Is Business School The Best Place To Prepare You For Startups
Should You Skip The MBA And Go Straight To Startupland
Over the years, there have been countless studies investigating and discussing the rate of return on attaining a Masters in Business Administration (MBA). For most people the decision to pursue an MBA all comes down to money. But for others it’s about acquiring the skills and knowledge obtained through an MBA program to launch the next great startup.
For those intending to find a technical co-founder or learn how to run a startup, then an MBA program might not be the best place. In school, you don’t get graded for “having resiliency, curiosity, agility, resourcefulness, pattern recognition and tenacity.” Speaking from personal experience after graduating from one of the top MBA programs for entrepreneurship, I can attest that more time is spent towards research versus building MVPs and physical assets as opposed to digital assets. If 80% of the companies that existed before 1980 are no longer around — and another 17% probably won’t be here in five years, then why are business schools still teaching the same material?
“Great grades and successful founders/technology entrepreneurs have at best a zero correlation.” — steve blank
Y Combinator recently posted a podcast, “How Should Business Schools Prepare Students for Startups?” The podcast featured Jeff Bussgang, a lecturer at Harvard Business School and General Partner at Flybridge, and Michael Seibel, CEO of YC. The host, Craig Cannon, opens the discussion by stating Seibel’s tweet from April 10th, “Reading YC applications and observing that business schools are doing a criminally poor job of prepping students to start tech companies.” What ensued next was a vibrant discussion with both guests gently pushing back on each other’s insights. Below is the video version of the podcast followed by my top takeways:
Michael Seibel — Everybody wants to have an incubator, but man, it’s a hard model. And I think too, very specifically, it’s extremely hard for the people who are leading entrepreneurship efforts in a school. It’s hard for schools to recruit entrepreneurs to do this work. And so it’s really hard to learn how to do a startup from someone who’s never done a startup before, and that tends to be the case for a lot of people running these programs.
Jeff Bussgang — One of the things we’ve gone back and forth on is this question of research versus MVPs. I think it’s just that MBAs, because of their nature, may be more likely to fall into the spending too much research time mistake as compared to a tech founder who is gonna be more likely to jump right in and build something.
Michael Seibel — And so to me this is not a situation where I say, “Oh, an MBA applicant is worse than the average YC applicant.” Of course not, and we accept tons of MBA applicants. We accepted a number of HBS applicants. I think the question that comes to my mind is why aren’t they doing disproportionately better? They should be doing disproportionately better. On average, they should be some of the best applicants we see, because the vast majority of our applicants have no formal training, mentoring, or experience in the classroom dealing with any issues around startups. And so I think that gap is what I’m trying to figure out how we erase.
Michael Seibel — I think research is extremely important, but I think that being able to do research with a live product is far more valuable than being able to do research with a general survey.
Jeff Bussgang — You know, and this game in startupland it’s moving so fast, if you’re out of the game for five years, you’re old. You’re out of touch. And the models that might’ve worked 10 years ago, 15 years ago, 20 years ago when some of these professors themselves might’ve been startup entrepreneurs, like me, or worse, academics who never had an operating job in startup land and had a great theory about this or that and then they’re teaching a class with no actual experience building product and building companies, that’s really dangerous.
Jeff Bussgang — Great startups and great ideas come from cross pollination. And that’s why the siloed thing is so heartbreaking to me because we have so many really smart kids getting siloed in these narrow lanes. And I don’t know what you see geographically with the YC group, but I think if you’re not in cities where you’re seeing a lot of cross pollination, it’s a real disadvantage for those entrepreneurs.
Michael Seibel — I think the one thing that always gets me is every entrepreneur has this sense of hustle, and when I see founders overextending the hustle to compensate for these core issues, that’s what often kind of frustrates me is that like, “Okay, we don’t have a technical co-founder, but man, I found some dude in India who’s gonna build this thing for me. Don’t I deserve a pat on the back. I got through that no technical co-founder challenge.” And it’s as if no one is telling them that some things are foundational, like some things you can’t hustle around. Or, if you hustle around them you’re decreasing your chances of success significantly.
Jeff Bussgang — You know look, I’m a venture capitalist by day, so I totally get this tension, but one of the things that we should be careful to distinguish is the purpose of the university. It’s not to create billion dollar startups. It’s to have a pedagogical experience for their students.
Michael Seibel — And I don’t know many people in the valley who would say that you learn more getting an MBA than you learn two years in the grind at an early stage startup. So, it’s tricky, it’s tricky. Because there are a lot of MBAs that have been successful, but there are also a lot of non-MBAs that have been extremely successful.
Jeff Bussgang— If you’re kind of bumping around in a company that’s growing 20%, 40%, even 60% a year, it’s not clear it’s gonna be a $10 billion plus company, then you would benefit tremendously taking two years off the treadmill, and to take a page from Stephen Covey’s book, sharpening the saw a little bit.
Jeff Bussgang — I say to students, “Look, go to the top five (business school), which are cities who happen to be in the middle of startup land cities, you know, rich innovation ecosystems, and that’s it.” I’m not sure I would go to others if I’m in the middle of a startup. If I’m trying to transform myself, who knows, but if I’m in the middle of a startup that’s going well in New York, or in Tel Aviv, or in Austin or in Silicon Valley, between, I don’t want to name a school to be negative, but if it’s a non top five school then I’m not sure you should go.
Jeff Bussgang— I think the blogs of people like Paul Graham, and Brad Feld, and Fred Wilson, and the books that have been written by those folks, or at least in the case of Brad and others, those are the real valuable pieces of content. If you’re not learning Eric Ries’s book, if you’re not reading Four Steps to The Epiphany by Steve Blank, if you’re not seeing that content in your class, you’re at the wrong class. So, that’s the advice I give is make sure you’re reading canon. There exists a canon in startupland, and if you’re not studying the canon then it’s like trying to be a minister without memorizing the Bible.
Of course, there are a lot of positives getting an MBA such as networking opportunities and upward mobility within your corporation. I’m not trying to discourage anyone from going to business school, but it can also come with a steep cost of approximately $40K in tuition a year at a private school. Steph Korey, Cofounder of luggage brand Away, told Fast Company, “I actually got an MBA from Columbia. But it was–truthfully–less helpful than startup grad school.” Experiences working at other startups can provide you skills, industry knowledge, and networks necessary to test business ideas and ultimately launch your own startup. Startupland is moving fast and it’ll be unclear whether business school curriculum can adequately reflect the current economic environment that you’ll be operating in when you launch your startup.