Why Business School Isn’t Actually A Crazy Plan for Entrepreneurs

Maybe MBAs Aren’t Just For Consultants and Investment Bankers

I recently read this WSJ article “B-Schools Vie for Startup Crown”, as well as several critical responses to it. A common joke among entrepreneurs is that a startup’s value is $1M for each engineer minus $250k for each MBA. The idea that “business guys” don’t add value in an early stage startup is common among engineers as well. After all, the only thing that’s important when building a product is actually building the product, right?

I think this is the wrong way to look at the situation. Many of my friends, including many engineers, want to start a company, but can’t afford to work without a salary for an indeterminate amount of time. Additionally, most early stage investors won’t consider investing in a team with a slide deck and a dream; investors want a working product, and traction.

Being a full-time graduate student (I did a 2 year masters in physics, followed by a 2 year MBA) gave me a safe environment to experiment with ideas. It also gave me four years where I could effectively be working full-time without a salary, which allowed my team and I to build version 1.0 of our product and get our first two enterprise customers. A month before graduating, we were able to raise 18 months of cash because we had a product, and traction.

Graduate school is expensive. Couldn’t I just have taken those tuition dollars and used them to support myself while building the product? Sure. But using those dollars for graduate school gave me two huge advantages.

First, I now have two sought-after graduate degrees that basically guarantee me a job. It may guarantee me a job that I would never actually want to have, but I have much more job security than I would have if I had just quit my job and spent two years building a company. Knowing that there is an educational safety net under me gave me the courage to try some things I may not have otherwise tried.

The second (and likely biggest) advantage that graduate school gave me was a network. Attending a high-quality graduate school gave me access to investors, mentors, and even potential customers that I would have had a hard time getting access to on my own. Again, is this network worth the huge tuition? You can make an argument that a $60k per year tuition bill is an expensive networking fee, but being able to build a team of partners, investors, and mentors that made our company successful was essentially priceless.

The worst reason for an entrepreneur to go to graduate school is to learn something. Almost everything you learn in graduate school you could learn on your own (especially if you’re smart enough to be starting companies). But the safe environment, access to partners, and excellent educational safety net can be great reasons to park yourself in school for two years while you start a company.

Finally, how do you balance all of that schoolwork while starting a company? It’s easy if you have your priorities straight. I went to graduate school to start a business, not necessarily to get A’s.