A Quick Guide: Startup vs. MBA? Or Both?
‘Getting an MBA’ and ‘starting a business’ are two different things
Participating in an MBA program can accelerate the launch of your start-up, but it can also hold you back. In this blog I share my story of ‘starting-up’ during my MBA journey and the benefits and challenges that came with the choice of doing both simultaneously.
My Journey
In 2011, I started at the Harvard Business School (HBS) and the Kennedy School of Government (HKS) with one goal — leave the program with a start-up focusing on revolutionizing higher education. I launched USAdelante the summer before I started the program with a colleague I met at Teach For America (where I worked as an Education Pioneers Summer Fellow in Houston).
The first year I took classes at HKS and that summer worked on our venture full-time out of the Harvard Innovation Lab (iLab). I recruited team members from the Harvard Graduate School of Education (HGSE) and through personal connections. By the end of the summer we conducted a pilot, made it to the semi-finals of Echoing Green, and were accepted to Start-Up Chile.
To partake in Start-Up Chile, I would have had to leave Harvard — so I reluctantly chose to forgo the accelerator program. After the summer, we still had not secured a ‘sale’ for our product and the team began splintering. About a month later the team disbanded. The pressure of balancing the 1st year at HBS and managing a distributed team, given speed at which we were iterating and adapting, was too much for me to handle at once.
At the time, I was convinced our virtual team was the primary issue — so I scouted ‘Edtech’ meet-up events locally until I found a co-founder with similar aspirations and level of commitment. A month later, we started Plexx. We received press through HBS, coaching and mentorship through the iLab, and within four months we had a design intern from Belgium helping us in Boston.
The next year was insane. My days were spent in the classroom talking through cases, evenings were spent crafting applications, pitch decks, and iterating on the user flow, mock-ups, and prototypes in the iLab (not going to social events with building relationships with my fellow MBA students, which is a large part of why you go to business school). By the end of my first year at HBS, it was too much to do both — so I left Harvard. We got into Start-up Chile and the designer and I moved to Santiago.
The short story — everything fell apart. We built a product, tested it, adapted it, did not get the user traction we needed, ran out of money and the team disbanded. I spent the next two months backpacking around South America reflecting and rethinking my next steps.
Unclear what I should do next, I worked in an innovation and design firm (Doblin), ran startup projects in fashion and medicine, worked as a summer associate at a venture capital firm (Gotham Ventures), and participated in a design program in Italy before ultimately deciding to return to HBS. After a few weeks, motivated by a class at HBS, I gave in — I started working on another startup Caila— returning to my original challenge of reimagining higher education.
Over the past year, I met my two co-founders, one at a hackathon at HGSE and another through my undergraduate network (now knowing what skills the ideal team should consist of). We iterated on the concept, built a prototype, won the Harvard Public Sector Innovation Award by Accenture, graduated, participated in the iLab Venture Incubation Program, and were accepted to the Parallel 18 incubator. We launched Caila in Boston on August 4th, 2016.
Benefits:
1. Indicator
Getting into Harvard opened the door to partake in Education Pioneers, Teach For America, Start-up Chile, Doblin, and Gotham Ventures. Options seemed to appear that I did not previously have (or that I was not aware of) — even before I officially started the program.
In our start-up, Caila, I contact deans and university presidents of schools to see how we can re-engage drop outs and improve access to higher education for their school. People usually take a call or an initial meeting. A few have sighted ‘my background’ as the reason for doing so.
2. Hidden Curriculum
There were hundreds of “little things” that seemed to be ‘common knowledge’ at Harvard that were new to me. I learned these “little things” mostly from classmates and informal conversations in the community - less so in the classroom.
For example, I did not understand what investment banking, private equity, venture capital, and search funds actually were. I did not know what books I could learn the details of the startup world like Founders Dilemmas and Venture Deals (and that VCs love to tweet and blog). I did not know MBAs were actually seen by some as a weakness in a start-up (who knew?)...and the list goes on.
I imagine if you went to an ‘ivy league’ school for college or grew up in San Francisco this hidden curriculum is common knowledge to you. For me it was not, and this ‘untaught’ knowledge was part of what helped me adapt.
3. Network
The network — the big ticket item you are paying for. You can contact alumni across the globe who are connected to almost every business. It provides access to knowledgable experts and investors with a cumulative net worth beyond comprehension. Also, the HBS Alumni Angels and Yard Ventures are just two communities that invest in startups. The lifetime power of this benefit is hard to even fathom at this point.
Outside of the alumni, CEOs of companies and subject matter experts are constantly coming to the iLab and the Rock Center for office hours or speaking events. These office hours were one of the most valuable resources because of the high quality feedback and coaching.
4. Community
Building a startup is tough. When I needed advice and support the community was there — from the lunch conversations to key introductions. I found my classmates to be some of the smartest and most driven people I have ever met. That support network of friends and expertise is part of what kept me motivated and directed toward what I should do next.
Universities are also amazing places to find co-founders. The community is a curated, talented, group in a point of transition. Especially for graduate students, many have left their jobs to deepen their expertise in a particular area, and are looking for the next ‘thing’. It may be the place to find your match.
Comparing the iLab community to the HBS community at large, they are both supportive, but the iLab is a homier network for entrepreneurs — it almost feels like a different school all together. I learned just as much informally (if not more) about entrepreneurship from the ‘expert in resident’ office hours and serendipitous conversations with other founders as I did from start-up related classes at HBS. As an HBS student, the iLab made all the difference.
Challenges:
1. Costly
$200,000+
The elite MBA programs are crossing closer to the $250K mark and it is simply absurd. Yes, at HBS 64% of students have ‘fellowships’, but I would love to cut out the therapy dogs, random afternoon mini cupcakes, and perfectly manicured facades for a tuition discount.
Specifically related to founding a company, unless you have a full scholarship, the savings, or have it paid for by the government (or family members) — you come out in debt. I was not foresighted enough to start with that much savings. What is my reality? I am deferring over $150K in loans, sleep on friend’s couches while we get the first version of the product off the ground, and hustle everyday for sales. How long can you keep this going? As long as I can and as long as it takes, because I believe in my venture and our mission. Being a start-up founder out of business school (on average) is not a glorious path compared to your counterparts who have jobs paying $130K/year plus signing bonuses at graduation.
2. Inflexible
The community, network, and classes are second to none and can be game-changing, but consuming a high volume of cases/courses, for an entire year, along side starting a business, forces you to choose between your business and taking advantage of what you are paying for — the program (or more specifically, the community). In an ideal world you would be able to take half the classes or less and work out of the iLab. Be aware, you are paying for world class management training — to pay and not fully engage is disservice to your classmates and for you. Are you in it for an MBA or to start a business? Which is a higher priority?
3. Tangentially Relevant
Don’t get me wrong, the education at HBS is world class. It is most likely the best place in the world to learn how to grow businesses and accumulate wealth. Before every class, the teacher is poised and waiting for the clock to strike before kicking off an intense directed discussion, but not all of the classes are going to relate to your venture.
Sure, everything we learn may be relevant — that case on Russia may one day help me think about how I may expand my business to eastern Europe — but be aware you are paying roughly $350/class (~$10K/course) and dedicating at least 6–10 hours a week to each course. If building a business is your sole focus, dedicating that amount of time and money for learning that is tangentially relevant may not be the best investment.
4. Outlier
5.8% — 54 of 930
I like data. 5.8% of the 2016 HBS class identified as start-up founders (at HBS Bridges 2016). This does not include those joining startups as an employee or partaking in search funds. As a founder you are a minority. Granted, start-up founders make up a larger percentage than most industry groups graduating from HBS, but it is a small percentage versus the whole (or compared to the number of students going to consulting or finance). Compare that to an accelerator, incubator program, or co-working space such as MassChallenge or Start-up Chile, or WeWork, where close to 100% of the people are working on start-ups. The vibe is very different.
On the flip side, 24% of unicorn founders have MBAs and the largest number (13) came from HBS (as of January 2016). I would venture for several reasons — the high volume of high caliber talent going through the MBA program (class size and network size is larger versus other schools), the access to capital through the network is substantially larger than other programs, and the training. While 13 founders is the largest representation from any MBA program, it is a small number of absolute people compared to the total number of students graduating through the program over that period. Even if you assume 13 unicorn founders every 5 years, thats a ‘unicorn’ success rate of ~0.3% (13 students/(5 years x 950 students/year)). No MBA program is a guaranteed ticket — and not all programs are created equal — but know the odds. Understand that the promoted stories of success represent a few.
Do you want to be surrounded by a community of founders or an outlier among many?
Parting Words
“I drank the startup Kool Aid that the GSB/silicon valley served up…and almost drowned in it. I was a founder working to build my dream. That came at the price of extreme financial distress, a temporary loss of self-confidence, and a few scary adventures. On the plus side — I gained new friends from all walks of life, learned how to hustle like a mofo, and have been absolutely humbled.” — Stanford Graduate School of Business Alumni
The MBA journey changed my life by providing access to an elite network, specialized knowledge, a brand and community that will last a lifetime. Not everyone who wants to start a business NEEDS to attend business school — and business school is not optimally designed to train founders. Going to business school can help immensely, but make sure you are clear on what you want more…
Be careful with the Kool Aid.
Leap with your eyes wide open.
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