Skip to comments.Is an MBA a Plus or a Minus in the Start-up World?
Posted on 05/11/2010 7:08:58 PM PDT by SeekAndFind
A long time ago, I had to make a really tough choice: invest in an MBA from New York University, or make do with my bachelors. I was newly married, had a child on the way, and didnt have much in savings. The degree would set me back tens of thousands of dollars and take years to completeespecially if I did it part time. And I couldnt imagine doing anything but programming computers for a living. So why learn finance, marketing, and operations management, I wondered? Well, I decided to enroll because my understanding of the business world lacked depth, and I harbored a deep-rooted desire to get the best education possible. My wife and I moved into a small one-bedroom apartment in North Bergen, NJ, and we made do with what we had.
For a couple of years after getting my degree, I wondered whether I had made the right choice. Even though I scored a great job at CS First Boston in its IT department, I was just writing code and designing systems. Yes, I started to enjoy reading BusinessWeek and the Wall Street Journal; but had the financial sacrifice and time away from my family been worth it? It didnt seem to have been.
Over time, I started rising through the ranks in IT. I went from being a programmer to becoming a project leader and then a vice president. I found that I could communicate effectively with user departments and my bosses; I could deliver projects on time; I knew how to manage and motivate employees; and I had the confidence to present business proposals to managing directors and board members. I was even able to help persuade IBM to make a $20 million investment in the technology that my team had developed. We spun off a startup called Seer Technologies, and I became chief technology officer. And thats when my education really began to pay big dividends.
In the startup world, its simply survival of the fittest. You have to involve yourself with almost every aspect of the businessand use all skills. I would find myself having to develop and manage budgets; help market and sell; hire; assist in setting corporate strategy; and review legal contracts. As well, I still had to develop technology and deal with all the uncertainties and failures that come with a startup.
My MBA classes seemed to fit our business needs like the pieces of a jigsaw puzzle. Even obscure topics like corporate finance came in handy, in IPO discussions with investment bankers and later, in raising capital for my own company.
So I have no doubt that my MBA was the best investment Ive ever made, and my education helped me achieve success. Which leads me to the reason for this post: a Twitter debate with Guy Kawasaki, Managing Director at Garage Technology Ventures. Kawasaki argues that MBAs are not needed in the startup world; in fact these provide negative value. He insisted that I was in denial when I challenged a piece he had written in Forbes several years ago:
What is the value of an MBA these days for young college graduates who want to start their own company? Probably about a negative $250,000. (I have an MBA, and I was once a young college graduate.) I dont think an MBA matters very much for starting a company. A much better educational background is an engineering degree. You can always hire MBAs, but if you dont have the ability to conceptualize and deliver a product, youve got nothing.
In email exchanges, Kawasaki explained that his issue with MBAs is that they are taught that the hard part is the analysis and coming up with the insightful solution. In other words: implementation is easy and analysis is hard. But this is the opposite of what happens in startups. Implementation is everything in a startup. Kawasaki believes that MBAs arent a good fit for startups, and engineering graduates are.
I agree that engineering degrees are important. They provide a level of technical depth and analytical capability that is invaluable in the tech-startup world. But not everyone needs to be an engineer. You need smart people coming up with creative marketing campaigns; managing finances; and selling your products. And the CEOs and CTOs need to master all domains.
In my experience, the most successful entrepreneurs have been those with a strong technical background who have been through some sort of finishing school. (I am not talking about college dropouts such as Bill Gates and Steve JobsI consider them to be outliers). Engineering degrees can be very technical and can actually narrow ones horizons. To innovate, you need to understand customers and markets. To build a successful productone that actually sells and makes an impact, you need to understand distribution and finance. So even in the lower echelons of technology, a broader educational background is a plus.
Is the MBA the best degree for engineers? Maybe not. Programs such as the one I teach at Duke may be a better fit. The Duke Masters of Engineering Management program is a one-year program that teaches students marketing, finance, intellectual property and business law, and management. Its like a mini-MBA. Engineers dont need to learn how to price an option with the BlackScholes Model, for example. They certainly dont need to learn how to create new types of financial products. There are also many other degrees that can provide the needed balance to engineers. These dont have to be tech or management oriented; even an education in diverse fields such as psychology can be a plus: anything that broadens your horizons and teaches you how to come up with insightful solutions. The point is that education is the best investment that one can make. Unlike stocks and bonds, education never loses value; and when you add experience, it gains even more value.
-- Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University.
After a couple dozen years of toil in the startup vineyards of Silicon Valley, I would urge young people to get the highest pedigree MBA you can muster. It is a few years of sacrifice for years of advantages and a jump start on the road to wealth creation.
First off, all the VC’s hail from the best MBA mills and most lack any operational background whatsoever. So, the first thing the VC’s look at is your education as they are largely under 40 years old anyway.
The only thing that trumps a Stanford or Harvard MBA is having the experience of a key operational role in a moonshot startup [think Facebook, Skype, Youtube, Google, etc.]. And if you have a Stanford or Harvard MBA and a moonshot liquidity event on your resume - you have already the checked the box: “set for life.”
Combined arms wins in business as well as war.
Dude, if you have a moonshot liquidity event on your resume, your bank account already screams “set for life”. No stinkin’ MBA necessary.
I would agree with many (or most) of these points; there’s no doubt in my mind that too many young engineers with bachelor degrees short-circuit their careers by getting an MBA when what they really need is a Master’s degree in their primary field, engineering.
Too many think that the bachelor degree gives them all they need to know about engineering - and yet they go for a master’s degree in business, not a bachelor’s. So they end up being deficient in engineering, and also never get the opportunity to put the MBA to use either.
Will Rodgers never met a MBA he did like.
You can hire MBAs, heck right now they are calling me begging for a job. A lot of them have been laid off and are desperate to keep their foot in the door.
The “Start-Up World” is it? Do you have a time machine set for 1996?
Where you get your MBA matters. I have worked for two Harvard MBAs and with one from the Wharton School and found them to have no practical business sense what so ever. The MBAs coming from the Technical University where I teach really do know something. You want your MBA program taught by faculty who have actually run a business successfully, have done business start ups and who have turned around failing businesses. That is an MBA that will have some meaning.
I'd tend to agree with this. I just finished a one-week mostly technical class that involved a wee bit of finance -- but that wee bit of finance was an eye-opener to this geezer engineer.
“You want your MBA program taught by faculty who have actually run a business successfully, have done business start ups and who have turned around failing businesses. That is an MBA that will have some meaning.”
I agree wholeheartedly. I received my MBA from Baker University. The instructors were men and women who ran their own businesses and ones who worked in the real world, not simply the world of academia.
> I would agree with many (or most) of these points; theres no doubt in my mind that too many young engineers with bachelor degrees short-circuit their careers by getting an MBA when what they really need is a Masters degree in their primary field, engineering.
I totally agree with you. Nothing will ruin a business faster than a young person with an MBA and ideas about how to turn a profit quickly.
I am a semester away from my BA in Economics. At 46 I’m not sure the added expense and time spent for an MBA will benefit me in the long run. But the thought of a graduate degree would be nice.
Good for you! Congratulations on approaching your BA, and in econ, no less. Whatever your motivations for returning to school, intellectual pursuit had to have been a piece of it, and that will very likely drive you on to a graduate degree. Learning for the sheer joy of learning, financial rewards notwithstanding is imo, the best way to be educated.
I graduated with a MBA from Pepperdine University in 1985. I have had a career in banking and would agree that it has provided job opportunities that I wouldn’t have had without it. I would say that I have gotten a respectable return from my parents’ investment. :)
Thanks! I started years ago but was always busy working (Navy full time). I am a disabled vet so when I found out that the VA would help me with tuition, I couldn’t say no. I have no savings right now since I have been going to school full time, but maybe in the near future, I can find a nice MBA program that would suit me.
Very true and coupled with the general hostility engineers have towards an MBA can make having an MBA a disadvantage in large engineering environment.
An MBA coupled with engineering degree works best when the engineer has a clear path out of engineering or, is in a small company where everyone is expected to pitch in and do whatever they can to help.
20 years ago I had been working for IBM as a Program Support Rep (system software maintenance) after many years repairing hardware. I had dropped out of MIT 30 years earlier, and did not have a Bachelor’s.
In my new position I was communicating with program analysts and application programmers instead of operators. I needed to know more about their world, so I had taken several business courses at a local college. The college had recently decided to start a graduate level program, beginning with a lockstep 46-hour MS in “Telecommunications and Information Systems Management” - and they asked me to apply for admission.
Several months earlier I had applied for admission to their undergrad business program, but was rejected due to my 101 hours at MIT with a 1.61 GPA. However, I earned an “A” in all six of the courses at this school, so when the new program started the director made the offer. IBM agreed to pay for it, as well as to allow me the days off necessary to get the work done.
I was too late for the first year but was admitted to the second, as one of two without a Bachelor’s. With that disadvantage, I really went to work - and came out on top of the class. And the courses were quite valuable to me at work, particularly after the PSR position was merged into Systems Engineering.
I credit this 1990 degree, and the MBA that followed in 1992, with keeping me at IBM through 1994 and full retirement. These degrees also greatly facilitated the very remunerative consulting and contracting work I did for the next 9 years.
When that slowed down, I also had an opportunity to teach Managerial Economics - one of the key courses for MBA and similar programs - for 5 semesters for Webster University, as part of their on-base “Navy College.”
That really piqued my interest in the general subject of economics, which has led directly to my level of fear, disgust, and anger at Obama and his mismanagement.
Would you recommend a new college business school grad to immediately get his/her MBA and finish all schooling, or to get experience working first AND THEN go for the MBA ?
I think it really depends on the individual. I went straight through from undergrad. It worked well for me. A case can be made to work and confirm your area of interest or emphasis. For some, taking a break and working can cause challenges in motivating ones self to go back to school or the pressure of finances can be an obstacle. However, many companies have generous tuition reimbursement programs which can help with the cost of the education. Just remember, “the cream always rises to the top”. If you are interested in business, I cannot over emphasize the power of networking and finding a potential mentor. Good Luck!!
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