Coding schools are the new MBAs
A world run on software demands new skills and new schools.
There is a famous saying in Silicon Valley that goes like this:
“When valuing a startup, add $500k for every engineer, and subtract $250k for every MBA.” Aaron Patzer (Founder of Mint)
My intention here is definitely not to make fun of MBA grads(even though highly tempting), I went to a Business School myself, back in 2001, and it would be hard to surpass Dilbert, so I won’t even try.
A lot of people investing their time, money and effort into an MBA usually agree about the three fundamental values they got from it :
1 the network of alumni,
2 the market recognition of your ability to pass a highly difficult selection process,
3 the business culture you acquire during the program…
MBAs have flourished in an era, the 2nd part of the 20th century where companies saw their product get commoditized very fast.
In most part of the 20th century’s economy, it all came down to how well you convinced the customer to choose your brand (marketing), and how much money you could put into it to reach more people (finance). And those are basically the two main things you learn in an MBA. How to sell - How to get financed.
In that era, the Mecca was undoubtedly New York, with only two streets of interest, Wall Street to get the money, Madison Avenue to spend it (famously illustrated in the series “Mad Men”).
But then came the Internet and everything changed. With everybody online, you need totally new kinds of intermediaries to facilitate peer to peer connections. With good software, the need for complex hierarchies is put into question. Lean digital platforms connect people willingly and manage to get tremendous traction with very little resources and people.
In 2014, Whatsapp was sold for $19 Billion to Facebook. It had grown to 450 millions active users without a single dollar spent in advertising, only had 55 employees made of 32 engineers and a team for customer support. The only employee with an MBA (from India) was not a founder and was famously labeled “the business guy”. What he was actually doing remains a mystery to this day. (source)
There definitely should be a little bell ringing in the MBA’s Dean’s offices when one of the most incredible recent history of value creation — for both shareholders and users — was completely executed without any Ivy League MBA’s member even remotely involved. Even the one and only VC whatsapp allowed to join the ride was a serial entrepreneur with a degree in Computer Engineering.
Has someone stole MBA’s thunder?
Yes, and by the very guys no one expected to be able to steal anything from anyone: the geeks. The digital revolution has allowed anyone to access anyone. So your ability to be part of the nexus of the old intermediaries’ organizations (top levels of TV and print media, banks, big agencies) is falling into irrelevance. Even Google’s IPO had the “geeks” dictate their terms to the MBAs for a cheaper, more egalitarian approach in order to avoid that brokers favor their best clients… (source). Bankers were in shock.
We’re seeing a vast power transfer from the “MBA elite” towards “digital product creators”. In the new game, points do not depend on who you know, but on how well your product engage with the crowd. Learning to code has become the new prerequisite to be allowed to play. In coders’ world, your rank depends on downloads and active users. Your age, sex, color, school or origin doesn’t matter as long as your invention really solves a pain millions of users were suffering from…
Startups still need financing and marketing of course, but marketing is morphing into “growth hacking”, where even there, employees code a few hacks to trigger extreme growth. In a sector as emblematic as car manufacturing, product inventors are stealing the scene too. Tesla just got 400k customers to preorder a car (not ready until 2017, probably 2018) without a single cent spent in TV ads… They just made a product a lot of folks had been expecting for years : a long range, affordable, beautiful electric car.
In a product driven organization, where your mission (Simon Sinek would say “your why”) resonates with the crowd, you don’t need to spend a lot to get the word out. And provided you show a good user’s growth, you will easily find money from former coder/entrepreneurs turned Business Angels and VC, when it is not directly provided by an online platform (Kickstarter) bypassing everyone and letting users finance you directly. The key factor of a successful fundraising is no longer your diploma (if it ever were…) but your “user’s traction”. A product launched is worth a thousand business plans.
And the benefits MBA provided are being reinvented. Your market recognition is now attached to the success of what you build and say online (portfolio or followers). Your network is made of the tribes you help foster (open source, wikipedia, meetups…). Your business culture depends on your ability to keep following what’s going on, because thinking that you could rely on what you learned at school for the rest of your life with no need for update is not only stupid but dangerous.
Interestingly, Goldman Sachs, one of the dream company of MBA grads, recently tried to rebrand itself as a tech company, boasting that it employed more engineers than facebook… Thinking that hiring more engineers than everyone else makes you “tech” is probably what a consultant (with an MBA) sold them on a shiny powerpoint… {facepalm} but yet the rebranding attempt tells something about the big shift I’m trying to describe.
Will MBAs disappear completely? Of course not, but their value will surely suffer from the fact that the most brilliant minds will gradually decide to get tech skills in shorter term trainings (like coding bootcamps) to complete an initial degree in a more passion driven degree like Sociology, Psychology or Arts.
Understanding users and being able to build something they use becomes the new Holy Grail, not your ability to express yourself in bullet points without laughing (hardest part of my personal career by far…).
So, just like Dr Jones, be faithful, take a sip and believe in your ability to turn your ideas into real products. Learn to code.
I’m Mathieu Le Roux. I lived in Toulon, Paris, Berkeley and São Paulo and am currently launching Le Wagon, the first Coding Bootcamp to happen in Brazil.
Edit: as an interesting twist of events, my business school just announced a partnership to have entrepreneurship class’ students do Le Wagon bootcamp :)
If you’re in São Paulo and want to start coding, we offer free workshops.
Thank you to my partners Pedro and Fernando for their help.
