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I like to think of this topic using an automotive racing analogy: Fortune 500 companies are the formula 1 cars. They need a great big team to perform efficientl

I like to think of this topic using an automotive racing analogy: Fortune 500 companies are the formula 1 cars. They need a great big team to perform efficiently, and minor tweaks applied correctly can yield significant results. The MBAs are the specialists who work the electronics and the advanced controls for the race cars. A team working on a formula 1 car could find a way to increase down force by 5%, or they could install a GPS system to analyze turns and scrape 1/100s of seconds off of lap times, and that edge could help them win. Startups are cars with a very different purpose. They are project cars, and they have 1 purpose: to go. Forget GPS systems and down force. These cars need tires and a working steering wheel. It would be a mistake to think about installing spoilers on a car that doesn't have all 4 tires, just as it would be a mistake to worry about ideal liquidity ratios in a startup. Entrepreneurs are the mechanics who decide to take on these 'project cars'. Eventually, as the car project develops and grows, specialists (MBAs) can be brought on to find the minor, yet precise changes that will improve the car's results.

bradgessler 16y ago
This is one of the best descriptions I've heard about people who work at startups and MBA's who work inside large organizations. I don't understand why so many people in startups feel the need to rip on MBA's; its comparing apples to oranges.
- dice 16y ago
  >I don't understand why so many people in startups feel the need to rip on MBA's It's because we've worked at startups where MBAs were brought in on the middle management layer and wasted our time polishing nuts and bolts in order to reduce drag when what we should have been doing was upgrading the suspension from a Watt's linkage to MacPherson struts.
  - mos1b 16y ago
    Not every MBA is lousy and incapable of seeing the forest for the trees, even though lots of startup techs think so. Not every tech is lousy and incapable of understanding that IT needs to serve business needs, even though lots of MBAs think so. Broad brush hatred of all MBAs is moronic.
    - ericd 16y ago
      It serves a useful purpose as a teaching tool for new initiates into the startup community. If they develop a phobia of MBAs, then they will know not to hire them into a brand new company without being very skeptical of that particular one's skills. If one checks out and is actually just a really good person for the job, sure, but on average, the stereotype is there for a reason.
      - mos1b 16y ago
        Most job applicants suck. That's true with techies, with salesmen, with everything I've ever hired for. I'll happily concede that small businesses often have trouble hiring outside their founders' core competencies just because it's hard for a CS geek to vet a CMO or VP of Sales unless they get some serious assistance with the candidate selection, but that really has nothing to do with MBAs being unusually bad. "My god, he decided to supplement his education by learning the basics of accounting, finance, marketing, and a bunch of electives! Fear him!" So lame.
      - arethuza 16y ago
        I'd agree with that - I've met some pretty decent people with MBAs but I've probably met more absolute scoundrels with MBAs than any other qualification (even more than law degrees). This has nothing to do with the concept of the MBA or the courses, but more to do with the type of people who feel drawn to a short cut to senior management or influence over senior managers.
ericboggs 16y ago
Your analogy works. Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever. An MBA as the first hire probably doesn't make sense. But an MBA to optimize sales/marketing/support might make a lot of sense... People tend to forget that top tier MBA grads are (usually) incredibly bright and productive professionals.
- shadowsun7 16y ago
  > Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever. I'm not convinced of this. Apart from the fact that your two sentences contradict each other, I don't believe this optimizes for the right variables. If you're a hacker, and you want to do a startup, you should be learning related skills - and the best way to do that isn't to attend an MBA course, it's to do a startup yourself. And, besides, if you ever find yourself wanting of MBA skills in the future (which implies that your startup has some degree of success) you can always go out and hire one.
  - enjo 16y ago
    I believe that is what the poster was saying (as well as the author of the original article).
    - shadowsun7 16y ago
      Hrmm. That's odd. Either I completely missed the poster's contention, or he edited his comment.
sridharvembu 16y ago
I question to value of MBA even for large companies. I see value in structured, methodical, analytical thinking for many classes of business problems (not all, many crucial business decisions involve creative guesswork!), but an MBA is way overkill, and whatever it is supposed to teach can be learned on the job. If a person cannot learn that on those skills on the job, I seriously would question his/her ability to be an effective manager. Here is my real world evidence: German and Japanese large companies are as good or as bad as American ones (depending on your point of view). The MBA is relatively rare in Germany and Japan. Japanese large companies, in particular, tend to recruit fresh undergrads without much attention paid to their major, train them internally, and promote from within. The fact that their companies hold their own in global competition, indicates that the MBA doesn't add any superior competitiveness to American companies. In fact, I would argue the MBA actually subtracts from American competitiveness, but that argument would be more subtle, and would require industry-by-industry analysis of competitiveness. I will note in passing that software and internet industry is probably where the MBA influence is the weakest in America (primarily because of the extraordinary rate of start-up creation), and that sector is the one where America is the most globally competitive.
- flipper 16y ago
  Based on my own experience of MBAs I tend to agree with you. My company brought in a US name-brand management consulting firm to assist with a large M&A. One of the MBAs was assigned to help me write a transition plan for the integration of the IT systems my company would inherit. She correctly recognized that helping me was useless to her real purpose (inserting herself into my company at a high enough level that she could scout out new consulting opportunities) so she spent two months with us and delivered nothing. I wrote the transition plan on my own.
  - andrew1 16y ago
    Isn't the fact she had an MBA incidental to her behaviour? Her job could have been filled by someone without an MBA who might have acted in exactly the same way. I've met many self-serving, selfishly ambitious people who don't have MBAs!
Maro 16y ago
I downvoted you because I believe your F1 analogy is off. F1 cars are highly optimized to do one thing: go around the given circuits in the calendar that year as fast as possible, within the rules. For a specific GP weekend, they are further optimized to go around that circuit, even if it means doing weird things to the car's balance. What are Fortune 500 companies optimized for? Certainly not for making money, they're wasting money left and right --- for example, on legions of MBAs.
- dkokelley 16y ago
  I can't be sure if you are being sarcastic or not, so my apologies if I missed it. To say that large corporations aren't optimized for making money seems foolish. Of course the goal of a corporation is to increase shareholders wealth, and by extention earn a profit. The goal is the same for a small company or even a startup. There will be instances where a fortune 500 fails this goal, but that doesn't mean the analogy is off. There are some Formula 1 cars that break down or crash. The logic in your argument escapes me.

bradgessler 16y ago

This is one of the best descriptions I've heard about people who work at startups and MBA's who work inside large organizations. I don't understand why so many people in startups feel the need to rip on MBA's; its comparing apples to oranges.

dice 16y ago
>I don't understand why so many people in startups feel the need to rip on MBA's It's because we've worked at startups where MBAs were brought in on the middle management layer and wasted our time polishing nuts and bolts in order to reduce drag when what we should have been doing was upgrading the suspension from a Watt's linkage to MacPherson struts.
- mos1b 16y ago
  Not every MBA is lousy and incapable of seeing the forest for the trees, even though lots of startup techs think so. Not every tech is lousy and incapable of understanding that IT needs to serve business needs, even though lots of MBAs think so. Broad brush hatred of all MBAs is moronic.
  - ericd 16y ago
    It serves a useful purpose as a teaching tool for new initiates into the startup community. If they develop a phobia of MBAs, then they will know not to hire them into a brand new company without being very skeptical of that particular one's skills. If one checks out and is actually just a really good person for the job, sure, but on average, the stereotype is there for a reason.
    - mos1b 16y ago
      Most job applicants suck. That's true with techies, with salesmen, with everything I've ever hired for. I'll happily concede that small businesses often have trouble hiring outside their founders' core competencies just because it's hard for a CS geek to vet a CMO or VP of Sales unless they get some serious assistance with the candidate selection, but that really has nothing to do with MBAs being unusually bad. "My god, he decided to supplement his education by learning the basics of accounting, finance, marketing, and a bunch of electives! Fear him!" So lame.
    - arethuza 16y ago
      I'd agree with that - I've met some pretty decent people with MBAs but I've probably met more absolute scoundrels with MBAs than any other qualification (even more than law degrees). This has nothing to do with the concept of the MBA or the courses, but more to do with the type of people who feel drawn to a short cut to senior management or influence over senior managers.

ericboggs 16y ago

Your analogy works. Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever. An MBA as the first hire probably doesn't make sense. But an MBA to optimize sales/marketing/support might make a lot of sense... People tend to forget that top tier MBA grads are (usually) incredibly bright and productive professionals.

shadowsun7 16y ago
> Most hackers certainly don't belong in business school...but many hackers could benefit from an MBA's experience/education once their product has traction, users, whatever. I'm not convinced of this. Apart from the fact that your two sentences contradict each other, I don't believe this optimizes for the right variables. If you're a hacker, and you want to do a startup, you should be learning related skills - and the best way to do that isn't to attend an MBA course, it's to do a startup yourself. And, besides, if you ever find yourself wanting of MBA skills in the future (which implies that your startup has some degree of success) you can always go out and hire one.
- enjo 16y ago
  I believe that is what the poster was saying (as well as the author of the original article).
  - shadowsun7 16y ago
    Hrmm. That's odd. Either I completely missed the poster's contention, or he edited his comment.

sridharvembu 16y ago

I question to value of MBA even for large companies. I see value in structured, methodical, analytical thinking for many classes of business problems (not all, many crucial business decisions involve creative guesswork!), but an MBA is way overkill, and whatever it is supposed to teach can be learned on the job. If a person cannot learn that on those skills on the job, I seriously would question his/her ability to be an effective manager. Here is my real world evidence: German and Japanese large companies are as good or as bad as American ones (depending on your point of view). The MBA is relatively rare in Germany and Japan. Japanese large companies, in particular, tend to recruit fresh undergrads without much attention paid to their major, train them internally, and promote from within. The fact that their companies hold their own in global competition, indicates that the MBA doesn't add any superior competitiveness to American companies. In fact, I would argue the MBA actually subtracts from American competitiveness, but that argument would be more subtle, and would require industry-by-industry analysis of competitiveness. I will note in passing that software and internet industry is probably where the MBA influence is the weakest in America (primarily because of the extraordinary rate of start-up creation), and that sector is the one where America is the most globally competitive.

flipper 16y ago
Based on my own experience of MBAs I tend to agree with you. My company brought in a US name-brand management consulting firm to assist with a large M&A. One of the MBAs was assigned to help me write a transition plan for the integration of the IT systems my company would inherit. She correctly recognized that helping me was useless to her real purpose (inserting herself into my company at a high enough level that she could scout out new consulting opportunities) so she spent two months with us and delivered nothing. I wrote the transition plan on my own.
- andrew1 16y ago
  Isn't the fact she had an MBA incidental to her behaviour? Her job could have been filled by someone without an MBA who might have acted in exactly the same way. I've met many self-serving, selfishly ambitious people who don't have MBAs!

Maro 16y ago

I downvoted you because I believe your F1 analogy is off. F1 cars are highly optimized to do one thing: go around the given circuits in the calendar that year as fast as possible, within the rules. For a specific GP weekend, they are further optimized to go around that circuit, even if it means doing weird things to the car's balance. What are Fortune 500 companies optimized for? Certainly not for making money, they're wasting money left and right --- for example, on legions of MBAs.

dkokelley 16y ago
I can't be sure if you are being sarcastic or not, so my apologies if I missed it. To say that large corporations aren't optimized for making money seems foolish. Of course the goal of a corporation is to increase shareholders wealth, and by extention earn a profit. The goal is the same for a small company or even a startup. There will be instances where a fortune 500 fails this goal, but that doesn't mean the analogy is off. There are some Formula 1 cars that break down or crash. The logic in your argument escapes me.