

Beware of MBAs: The business school curriculum teaches how to suck at startups - jaf12duke
http://www.humbledmba.com/beware-of-mbas-the-business-school-curriculum

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dkokelley
I like to think of this topic using an automotive racing analogy: Fortune 500
companies are the formula 1 cars. They need a great big team to perform
efficiently, and minor tweaks applied correctly can yield significant results.
The MBAs are the specialists who work the electronics and the advanced
controls for the race cars. A team working on a formula 1 car could find a way
to increase down force by 5%, or they could install a GPS system to analyze
turns and scrape 1/100s of seconds off of lap times, and that edge could help
them win.

Startups are cars with a very different purpose. They are project cars, and
they have 1 purpose: to go. Forget GPS systems and down force. These cars need
tires and a working steering wheel. It would be a mistake to think about
installing spoilers on a car that doesn't have all 4 tires, just as it would
be a mistake to worry about ideal liquidity ratios in a startup. Entrepreneurs
are the mechanics who decide to take on these 'project cars'. Eventually, as
the car project develops and grows, specialists (MBAs) can be brought on to
find the minor, yet precise changes that will improve the car's results.

~~~
sridharvembu
I question to value of MBA even for large companies. I see value in
structured, methodical, analytical thinking for many classes of business
problems (not all, many crucial business decisions involve creative
guesswork!), but an MBA is way overkill, and whatever it is supposed to teach
can be learned on the job. If a person cannot learn that on those skills on
the job, I seriously would question his/her ability to be an effective
manager.

Here is my real world evidence: German and Japanese large companies are as
good or as bad as American ones (depending on your point of view). The MBA is
relatively rare in Germany and Japan. Japanese large companies, in particular,
tend to recruit fresh undergrads without much attention paid to their major,
train them internally, and promote from within. The fact that their companies
hold their own in global competition, indicates that the MBA doesn't add any
superior competitiveness to American companies. In fact, I would argue the MBA
actually subtracts from American competitiveness, but that argument would be
more subtle, and would require industry-by-industry analysis of
competitiveness. I will note in passing that software and internet industry is
probably where the MBA influence is the weakest in America (primarily because
of the extraordinary rate of start-up creation), and that sector is the one
where America is the most globally competitive.

~~~
flipper
Based on my own experience of MBAs I tend to agree with you. My company
brought in a US name-brand management consulting firm to assist with a large
M&A. One of the MBAs was assigned to help me write a transition plan for the
integration of the IT systems my company would inherit. She correctly
recognized that helping me was useless to her real purpose (inserting herself
into my company at a high enough level that she could scout out new consulting
opportunities) so she spent two months with us and delivered nothing. I wrote
the transition plan on my own.

~~~
andrew1
Isn't the fact she had an MBA incidental to her behaviour? Her job could have
been filled by someone without an MBA who might have acted in exactly the same
way. I've met many self-serving, selfishly ambitious people who don't have
MBAs!

~~~
brc
Exactly. A lot of people have taken to using 'MBA' as a heuristic for 'lazy
self promoting asshole'. While I agree there is probably some overlap, it's
extremely unfair to go around painting with this wide brush.

The fact that the consultant wsa trying to get more work out of the company
had nothing to do with her qualifications.

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joshkaufman
Research shows that business schools do not contribute to business success:
<http://www.aomonline.org/Publications/Articles/BSchools.asp>

From "The End of Business Schools?: Less Success Than Meets the Eye" by
Jeffrey Pfeffer (Stanford University) and Christina T. Fong (University of
Washington):

 _"Although business school enrollments have soared and business education has
become big business, surprisingly little evaluation of the impact of business
schools on either their graduates or the profession of management exists. What
data there are suggest that business schools are not very effective: Neither
possessing an MBA degree nor grades earned in courses correlate with career
success, results that question the effectiveness of schools in preparing their
students. And, there is little evidence that business school research is
influential on management practice, calling into question the professional
relevance of management scholarship."_

Far better to skip the MBA and teach yourself. Better results, and far less
debt.

~~~
anamax
I wonder how the biz started by Stanford Engr students compare with those
started by Stanford Biz students? (Yes, Stanford's CS department is part of
its Engineering school.)

~~~
rohin
I can't speak to the success rate of the engineering students, but I graduated
from the business school in '07.

In my class about 10 of us started companies. There have been two successful
exits and one is probably doing over $100MM revenue.

All in all, about 8 of the companies will be considered successful and 2
flops. Of the 10, the vast majority raised less than $500K in capital.

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brc
I think the point missed in here is that if you go into your MBA with a
consulting, banking, etc direction, then you'll get all the lessons that go
with that.

If you did an MBA with the express purpose of concentrating on making startups
work, you'd concentrate on taking away the parts of that education that focus
on entrepreneurship.

It's fashionable to diss the MBA but they contain a non-trivial amount of
learning about finance, capital markets, legal and other aspects of business
that would take a long time to pick up just by going through a startup.

~~~
ryanhuff
Agreed. An MBA is a strange animal. Two people coming out of the same school
can have vastly different career goals, and have taken much different
coursework. While the core courses may be the same, the real meat is often in
the elective courses that allow you to focus on a specific area of business. A
brand management person is going to exit business school with a much different
skill-set than somebody who wants to do investment banking. The same goes for
entrepreneurship.

Its not enough to point to an MBA and make generalizations about how it
prepares you for X or Y. The devil is in the coursework, the professors, and
most importantly, the student.

~~~
brc
I would just add to that - most MBA courses (well, mine, anyway, a sample size
of 1) involve a lot of case studies. In many cases, you can choose the topic
of the case study, just be getting approval from the assessor for suitability.
Thus, you can decide to study GE, Digg or Microsoft, whether it's for
marketing, industrial relations or strategy.

When I went through I had a fellow student who was preparing to take over the
family cleaning business with several hundred staff. A friend was a career
airline pilot getting ready to step out of the cockpit and into
administration. I also had career public servants learning on the public dime
to get to the next pay grade. There was also aimless students who weren't
ready to leave university because they had no direction in life. The things
that these different groups studied vary a lot.

The one thing that did come through, unfortunately, was a heavy reliance on
Powerpoint.

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ziadbc
At some point, and it is happening already to a small degree, this problem
will no longer exist. Top universities are catching onto the success of YC and
will begin to offer programs of lesser magnitude, but similar intent. Once one
of the big schools (Harvard, Stanford, etc) will declare victory then the rest
of them will begin copying the model as well. I think places like the Stanford
d school have some overtures in this direction, but they are not the final
word. The bottom line is, the whole intention of an MBA is to credentialize
businesspeople the way other professional degrees do (J.D.) etc. The conflict
here is that startups are about near the exact opposite. Entrepreneurship is a
recursive credential. You can only earn the title by doing the act itself, not
some abstraction.

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ben1040
I notice the author mentioned "leave-behind Powerpoint decks." I had a short
stint in consulting after getting my MBA, working with enterprise software
clients. Within that job I've never once seen a Powerpoint deck that was
useful after the fact unless you were in the room when the talk was given.

All it took for me to forget nearly everything I learned in business school
communication classes was a seminar led by Edward Tufte, where it dawned on me
that Powerpoint is no substitute for an appropriate executive summary of your
content that can be passed around and referred to long after your talk is
over.

~~~
jaf12duke
Leave-behind decks are for when the deliverable is the deck. It can be a
useful tool for the company because the content is conveying information that
they need for whatever project their working on. While working for a
consulting firm, I did a marketing analysis for a grocery chain--it was a 150
slide deck packed with data about each of their geographies. It's something
they'll refer to hundreds of times in the future.

As entrepreneurs, we're rarely delivering data in this way. it's usually our
job to distill all the potential data points down to the 1 or 2 most
important.

It comes down to whether you're persuading or informing. For persuasion,
Tufte>MBA every time.

------
snowbird122
I am an entrepreneur, a hacker, and an MBA. I am intelligent enough not to
apply big-company processes to a start-up and vice versa.

An MBA is an education in business. That can't be a bad thing if you operate a
business, large or small.

~~~
plinkplonk
"An MBA is an education in business."

So some people claim. Other people think it isn't that clear cut. On another
discussion (<http://news.ycombinator.com/item?id=1330878>), someone asked

"I presume you get an MBA to give you a better understanding about business.
And startups are in essence businesses. Then how come having a better
understanding not impact your startup?"

pg replied,

"The cause of the apparent paradox is that "business" spans a huge range. MBAs
train you to be junior officers in the armies of managerial capitalism. But
there is almost zero overlap between that sort of work and what startups do."

and later

"Actually I would say it's a slight net minus to have an MBA when doing a
startup. You learn nothing of use to you, but investors discriminate against
you slightly.

Almost all investors are looking for founders who match past stars. So what
they're looking for at this point is hackers.

I have to say I agree with them. I can't imagine Bill Gates or Larry & Sergey
enduring B School."

So there are intelligent people with differing viewpoints on whether "An MBA
is an education in business." is a valid premise.

~~~
snowbird122
I have upvoted you for a very insightful and resourcful reply. The term
"business" is big, kind of like the term "engineering" is big. Would you also
say that studying engineering is harmful to a startup?

It is one thing to say that an MBA won't help you much with your start-up, but
it is another to say it is detrimental. Other than the prejudice of investors,
I just don't understand why education of any kind is harmful as long as it
isn't filling your head with lies.

So suffice it to say that I disagree with my hero, pg, about the value of an
MBA. I can tell you that I personally have gained greatly from the experience,
and that I'm better at all facets of business (even startups) because of it.

------
ojbyrne
"MBAs will generally know how to read WalMart's annual report but will be lost
in the complexities of a cap table."

I didn't go to a very good B school, but clearly it was a better one than
Tuck.

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durbin
I'm so sick of these Ivy League MBA's lumping all MBA programs together in
their inability to teach entrepreneurship. At Babson we were learning about
the Timmon's model and how to be 'lean' on day one. Long before anyone had
heard the name Eric Reis. And in case you're unaware, Babson has been ranked
the number 1 business school for Entrepreneurship by US News for the last 17
years, when they started ranking.

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enjo
I'll take umbrage with one statement:

 _It's about selling a vision, not presenting analysis._

From my experience that's a sure way to receive a polite "no thank you" from
VC's or angels. Good venture capitalists demand meaningful analysis in your
pitch. Every single pitch I've been a part of has inevitably zeroed in on
market, financial, and performance analysis within 5 minutes of starting.
Those slides about vision and big ideas just don't play well in those rooms
(again, from my experience).

More than anything, money-folks seem to want entrepreneurs who have an eagle
eye on the performance metrics of their business.

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bryanh
Hey, I'm in the middle of an MBA program and think I'm doing just fine with my
little start ups. Cute blanket statement though.

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JVerstry
I am surprized. Where did the author get that MBA's are good at teaching
entrepreneurship? Where does that expectation come from? I am have an MBA too
and I was never told that MBAs are good at teaching entrepreneurship. Pick any
blog and articles from real entrepreneurs and they'll confirm that you become
one on the field, not in the books. I also disagree that MBAs make people suck
up at startups. You may be talking about your personal experience, but it does
not fit with mine. I am very happy to know what would have taken me 20 years
to learn by myself. You don't need an MBA to become an entrepreneur, but it
definitely helps...

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maukdaddy
This is only true if you go to a shitty school or don't apply yourself. There
are some really good schools out there with exceptional programs in
entrepreneurship.

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tibbon
I really enjoyed reading this. I've considered an MBA on and off for the past
few years and I'm still leaning away from it. An MBA seems to serve a very
specific function and I'm not sure if I want to be that person.

I wonder how this is at more entrepreneurial programs like Sloan.

~~~
jaf12duke
At most schools, the majority of your class will be pushing in one direction,
and that's generally towards consulting, banking, bigCo rotation programs,
etc. It's what they're explicitly selling--preparation and access to these
types of positions. If you don't want that, you should think very carefully
about spending that much time and money. If you want to be an entrepreneur, do
everything you can to get into YC or any of the other incubators. As many have
noted, it's a far better startup prep course.

I don't regret my MBA for a second. The best two years of my life. I intend on
using my skills from my MBA throughout my life. Someday I want to run a large
non-profit and the tools I developed at Tuck will be invaluable. The painful
lesson of the last few years was that all of that education is near-worthless
as a startup founder.

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lelele
This book relates to this post:

[http://www.amazon.com/Managers-Not-MBAs-Management-
Developme...](http://www.amazon.com/Managers-Not-MBAs-Management-
Development/dp/1576752755)

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lelele
I guess a similar situation happens to programmers who learn a new design
pattern or programming paradigm and apply it to every situation, including
when it's overkill.

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known
You don't need MBA, if you're rich & connected. <http://netmba.com>

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alexyim
Maybe the takeaway should be MBAs are better suited to startups that are post
product-market fit.

