The real risks of failure as an MBA-Entrepreneur
Starting a company is scary, but not for the reasons you might think. My fear going in was that I would ruin my career prospects, or miss out on professional opportunities if my start-up failed. But in reality, it was the emotional side of entrepreneurship that proved most challenging — and I believe that would have been the case whether my company was successful or not.
I was one of the many MBA-Entrepreneurs who launched a business while in school, although my business ultimately folded. It took a major toll on me but was also one of the most transformative experiences of my life. I hope that by sharing my experiences, other would-be student entrepreneurs will be a little better prepared for what they have in store. I’ve organized my thoughts as answers to the questions I am most commonly asked today.
How did you start your company?
I founded a company with a classmate before our second year of business school. We bootstrapped the first few months, tapping into our personal savings to pay for our first engineer. By the mid-point of the academic year, we had raised $225k and had a team of 8 people. Six months after graduation, we decided to shut it down. We lasted 16 months total, ~10 of which we were full-time MBA students. We successfully launched two mobile apps and a web application but ultimately did not see sufficient traction to support the business case.
What was it like to fail?
It sucked, even more than I ever expected. The first question everyone asked me when they saw me was “How’s the startup going?” I read cases in class about companies that pulled through challenges, but I questioned if my own persistence was courage or blindness. As the assumptions we made about our market proved false and our employees began to lose faith, it became a lonely struggle to appear confident.
Over time, I began to lose trust in my own judgment and my team. I’m usually pretty good at compartmentalizing work from my personal life, but there was no way that this ‘crisis of confidence’ feeling could be contained. It took the untiring support of my spouse and closest friends to keep me going.
When we decided to shut the company down, I was desperate to do something I knew I was good at. It took a couple months back in a normal job with regular performance feedback to build up the confidence I had lost. During this time, I also spent days just reflecting, writing, and talking with my mentors to help process what exactly had happened and what it really meant for me both personally and professionally. The startup had been so fast-paced; I hadn’t taken that time for reflection before we folded. But it was critical for moving on.
How did you balance the MBA program and your startup?
Sacrifice. The time I spent on my company was stolen from class, homework, social events, networking, and my personal life and relationships. At graduation, I felt pangs of regret when I saw classmates receiving their diplomas whom I had never even met.
But it wasn’t all bad. Working passionately on a single idea helped me engage with faculty, bond with classmates, and explore the enormous resources that a network of 800 talented classmates can offer. Although I didn’t get to know as many people as I would have liked, I had a tight-knit circle of friends and fellow entrepreneurs who had shared common challenges, fears, frustrations, and triumphs.
How did your startup impact your career?
It has given me experience and perspective that few of my peers can match. It has given me credibility to talk about persistence and resilience. It has given me the ability to make decisions quickly and execute them swiftly, even in the absence of good information. In short, it has made me a better business manager.
I worried that my company’s failure would make me look like a failure too. But that hasn’t happened yet. Bosses and colleagues ask me about my experiences with a tone of curiosity, not judgment. When I can articulate clearly why we failed and what we might have done differently, it has earned respect, not scorn for my business sense. Ultimately, this experience has become powerful story for me to draw on when talking to recruiters and hiring managers — one that sets me apart from the crowd.
Because we shut the company down after school was over, I missed all the on-campus recruiting. I didn’t have the easy access to apply to lots of different companies. But my network of classmates was invaluable in uncovering opportunities and getting my resume in front of the right people.
Of all the potentially negative consequences of entrepreneurship, I think the career risk was the most overblown.
What would you do differently?
I wouldn’t take investor money until after graduation. For most ideas, there is no rush. After we took money, everything changed. We felt responsible to our employees, our investors, our spouses, and ourselves. And every morning I woke up and asked myself “Why am I going to school today? I have other more important responsibilities.”
In retrospect, I would have spent more time doing ‘free’ activities like customer interviews and entrepreneurship classes, building mock-ups and prototypes, and running smoke tests to validate key business hypotheses rather than jumping straight into building a product. By the time my co-founder and I had graduated and should have been ready to start our sprint, we were already exhausted and frustrated from 18 months of trying to balance too many priorities.
Would you do it again?
Absolutely. Every class I attended took on deeper meaning as I tried to apply it to my own business idea. Every conversation with a professor had a real, tangible objective. And I began to engage with classmates on topics where they had deep expertise, so I learned about their personal and professional lives.
But I would have reset my expectation about what entrepreneurship meant as an MBA student. I would have set milestones focused on knowledge-building rather than operations. That way I could leverage the strengths of the MBA program rather than fighting against the current by having two conflicting priorities (see below for examples).
Even though the financial outcome of my venture was disappointing, the overall experience of being an MBA-Entrepreneur made me the person I am today, and I’m grateful for all my friends and family that helped me take the plunge.
Examples of Knowledge-Building Goals (things to do while in school):
- Find a co-founder
- Find mentors/advisors
- Find a business insight/hack
- Perform market research
- Draw mock-ups and interview 100 users
- Generate a waiting list of 100 customers
Examples of Operational Goals (things to wait until after graduation):
- Launch a mobile application
- Sell and deliver 100 products
- Hire 3 engineers
- Raise $500k funding
- Get 10k social media followers