Why I dropped out of Stanford business school

I’m a member of Stanford’s Graduate School of Business Class of 1999. My name appears in the alumni directory, I receive frequent GSB fundraising solicitations and the alumni magazine shows up in my mailbox every month. With respect to the GSB, the biggest difference between me and most of my classmates is this: I left the program after the first year and never went back.

When people hear that I dropped out of Stanford their reaction serves as a kind of Rorschach test. One group – I’ll call them “traditionalists” – look surprised, then cautious (as if I’m only teasing and just about to say that, no, I actually did go back), and then (when I don’t) reappraising, in a “Well I guess you’re not as smart as I thought you were” kind of way.

The other group – I’ll spoil the punchline by calling them “entrepreneurs” – get a little half-smile on their face and look at me sideways as if to say, “Really? you went to that fancy school and bailed after a year?”, and then the half-smile widens to full and they visibly warm up, as if they weren’t sure what to make of me at first but have decided I’m OK after all.
I went to Stanford in the fall of 1997, having spent the previous two years living on the beach in southern California and working for outdoor apparel retailer Patagonia. Branded retail was a departure for me – I had spent the early ’90s in strategic planning, product development and product marketing roles at AT&T and McCaw Cellular. But I took a flyer on an open position and wound up running the company’s “technical” product lines (high performance gear for alpine mountaineering, skiing and snowboarding, endurance sports, fishing and paddling). I also talked the Chouinards into opening an online storefront – a first for the company – and spent most of my last year there building a team, writing requirements and hiring a brand-new company started by some young hackers and graphic designers to help us build the site.
I left Patagonia because I was impatient (still true), young (not so much), and hungry to go build something. I was obsessed with the internet and wanted to be at the center of the action. I figured the GSB would be the perfect place to plug in to the entrepreneurial scene and meet like-minded people. But as many other aspiring entrepreneurs find when they arrive at business school, MBA programs are a lot of things (many of them good) but hotbeds of entrepreneurial passion they are not.

Not long after school started my friends at Adjacency, the young company I’d hired to create Patagonia’s online store, told me they were moving the entire team from Madison, Wisconsin to San Francisco to be closer to their clients (and an easier sell to new hires). I didn’t realize it at the time, but my odds of completing my MBA took a nosedive the day Andrew Sather, Adjacency’s CEO, invited me up to the city to see their new offices in Potrero Hill. They dropped further when I signed on “for the summer” to help Andrew out with business development and client strategy. And at the end of the summer when I asked then-associate dean George Parker for a leave of absence and was told, in effect, “finish the program or don’t count on coming back”, it really wasn’t much of a choice at all.

I loved my year at the GSB – not least because I met my future wife there – but I’ve never looked back with anything but relief at my decision to leave. The Internet was taking the world by storm in 1998 and until I dropped out I was just sitting in a library reading about it. Adjacency was an incredible adventure – I learned more about business, people and leadership there than a decade in school could have taught me. And my experience there led to other fantastic adventures, both as an entrepreneur and – in my current role at Founder’s Co-op – a facilitator of others’ creative efforts.

It didn’t really register at the time, but I’ve since come to appreciate the irony that Michael Spence, the Dean of the GSB when I was there, won the Nobel Prize in Economics for his work on Signalling. As the Wikipedia description has it:

…in Michael Spence’s job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring certain education credentials. The informational value of the credential comes from the fact that the employer assumes it is positively correlated with having greater ability.”

I’m not sure Dean Spence would agree with my analysis, but in retrospect my decision to leave the GSB seems like a great example of signalling theory at work. By attending the GSB for a year I picked up a bunch of useful ideas, made some great friends (and even married one of them!) and acquired a significant market signalling benefit. And then I dropped out and began my real education as an entrepreneur.

  • Allyson

    Many of the best left school to pursue their entrepreneurial dreams. The timing of these opportunities are key. The traditional finance professors and administrators favor pure academics since that’s all they know. Seriously, are the kids there just to do case studies and do assignments? The next generation will be running the GSB and hopefully things will change for the better. We all take risks and make decisions based on our personal goals. Just that the school’s goals (although the brochure may say Silicon Valley opportunities all over it) may not be yours. Good luck, I admire your courage.

    • Allyson

      Didn’t I tell you the “next generation will be running the GSB”??? Dean Saloner is exposed and Parker is in the same old ole boys network. Their time has come.

  • Purnima Anand

    Thanks for sharing your story! I’m surprised that even now, when an MBA’s value has become so much more diluted (and especially so for entrepreneurs) that people react in the way you described as “traditionalist.”

    Re: Spence’s signaling theory, do you think that having a year of GSB under your belt actually turned out to be a valuable market signal? Or did the fact that you dropped out cancel that out people’s eyes?