7 ms·

Is an MBA a Plus or a Minus in the Startup World?

30 points by jfi 16y ago

dave1619 16y ago
I think an MBA can be helpful in the right situation/startup, but in other situations it might not be needed or the person might need to unlearn some things. It's the debate between B-School and E-School (Entrepreneurship School advocated by Steve Blank).
pkaler 16y ago
I don't get this either or thing. I got a BSc in Computing Science when I was a kid. I'm 30 now and preparing for the GMAT. I also keep abreast of the latest on the lean startup and on the fat startup. Why not learn it all?
- ojbyrne 16y ago
  In my opinion you're the ideal MBA candidate - undergrad in either engineering or a science, some work experience, then the MBA. The problem is that so many MBAs have undergrads in Business and go straight to the masters without any intervening work experience. So they don't have experience and the courses have a lot of overlap. They give the MBA a bad name, but they're the cash cow of business schools.
  - rick_2047 16y ago
    Where I live (India) most of the MBAs are Engineering or Science Graduates. This year only 9 people from business and 1 from arts got into IIM-A. Its a common choice among Engineers to take up MBA after there Graduation (BE/BS/B Tech). It kind of annoys me though. Its fine if you are doing an specialization in something like Project Management, Computer Management, E-Commerce or something like that. But it just bugs me if you take up finance or banking. WTF? If you wanted to do finance or banking why the hell did you waste the one seat of Eng/Sci student. In a country where there is already a shortage of Quality Engineering studies, these people take there education from IIT and then join IIMs taking up banking or finance. This is a total waste of the Rs 900,000/- the government is spending on each IIT student. I just hate to meet someone working in a bank and them mentioning "I did an B Tech in Electrical from IIT then went to IIM". Either I am missing the node joining finance and banking with engineering or this is really just the product of the herd mentality students here have. Its a trend now to go for MBA and they would take any branch if they get into an IIM, "Why bother, its IIM!!!".
    - nileshtrivedi 16y ago
      Good point. Although, I have to add that the trend has already reversed. Most IITians now consider IIMs beneath them. "Only mediocre crowd goes to IIMs" says a recent fresh graduate from IIT Kharagpur. The reason is that IIT grads are now able to get the same jobs and roles as the IIM grads - McKinsey / BCG / Goldman Sachs / and other investment banks have been regulars at IIT campuses for quite a few years now. Their reasoning goes that why not catch this talent early instead of getting the same bunch of people from IIMs a few years later. It's indeed sad that there is not enough money in the core engineering disciplines yet.
      - rick_2047 16y ago
        The problem is not money in this case. There was never the equal amount of money in Engineering that they have in business. The problem here is that there is not passion amongst the engineering graduates in general towards there discipline. Most join engineering because there peers are joining or there parent told them to. It is indeed sad that students think in pure monetary terms rather than there passion. I have seen many engineering undergrads who wanted to go into fine arts and joined up just so because there "uncle" told them to.
    - roel_v 16y ago
      What's an IIM and IIT? How much is 900k Rs?
      - rick_2047 16y ago
        IIM : Indian Institute of Management. These are the most premium B-schools of India supported by Indian government. IIT : Indian Institute of Technology. These These are the most premium tech schools of India supported by Indian government. 900 000 Indian rupees = 19 758.6 U.S. dollars
        glen 16y ago
        IIT - most selective school on the planet. Much more competitive than Harvard.
  - profgubler 16y ago
    I actually think very few go from undergrad to their mba without work experience. Look at the average years experience for top grad schools. It is normally 3+ years on average. I am about to go to Notre Dame for an MBA and I have just under 3. It is all great to pick on people who have a business undergrad and mba, but sometimes in life people don't know what they want to do at the undergrad level. I did not start my business undergrad thinking I would get an MBA, but it becomes the logical career move later on. I am way excited for where I am going now with it, but double business isn't inherently a bad thing in some industries. For me I want to get more into tech, so I am teaching myself rails. People always talk about learning business on their own, why can't someone also learn programming on their own?
    - gaius 16y ago
      It's often business degree -> analyst at a bank or consultancy -> MBA -> associate at bank or consultancy -> industry job when it becomes apparent that partnership isn't on the horizon. The problem with MBAs of this type is that they believe management is a universal function that can be applied directly to any industry. The real world is more subtle than that.
      - nileshtrivedi 16y ago
        As long as the recruiters keep believing that "management is a universal function that can be applied directly to any industry", students can hardly be blamed for it.
        ojbyrne 16y ago
        Actually I think that's true, but it takes experience to gain sufficient humility to know that you have to respect the differences in domains. Obviously (for example) manufacturing is different from software, but motivating people, managing costs, solving customer problems - those are universal.
barnaby 16y ago
It was a very good plug for the authors' own classes that he teaches (link in the last paragraph).
- some1else 16y ago
  I don't mind it. Almost everyone plugs their own stuff in guest posts on TC, and I've read plenty of Vivek's brilliant posts to allow a plug like that in the latest one. I do mind the fact that he maintains his affection towards the MBA and disagreement with Guy although he clearly believes an intense one-year program that focuses on the important bits is a better alternative.
deleted 16y ago
[deleted]
Maro 16y ago
In the Startup World, it's not the MBA that matters, it's you!
- rick_2047 16y ago
  I don't know much but I have a slight doubt whenever I read something like this. I presume you get an MBA to give you a better understanding about business. And startups are in essence businesses. Then how come having a better understanding not impact your startup?
  - PG-13 16y ago
    Because this assumption is false.
  - pg 16y ago
    The cause of the apparent paradox is that "business" spans a huge range. MBAs train you to be junior officers in the armies of managerial capitalism. But there is almost zero overlap between that sort of work and what startups do.
    - neilc 16y ago
      MBAs train you to be junior officers in the armies of managerial capitalism. Some MBA programs do -- most, even. But more and more programs are focusing on entrepreneurship. I think it is pretty obvious that having an MBA is useful if you're going to do a startup. Is getting an MBA more useful than spending the time/money on something else? Perhaps, perhaps not -- depending on the person involved, the skills of their cofounders, the type of the business, and so on.
      - pg 16y ago
        Actually I would say it's a slight net minus to have an MBA when doing a startup. You learn nothing of use to you, but investors discriminate against you slightly. Almost all investors are looking for founders who match past stars. So what they're looking for at this point is hackers. I have to say I agree with them. I can't imagine Bill Gates or Larry & Sergey enduring B School.
davidw 16y ago
I don't think this debate will really be settled until we have actual data to deal with, which isn't likely to happen any time soon, because you'd have to observe the same people with, and without MBA's.
- NyxWulf 16y ago
  We actually do have some data, but a little thing like facts never hinders an uninformed opinion. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1127248 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1127248
  - ericlavigne 16y ago
    That's an interesting read. Some conclusions about US-born tech startup founders include: (1) they tend to be 30+ years old, (2) they tend to have advanced degrees, especially from ivy-league schools, and (3) those with advanced degrees tend to create bigger companies, especially if they went to ivy-league schools. I didn't see any commentary on whether someone who is older or has a degree is more likely to succeed in their venture at all. This study couldn't address that question because the survey sample was composed entirely of people who had already reached a certain threshold of success. I find the study interesting mainly because it hints at the answer to this related question, and would love to see some data that addresses this issue more directly.
sachinag 16y ago
I'm a non-technical founder who's founded one startup, joined another, and am now an Advisor at TechStars - before I go back to B school to get an MBA. And that's after I did a business degree in undergrad. To me, getting an MBA is all about option value. If I want to go to a big company, it's a prerequisite. If I want to do startups, it's not. If I want to jump back and forth, then it's a prerequisite again. I'm willing to pay $150,000 to have the option value of jumping back and forth for the thirty years after I graduate, not to mention the experience of the two years there, the network I'll have, and the other attendant benefits. I wrote about this decision last week; maybe it'd be useful to some people here: http://www.sachinagarwal.com/why-this-startup-guy-is-going-back-to-busines http://www.sachinagarwal.com/why-this-startup-guy-is-going-b...
- tullius 16y ago
  Exactly the kind of the logic that people use to justify going into the corporate world instead of a startup. For people serious about building a successful startup the possibility of going back to a cushy corporate job if things don't work out should be the last thing on their mind.
  - mwerty 16y ago
    So should health insurance by that logic.
Major_Grooves 16y ago
I think the actual education would be very beneficial. Most MBA schools now position themselves as very entrepreneurial. Oxford, for example, has a seed fund for startup ideas from MBA students. The thing that puts me off doing an MBA is the time and the cost. One or two years is a long time to not act on an idea if you've already got some in your head. If you don't already have some startup ideas in your head and you're thinking of doing a MBA I would argue that you're not really a startup person. There are lots of people that want to be an "entrepreneur" but don't have any actual startup ideas. The cost is my biggest worry though. Having a £50,000 dept with £700/month repayments really does put a dampener on the idea of bootstrapping a startup. Hence why so many MBA graduates end up doing investment banking or consulting. Me - non-coder, lots of startup ideas, entrepreneur wanabee, business school interview in a week!
vishaldpatel 16y ago
Being in a start up is a game. We have an idea and we are playing the game to make that idea as successful as possible. We need tools in this game - engineers, lawyers, accountants etc.. are all tools. Some tools are more useful in the beginning than others. Some tools become more important as our startup matures. Now MBA is this awesome general degree that teaches you a bit of everything - accounting, sales, some business law. This makes you a versatile tool! :D. The question is, do you know how to best serve a startup? What can you do? What do you want to do? How will you make up for your lack of experience in a certain area - can you learn quickly? Adapt? Many startups these days start out with the core team being engineers - they're looking to build something, so it makes sense. That said, some startups may do well with a gritty MBA who can go out there and talk to tons of people to generate / prove ideas and report back to the engineering team; take care of accounting; HR stuff if need be; etc... basically it means being the CEO from day one without worrying about the title. Is that what you're looking for or do you just want a cusy desk job as a junior manager? ;)
thewileyone 16y ago
I was a founder at consecutive startups years ago and I recently got my MBA. One thing I can attest, if I had my MBA in the past, it would have helped to run the startups more productively and efficiently.
pramit 16y ago
Related Reading Which You Will Find Useful: The Simple MBA Manifesto: Do We Really Need MBAs? A Presentation http://www.slideshare.net/pramitsingh/the-success-manual-do-we-need-mbas http://www.slideshare.net/pramitsingh/the-success-manual-do-... Presentation Transcript is Available Here http://bighow.com/news/the-simple-mba-manifesto-do-we-really-need-mbaspresentation-transcript http://bighow.com/news/the-simple-mba-manifesto-do-we-really... Do we need MBAs? A 5- part look http://bighow.com/tags/doweneedmbas http://bighow.com/tags/doweneedmbas

30 points by jfi 16y ago

I think an MBA can be helpful in the right situation/startup, but in other situations it might not be needed or the person might need to unlearn some things. It's the debate between B-School and E-School (Entrepreneurship School advocated by Steve Blank).

pkaler 16y ago

I don't get this either or thing. I got a BSc in Computing Science when I was a kid. I'm 30 now and preparing for the GMAT. I also keep abreast of the latest on the lean startup and on the fat startup. Why not learn it all?

ojbyrne 16y ago
In my opinion you're the ideal MBA candidate - undergrad in either engineering or a science, some work experience, then the MBA. The problem is that so many MBAs have undergrads in Business and go straight to the masters without any intervening work experience. So they don't have experience and the courses have a lot of overlap. They give the MBA a bad name, but they're the cash cow of business schools.
- rick_2047 16y ago
  Where I live (India) most of the MBAs are Engineering or Science Graduates. This year only 9 people from business and 1 from arts got into IIM-A. Its a common choice among Engineers to take up MBA after there Graduation (BE/BS/B Tech). It kind of annoys me though. Its fine if you are doing an specialization in something like Project Management, Computer Management, E-Commerce or something like that. But it just bugs me if you take up finance or banking. WTF? If you wanted to do finance or banking why the hell did you waste the one seat of Eng/Sci student. In a country where there is already a shortage of Quality Engineering studies, these people take there education from IIT and then join IIMs taking up banking or finance. This is a total waste of the Rs 900,000/- the government is spending on each IIT student. I just hate to meet someone working in a bank and them mentioning "I did an B Tech in Electrical from IIT then went to IIM". Either I am missing the node joining finance and banking with engineering or this is really just the product of the herd mentality students here have. Its a trend now to go for MBA and they would take any branch if they get into an IIM, "Why bother, its IIM!!!".
  - nileshtrivedi 16y ago
    Good point. Although, I have to add that the trend has already reversed. Most IITians now consider IIMs beneath them. "Only mediocre crowd goes to IIMs" says a recent fresh graduate from IIT Kharagpur. The reason is that IIT grads are now able to get the same jobs and roles as the IIM grads - McKinsey / BCG / Goldman Sachs / and other investment banks have been regulars at IIT campuses for quite a few years now. Their reasoning goes that why not catch this talent early instead of getting the same bunch of people from IIMs a few years later. It's indeed sad that there is not enough money in the core engineering disciplines yet.
    - rick_2047 16y ago
      The problem is not money in this case. There was never the equal amount of money in Engineering that they have in business. The problem here is that there is not passion amongst the engineering graduates in general towards there discipline. Most join engineering because there peers are joining or there parent told them to. It is indeed sad that students think in pure monetary terms rather than there passion. I have seen many engineering undergrads who wanted to go into fine arts and joined up just so because there "uncle" told them to.
  - roel_v 16y ago
    What's an IIM and IIT? How much is 900k Rs?
    - rick_2047 16y ago
      IIM : Indian Institute of Management. These are the most premium B-schools of India supported by Indian government. IIT : Indian Institute of Technology. These These are the most premium tech schools of India supported by Indian government. 900 000 Indian rupees = 19 758.6 U.S. dollars
      - glen 16y ago
        IIT - most selective school on the planet. Much more competitive than Harvard.
- profgubler 16y ago
  I actually think very few go from undergrad to their mba without work experience. Look at the average years experience for top grad schools. It is normally 3+ years on average. I am about to go to Notre Dame for an MBA and I have just under 3. It is all great to pick on people who have a business undergrad and mba, but sometimes in life people don't know what they want to do at the undergrad level. I did not start my business undergrad thinking I would get an MBA, but it becomes the logical career move later on. I am way excited for where I am going now with it, but double business isn't inherently a bad thing in some industries. For me I want to get more into tech, so I am teaching myself rails. People always talk about learning business on their own, why can't someone also learn programming on their own?
  - gaius 16y ago
    It's often business degree -> analyst at a bank or consultancy -> MBA -> associate at bank or consultancy -> industry job when it becomes apparent that partnership isn't on the horizon. The problem with MBAs of this type is that they believe management is a universal function that can be applied directly to any industry. The real world is more subtle than that.
    - nileshtrivedi 16y ago
      As long as the recruiters keep believing that "management is a universal function that can be applied directly to any industry", students can hardly be blamed for it.
      - ojbyrne 16y ago
        Actually I think that's true, but it takes experience to gain sufficient humility to know that you have to respect the differences in domains. Obviously (for example) manufacturing is different from software, but motivating people, managing costs, solving customer problems - those are universal.

barnaby 16y ago

It was a very good plug for the authors' own classes that he teaches (link in the last paragraph).

some1else 16y ago
I don't mind it. Almost everyone plugs their own stuff in guest posts on TC, and I've read plenty of Vivek's brilliant posts to allow a plug like that in the latest one. I do mind the fact that he maintains his affection towards the MBA and disagreement with Guy although he clearly believes an intense one-year program that focuses on the important bits is a better alternative.

deleted 16y ago

[deleted]

Maro 16y ago

In the Startup World, it's not the MBA that matters, it's you!

rick_2047 16y ago
I don't know much but I have a slight doubt whenever I read something like this. I presume you get an MBA to give you a better understanding about business. And startups are in essence businesses. Then how come having a better understanding not impact your startup?
- PG-13 16y ago
  Because this assumption is false.
- pg 16y ago
  The cause of the apparent paradox is that "business" spans a huge range. MBAs train you to be junior officers in the armies of managerial capitalism. But there is almost zero overlap between that sort of work and what startups do.
  - neilc 16y ago
    MBAs train you to be junior officers in the armies of managerial capitalism. Some MBA programs do -- most, even. But more and more programs are focusing on entrepreneurship. I think it is pretty obvious that having an MBA is useful if you're going to do a startup. Is getting an MBA more useful than spending the time/money on something else? Perhaps, perhaps not -- depending on the person involved, the skills of their cofounders, the type of the business, and so on.
    - pg 16y ago
      Actually I would say it's a slight net minus to have an MBA when doing a startup. You learn nothing of use to you, but investors discriminate against you slightly. Almost all investors are looking for founders who match past stars. So what they're looking for at this point is hackers. I have to say I agree with them. I can't imagine Bill Gates or Larry & Sergey enduring B School.

davidw 16y ago

I don't think this debate will really be settled until we have actual data to deal with, which isn't likely to happen any time soon, because you'd have to observe the same people with, and without MBA's.

NyxWulf 16y ago
We actually do have some data, but a little thing like facts never hinders an uninformed opinion. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1127248 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1127248
- ericlavigne 16y ago
  That's an interesting read. Some conclusions about US-born tech startup founders include: (1) they tend to be 30+ years old, (2) they tend to have advanced degrees, especially from ivy-league schools, and (3) those with advanced degrees tend to create bigger companies, especially if they went to ivy-league schools. I didn't see any commentary on whether someone who is older or has a degree is more likely to succeed in their venture at all. This study couldn't address that question because the survey sample was composed entirely of people who had already reached a certain threshold of success. I find the study interesting mainly because it hints at the answer to this related question, and would love to see some data that addresses this issue more directly.

sachinag 16y ago

I'm a non-technical founder who's founded one startup, joined another, and am now an Advisor at TechStars - before I go back to B school to get an MBA. And that's after I did a business degree in undergrad. To me, getting an MBA is all about option value. If I want to go to a big company, it's a prerequisite. If I want to do startups, it's not. If I want to jump back and forth, then it's a prerequisite again. I'm willing to pay $150,000 to have the option value of jumping back and forth for the thirty years after I graduate, not to mention the experience of the two years there, the network I'll have, and the other attendant benefits. I wrote about this decision last week; maybe it'd be useful to some people here: http://www.sachinagarwal.com/why-this-startup-guy-is-going-back-to-busines http://www.sachinagarwal.com/why-this-startup-guy-is-going-b...

tullius 16y ago
Exactly the kind of the logic that people use to justify going into the corporate world instead of a startup. For people serious about building a successful startup the possibility of going back to a cushy corporate job if things don't work out should be the last thing on their mind.
- mwerty 16y ago
  So should health insurance by that logic.

Major_Grooves 16y ago

I think the actual education would be very beneficial. Most MBA schools now position themselves as very entrepreneurial. Oxford, for example, has a seed fund for startup ideas from MBA students. The thing that puts me off doing an MBA is the time and the cost. One or two years is a long time to not act on an idea if you've already got some in your head. If you don't already have some startup ideas in your head and you're thinking of doing a MBA I would argue that you're not really a startup person. There are lots of people that want to be an "entrepreneur" but don't have any actual startup ideas. The cost is my biggest worry though. Having a £50,000 dept with £700/month repayments really does put a dampener on the idea of bootstrapping a startup. Hence why so many MBA graduates end up doing investment banking or consulting. Me - non-coder, lots of startup ideas, entrepreneur wanabee, business school interview in a week!

vishaldpatel 16y ago

Being in a start up is a game. We have an idea and we are playing the game to make that idea as successful as possible. We need tools in this game - engineers, lawyers, accountants etc.. are all tools. Some tools are more useful in the beginning than others. Some tools become more important as our startup matures. Now MBA is this awesome general degree that teaches you a bit of everything - accounting, sales, some business law. This makes you a versatile tool! :D. The question is, do you know how to best serve a startup? What can you do? What do you want to do? How will you make up for your lack of experience in a certain area - can you learn quickly? Adapt? Many startups these days start out with the core team being engineers - they're looking to build something, so it makes sense. That said, some startups may do well with a gritty MBA who can go out there and talk to tons of people to generate / prove ideas and report back to the engineering team; take care of accounting; HR stuff if need be; etc... basically it means being the CEO from day one without worrying about the title. Is that what you're looking for or do you just want a cusy desk job as a junior manager? ;)

thewileyone 16y ago

I was a founder at consecutive startups years ago and I recently got my MBA. One thing I can attest, if I had my MBA in the past, it would have helped to run the startups more productively and efficiently.

pramit 16y ago

Related Reading Which You Will Find Useful: The Simple MBA Manifesto: Do We Really Need MBAs? A Presentation http://www.slideshare.net/pramitsingh/the-success-manual-do-we-need-mbas http://www.slideshare.net/pramitsingh/the-success-manual-do-... Presentation Transcript is Available Here http://bighow.com/news/the-simple-mba-manifesto-do-we-really-need-mbaspresentation-transcript http://bighow.com/news/the-simple-mba-manifesto-do-we-really... Do we need MBAs? A 5- part look http://bighow.com/tags/doweneedmbas http://bighow.com/tags/doweneedmbas