MBAs and Start Ups

Lots of buzz of late regarding MBA grads and start ups.  A couple of representative soundbites vis a vis the value of an MBA when it comes to starting companies:

I have an MBA - UNC Kenan-Flagler 2009 - and I'm starting a company.  And I also have a few opinions on the matter:

In descending order according to value, the most important outcomes from a top quality MBA are relationships, direction, and education.  And they're all very helpful when it comes to launching a company.

Relationships have been incredibly important to our efforts to will Argyle into relevance...and the vast majority of those that have been helpful have come directly from my ties/time at UNC Kenan-Flagler.  I made a list of 100+ prospective investors, advisors, customers, etc. a few months ago - most of whom would immediately return my phone call and all of whom at least know who I am.  That's pretty powerful when I consider the networks of those 100+ people and especially powerful when I consider the vacuum from which so many companies try to launch.

Note that you don't get the same kind of relationships from a part-time MBA.  Nights and weekends programs are helpful for the hard skills - (which I've already stated to be much less important) - but sub-optimal when it comes to relationships.  Do a part-time MBA to get a promotion...especially if you can get your company to foot the bill.  Don't do a part-time MBA to find your co-founder or to learn about launching a company.

If relationships are the most important part of the business school experience - which it will be - then you should use this as a filter when determing where to apply and attend - ESPECIALLY if you're harboring entrepreneurial ambitions.  Think about who you would like to be friends with and go there.  Not to undermine the fluffy stuff like "culture", "fit", etc. - but you're probably best off making friends with people at the best school that accepted you, provided it is a consensus Top 25 or so school.

To me, the direction one can gather from 20 months of business school is much bigger than the first job out of school.  I was able to dabble in lots of areas and work a lot of internships/part-time gigs - all in an effort to figure out what I like and what I am good at doing.  (By the way - not all MBA students do it this way.) 

Starting a company is a life decision - not a job decision.  And I used my time as an MBA student to aggregate a lot of inputs and experiences to ultimately make the decision. The most helpful classes vis a vis launching a company weren't the entrepreneurial classes - they were the "what do you want to do with your life" classes....which for me helped me answer the quintessential start up question: "How poor are you willing to be, for how long, and in exchange for what potential pay-off - monetary or otherwise?"

With regards to the education piece, I've more or less forgotten most of what I've learned.  With deep apolgies to my teachers, I probably couldn't DCF model my way out of wet paper bag.   

And it doesn't matter at all.  The first 6 months of Argyle have been about hustle, product, and customers.  And the next 18 months will be, too.  You don't need an MBA to work (productively!) for 14 hours a day and build a compelling product - you just need furious passion and an overwhelming love for the customer/problem. 

And the "I'm getting an MBA to study entrepreurship" line is total bullshit.  For one - the entrepreneurship cirriculum in most business schools is completely antiquated.  (And that is me saying it nicely.)  All about writing business plans and raising money from VCs - which is educating, but not the way the world always works.  For two - entrepreneurship doesn't happen in a clinical environment.  I wish someone had grabbed me by the shoulders during my 2nd year, shaken me violently, and told me to stop learning about starting a company and to start starting a company.

When it comes time to build a team and run a company, the MBA education will pay off in spades.  I'm sure of it.  And I'm not necessarily talking about the "how to build an enormously complex financial model" training.  (I'll hire a recent MBA grad for that.  Zing!)  I'm talking about the how to relate to people, build a team, and get sh!t done.

And then there is the tiny detail that no one discusses - money

Most students that graduate from business school leave with a crippling debt burden - anywhere from $150k to $250k - that more or less precludes starting a company or joining a start-up right after graduation.  So most students follow the money and who can blame them!  Some of my classmates are making bank and deserve every penny because they're incredibly talented and productive.

The problem is that many of these classmates want to start companies.  I know it for a fact because they've told me as much.  But they won't.  They're making fat salaries...and will make fatter and fatter salaries as they continue to perform...which raises the personal burn rate for all and renders the "leave my job and start a company" hurdle insurmountable for most.  This is a fact and this is how the MBA kills start ups.

Due to a variety of factors, I'm extremely fortunate to have graduated with a fraction of the typical MBA debt load.  My student loan bill is the equivalent of a monthly payment on a new Honda Accord - which gives Kelly and me incredible flexibility that we otherwise might not have.  Had I attended another school and had to rack up a ton of debt to pay my tuition and Kelly's shoes - there is absolutely no way that Argyle would exist.

The minimal debt has helped me keep my personal burn extremely low, which has enabled me to stay alive as an impoverished entrepreneur, which has given me time to figure out what to do, find a partner to help me do it, and start making things happen.

So to summarize what has turned into quite the rant:

  • Go to business school to build relationships and find direction.  Then learn stuff along the way.
  • Don't go to business school to start a company or to learn about starting a company.
  • If you're going to business school, give UNC Kenan-Flagler a look.  :)