of them was a restaurant—to help my family through difficult times. Every weekend, I would wake up well before dawn to open the restaurant and work 12-hour days among the grease and fumes. Many years later, I would go on to Harvard Business School, where I learned about things like the 4Ps and 5Cs, before joining a venture capital firm, where I got used to sizing up markets and entrepreneurs in my sleep. I learned quite a lot about businesses and startups in these institutions (unlike many people in tech, I’m a true believer in the value of an M.B.A.), but I can say that I learned a lot more about entrepreneurship when the stakes were my family’s ability to put food on the table rather than getting a good grade.

There is a reason why “entrepreneur” etymologically comes from antique French words that mean “to undertake.” When it comes to subjects such as entrepreneurship, people learn much more by doing, rather than from lessons in a classroom, and the idea of it becoming an undergraduate major is a funny prospect. In the last half decade, the world has teetered back and forth from financial ruin, and in these turbulent times, central bankers, heads of states, hedge fund managers and pundits alike talk ceaselessly about navigating “the new normal.” Increasingly they’re pinning their hopes of global economic recovery on real innovation driven by entrepreneurs—after all, venture-backed companies account for 20% of US GDP. I’m of the belief that teaching our youth to become entrepreneurs is essential, as entrepreneurship is one of the keys to our economic future. However, a formalized undergraduate major would be a silly way to foster the startup spirit.

In one of my computer science courses in college, I was struck by a quote from a celebrated computer scientist who was asked whether he would like his children to study something as pedestrian as computer science at a university. His response was “no” because he wanted them to get a “real” education first in something like physics or mathematics. In an era where computer science sits near the top of the intellectually egotistical undergraduate food chain, this sentiment seems vaguely quaint, but there’s something to this feeling as a whole. What, I wonder, would this person say about his children majoring in something as “lowly” as entrepreneurship?

Some observers praise the German model of education, with its panoply of trade schools and universities that allow people to train rigorously in their chosen fields from a relatively early age. Similarly, we should teach aspiring entrepreneurs by letting them do. Some argue that students have much to gain by going through the formative years of college, but I say if they’re intent on higher education, then let them study subjects such as theoretical physics or mathematics or history, which are better suited to these settings. Don’t waste their four years studying something that is better taught outside of a university.

In fact, there is already a better model that exists for teaching entrepreneurs — by allowing them to start their own businesses. In this sense, universities have a lot they could learn from entrepreneurs, rather than vice versa. There is endless debate on the bubble in higher education—the notorious Thiel Fellowship delights some and rankles others. But this debate is not peculiar to our era. Even the seminal libertarian Milton Friedman, writing in the 1950s, argued that one possible solution to the problem of stale competition among universities was this: instead of universities taking tuition, the government would partially subsidize and allow each university to take an equity stake in the human capital of the individual, thereby motivating the university to produce graduates with high earning potential. In essence, each student would become a startup.

While Friedman’s ideas are difficult to implement for many reasons (imagine what would happen if we let Wall Street trade derivatives on our children?), his ideas are essentially being enacted today as youth of various stripes decide to sell equity stakes in their ideas as they try to build their businesses, raising money from venture capital or the relatively new asset class of startup accelerators.

Ultimately, I believe that creating a formalized undergraduate major in entrepreneurship is a step in the wrong direction. I have nothing against higher education—some of my best memories, best friends and lasting lessons have come from my years in college and grad school. There is nothing wrong with people who want or need to develop and grow through their years sheltered in these institutions. But for those intrepid enough to know they’re entrepreneurs from an early age, allow them to learn from the best teacher of entrepreneurship that we have: real life.