Why Business School Teaches You Nothing About Running a Business

Contrary to popular belief business school doesn’t teach you a thing about how to run a business. It teaches you how to be a great employee in someone else’s.Of course there are probably exceptions like Babson and a few others, but I’d say that going through Ycombinator’s How to Start a Startup series and reading Josh Kaufman’s blog will be worth more than any MBA you could get, and they won’t cost you a dime.

If you want to be an investment banker at Goldman Sachs, or a consultant at Mckinsey, go to Harvard. Otherwise the name of business school should be appropriately renamed as “upper management school”

If you want to start a company, the best MBA would be to start the damn company.

• Rather than spending 120,000 dollars on an MBA Tim Ferriss decided to forego the MBA and invest in startups along side a friend. Not only was the ROI significantly higher than business school, he probably learned things you never would in a classroom.
• When David Henemeir Hansson (DHH) gave a talk at Stanford it was titled Unlearn your MBA.
• 600 interviews has given me an education that kicks the crap out of my MBA and has led to far more opportunities to advance my career than my degree ever did.

In business school the consequences of a miscalculation on a spreadsheet in a project management class is a lower grade. In an actual business the consequence of a miscalculation could be thousands of dollars. Something far more real is on the line. In business school you study a bunch of theory. In a real business you actually make and build things. When you run a business you learn countless lessons that you don’t in business school. Here are just a few I’ve learned from running a business that I never did in a classroom.

1. Momentum and Metrics

If there’s one lesson that has been drilled into my head over and over during the last 2 years it’s the notion that momentum is everything.

• Sam Altman said the momentum is the lifeblood of a startup
• When we had to cancel an event that had been a blowout success the year before, my mentor Greg said “you lost momentum.”
• When I met with my speaking agent, he said “Let me give you one piece of advice. When you start a speaking career don’t take a break for a year and try to come back.”

Momentum itself is rarely the byproduct of any one big thing. It’s the byproduct of little things done consistently over time, which carry you into momentum windows (which are often big things). It’s exactly how my business partner Brian Koehn managed to get his skateboard line into 27 stores in 2 years, all while he was in high school.

But what you do after a momentum window matters just as much as what happens during it.

• It’s why I’ve never stopped writing 1000 words a day.
• It’s also why I started working on the marketing plan for my book launch the day after I submitted my manuscript to my publisher
• It’s also why all the most successful people are always working on what’s next: an author on a next book, a musician on her next album, and actor on his next film.

One of the most important lessons my friend Greg Hartle taught me was this.

If you do the right things in a momentum window, you’ll make a quantum leap. And you’ll never go back down to the same level again.

Maintaining momentum is a delicate balance between living in the moment and keeping your eyes on the horizon. And it’s really hard to get it back once you lose it. But if you maintain it, you might just make a crack in the sidewalk or a dent in the universe.

Metrics

As a creative person I hated metrics. They made me queasy and sometimes they made my head spin. But this little gem from Fred Wilson changed my opinion on metrics.

If you listed the habits of successful people, tracking and measuring would be near the top of that list. I see it with people, companies, and teams that I work with. I see it in my own behavior. — Fred Wilson

Right now I’m teaching the guys at Idea Lemon, a new podcast some of the things I’ve learned over the last 6 years. After our first call, they said “nothing you’ve told us is earth shattering, but it’s immensely helpful.” Most immensely helpful things are not earth shattering. They’re obvious, but we just don’t do them. Watching your metrics is one of those things. As my business partner Brian likes to say, “the metrics are the pulse of the business.” And you always want to keep your eye on the pulse or you’re going to flatline.

There’s a somewhat odd phenomenon that occurs when you start to measure things. They start going up. I’m not sure if it’s because of the heightened awareness you have of what’s actually going on in your business, or because there’s psychology in seeing the progress you’re making.

2. Marketing and Branding

Marketing today is driven by your ability to tell compelling stories and give people a reason to find you interesting. What the internet has done is effectively democratize the creation of brands. But if you’re going to cut through the sea of noise, your brand has to be unmistakable. How to do this isn’t going to be found in a For Dummies Guide, or standard marketing text book. It’s something that you discover by putting your work out into the world, creating minimum viable products, and iterating on them. Effective marketing and branding is about emotional resonance with the people you’re trying to reach. Marketing and branding are about alignment to your core message, and giving people something that they want to be a part of, and cant’ help but talk about.

3. Teamwork

If a team doesn’t work well together in business school, at the end of the semester you’re able to cut ties and be done with them. In a real business, how a team works together is everything. It can make or break a company. First let’s dispel the myth of solo entrepreneurship. Without a doubt it is one of the greatest times ever to start a business, but having help makes a world of difference. Here are some thoughts on teams and hiring that I never learned in business school

1. Entitled team members can sink or poison a small team. Never hire them.
2. If everyone is not equally committed to the success of the enterprise they will hold the company back.
3. Good partners build each other up when they need it. They recognize each others accomplishments. It’s something I’ve noticed our CEO Brian does with every single person on our team.
4. You’ll learn more about someone when things are a struggle than when they’re going well. This will reveal their true character. It’s a lot easier to walk in the sun than it is in a shitstorm.
5. Do a project together before you hand over any equity to someone.
6. Belief in the inevitability of the organization’s success is essential.
7. One of our team members asked us why we asked him to join us even after the first thing he did with us was a failure. Our answer was simple: Work ethic. We saw how hard he worked on something even though he knew it was destined to fail.
8. Good team members stick together. They fight for each other. They pick each other up when the other falls.
9. Respect is really important. If someone sees themselves as better than another person they become toxic for the team.

4. Running a Business Requires You to Use a Compass not A Map

I have two friends from business school who wanted to start a business around big data. They had a client who was ready to pay them. Instead of taking the money and doing the work they were busy building a web site. They had spent 2 years trying to put together a web site, and neither one of them is a web designer. To the best of my knowledge they haven’t started the company.

One of my other friends had a product built by a software developer. He wanted to outsource the growth and marketing. Effectively he wanted to outsource running the business and making it successful. I told him that wasn’t an option.

While you could read every book under the sun, read every blog post written by every successful entrepreneur and listen to a thousand podcasts, nothing will teach you as much as actually doing the work of running your business. And this is the kind of work that has to be done with a compass, not a map.

5. Managing Your Psychology

There’s no class in any business school to the best of my knowledge titled “Founder Depression 101: How to Deal with the Epic Highs and Lows of Running a Company.” But as Ben Horowtiz said

By far the most difficult skill for me to learn as CEO was the ability to manage my own psychology.

Fortunately we are getting to a point where people are willing to publicly talk about the challenges they’ve had with managing their psychology.

• I talked briefly about my own challenges with it in this raw and honest look back at 2015.
• Tim Ferrris Shared some practical thoughts on suicide.
• Another great resource is the work that Jerry Colona has been doing at the Reboot Podcast.
• Jon Westenberg has said we need to stop pretending that founders don’t suffer from depression.

If you’ve been there, you’re not alone.

While business school may give you a lot of information, the education starts when you do something. If the reason you’re headed to business school is because you want to start a business, I’d encourage you to reconsider. You’ll learn far more by actually starting a business. It won’t cost you as much and it might have a much more significant payoff.

I’m the host of the The Unmistakable Creative Podcast. Every Sunday we share the most unmistakable parts of the internet that we have discovered in The Sunday Quiver. Receive our next issue by signing up here.