Why Tech is Actually Great for MBAs
If you are on the road to getting an MBA and have even a passing familiarity with the tech space, you’ve probably heard something about the industry’s general lack of regard for the degree. A cursory survey of the internet reveals all sorts of negative opinions from startup founders to VCs who view MBA hires as process-obsessed dead weight that demand a high price without adding much value.
Guy Kawasaki’s classic pre-money startup valuation formula from way back in 2004 tells us, “for every full-time engineer, add $500,000; for every full-time M.B.A., subtract $250,000” in order to determine the worth of a new tech venture.
Ouch.
Statements like these have been widely interpreted (inside and outside of tech circles) to mean that people with MBAs don’t have much to offer the tech industry. For MBA students, like myself, it can be easy to read this type of opinion and conclude that a career in tech likely won’t be a good fit. But, you know what they say about people who “assume.” PSA to MBA students past and present: tech may be the promised land you’ve been looking for.
“A” is for Administration
As I see it, the problem with the Kawasaki take on MBAs is really a problem of interpretation and application. Interpreted narrowly to apply only to actual startups, I think that the general sentiment is valid. After all, the “A” in MBA does stand for administration. MBA programs focus largely on teaching general management and analysis skills which are quite valuable within the context of large organizations with lots of resources and specialization. However, management and deep analysis are often not what a fledgling startup needs most. The number one priority for startups is living to see tomorrow (or to close the next deal or lock up the next round of funding). In such an environment, success is more likely to be determined by the quality of execution than the quality of management.
Don’t get me wrong: if someone right out of business school wants to join a startup, that’s great! But be prepared to put most of what you’ve been learning over the past year or two to the side, because what the company probably needs most is somebody to conduct product demos, handle customer service calls, review lease contracts, hire developers, keep the bathroom stocked with toilet paper, and hassle with the cable company when the internet doesn’t work. An MBA program is not designed to teach you to do these things. That doesn’t mean you can’t do them well if you have an MBA, just that the degree is not a requirement for success.
All Tech Firms Are Not Startups
An important (and seemingly obvious) thing to remember here is that many tech firms are not startups. Tech industry leaders like Google, Twitter, Amazon, Facebook, Salesforce.com, Adobe, and many, many more have sailed right past the startup phase and are now industry behemoths in their own right. However, because these companies are largely responsible for creating the now-ubiquitous “startup culture” (think free beer in the office, super-casual dress, and general employee empowerment), the public consciousness doesn’t seem to have caught up with their growth. Oftentimes, these same companies are what come to mind when people imagine “startups.” The result is confusion: when Kawasaki says startup, lots of people hear tech writ large.
The fact of the matter is that companies like Google and Amazon are actually in desperate need of just the sort of analytical and management skills cultivated by MBA programs. They obviously value the contributions someone with an MBA is trained to make, judging by the growing number of business school graduates they hire each year. So the issue isn’t that MBAs aren’t a good fit for tech, it’s really that the skills acquired through an MBA program oftentimes aren’t as valuable for a startup as they are for a company that has achieved a certain threshold of size and sophistication. But, for those tech firms which have hit a point where the focus is on scale, rather than survival, hiring talented managers with outside perspective can be critical to success. If you’re Google, Apple, Amazon, Facebook, or HubSpot, this means hiring MBAs.
Look for Scale
My advice to those that have started down the MBA path and are interested in tech is to seek out opportunities with companies that have just reached the threshold where they start to focus on scaling. Companies that fit this profile are usually growing extremely fast and have started to observe the need for more structure and organization as they grow. HubSpot, where I have spent the summer interning, is a great example. On one hand, the company continues to embrace autonomy and flexibility — values that have been critical to its success so far. On the other, there is a widely recognized need to invest in managers that can help get the company into a position to massively scale. The result is that an MBA joining the organization can make a large and immediate impact without having to shelve the analytical and management skills she just spent two years building. Sounds like a great fit to me.