

Not all MBAs suck at startups. Learn how to spot Durant MBAs. - mmcgrana
http://www.humbledmba.com/not-all-mbas-suck-at-startups-learn-how-to-sp

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woodrow
Site is down. Text from Google Cache:

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Not all MBAs suck at startups. Learn how to spot Durant MBAs.

I've been meaning to write this post for awhile--since I originally started
this blog actually. When I originally warned startups to beware of MBAs, it
was not to say all MBAs are bad for startups, but that one should be careful
when working with one in an early stage startup. To be clear, most are bad for
early stage startups, but certainly not all.

This post is about learning which MBAs get it and which ones suck. Any why.

Why All The Hating?

It has become hip to bash MBAs. Some of my favorite rants have been from Mark
Suster, Stu Wall, and DHH. My overarching take on this discussion is that MBAs
are more useful post-product-market fit and less helpful (or outright bad)
pre-product market fit. When a company is in the exploration phase, all the
skills of an MBA are backwards. MBAs are sophisticated thinkers that can
create high quality business plans. But in the pre-product market phase of a
company, the entrepreneur's job is to find the repeatable business model,
wherever it may be hiding. At this stage, iteration trumps planning. Speed
trumps quality. Perseverance trumps intelligence. Passion trumps
sophistication.

Because of the structure and curriculum of business schools, MBAs are better
trained for the later stages, when the goal is optimizing value, not finding
it. My favorite analogy comes from a commenter on Hacker News:

"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."

Of course, this is not by accident. Business schools teach what the vast
majority of its students need: specialist skills in large-scale optimization.
Entrepreneurship, it turns out, is a very different beast that requires a very
different academic approach.

Business School is not Entrepreneurship School: Sloan vs. Durant

Steve Blank has been advocating for the Durant School of Entrepreneurship.

Billy Durant founded GM, was fired, founded Chevrolet, was fired, regained
control of GM, and was fired again. He was a true start up founder, but very
few have ever heard of him.

It was Alfred Sloan that later became CEO of GM, grew the company, invented
cost accounting, and effectively founded the modern corporation. He was an
accountant and MIT named their business school after him.

Business schools teach Sloan-style business fundamentals. It's not a bad thing
--it's just not relevant for pre-revenue, pre-product market fit companies.
During the iteration and customer discovery phase, companies need founders
versed in the Durant School of Entrepreneurship.

Learn how to spot the Durant MBAs

When hiring or picking co-founders or doing investment due diligence, you're
searching for data that predicts success. The list below is a collection of
possible data points that can indicate whether someone gets it--whether they
have a bit of Durant in them.

1\. Previous Founder Experience

The best entrepreneurship school is doing start-ups. Nothing replaces the
education gained when your product fails, when you struggle to make payroll,
when you raise money and become accountable to investors, when you build and
sell products people want, when you reach profitability, and when you go
bankrupt. All these experiences provide perspective that make formal education
more valuable by providing a unique lens to judge the relevance of each
lesson.

Perhaps, more importantly, anyone with previous founder experience, that wants
to stay in startups is proving through their actions that they have real
entrepreneurial determination. As Paul Graham often says, the most important
predictor of success is determination.

2\. Previous Startup Experience

Size matters. Doing product management for a 100 person startup is not the
same as being a first employee, but it is more relevant than coming from a
McKinsey. I often tell first year MBAs to spend their summer internship
working for the smallest company possible. My first venture back start-up
experience was at MocoSpace when it was being run out of an incubator--it was
an incredible experience for seeing how startups work.

3\. Technical Experience Building Products

It's painful to work with people that have never built anything. Many VC won't
invest in non-technical founders. As a non-technical founder myself, I know
it's a huge weakness (I did however just code my first video game...). My
first startup was building lofts in college. It wasn't super technical, but it
forced me to put together an ecommerce website, an engineering process, buy
supplies, etc. You don't have to be technical, but it's better. If you're not
technical, you still have to have experience building products. As Brad Feld
says, great entrepreneurs have a complete and total obsession with the
product.

4\. Write Something People Read

Y Combinator founders will see the immediate corollary...Paul Graham's
overarching advice is that the most important task at first is to build
something people want. A blog is a product that people make a decision to read
or not read. Anyone that has a well-read blog has at least proven that they
can create something that other people find valuable. The same goes for having
Twitter followers, a high Hacker News Karma score, etc. For MBAs, putting
yourself out there on the internet can be far more powerful than any resume. I
love talking to people that email me their Hacker News username, because I can
then go learn a lot about them and see quickly how they're perceived in the
hacker community.

5\. Read the Right Stuff

I have generally found that most successful founders I know have at some point
read a ton of blogs and books. Paul Graham calls his essays the startup FAQ.
Why would anyone not read them? I've put together a pretty good recommended
list. At some point, you need to stop reading and start building--but everyone
should have at least read through a good portion of this stuff at one time or
another.

6\. Hang out with Startup People

My favorite part about living in San Francisco is that it sometimes feels like
every person I meet works at a startup. This network of friends provides
knowledge transfer, inspiration, collective support, etc. I can't imagine
doing a startup without it. It's not just Silicon Valley--If you're in Boston,
you should know the guys at betahouse. If you're in Colorado, you should know
the Techstars guys. Every city has a startup center, be there. On that note,
one of the toughest parts about business school for the would-be founder is
that you hang out with consultants and bankers all the time.

7\. Become a Domain Expert

As Mark Suster says, domain experience gives entrepreneurs an unfair
advantage. My co-founder Evan Konwiser brought incredible domain expertise to
FlightCaster. Spend 5 minutes reading his blog, and you'll quickly understand
that he understand more about the travel industry than any person you've ever
met.

Beware of MBAs that fail all or most of these items--odds are they will doom
your startup. And for those aspiring MBA entrepreneurs out there...stop
fiddling with your B.S. Powerpoint deck and get started on this list.

~~~
sabj
Interesting points even if we don't agree with all of them - most of all, for
the importance of a) not typecasting everyone with a particular piece of paper
and b) emphasizing the best things that business-y people could bring to the
table.

Upvotes for the cached version, thanks!

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maukdaddy
_MBAs are sophisticated thinkers that can create high quality business plans_

HAHAHA This person has clearly never been to an MBA school. If only my peers
were sophisticated thinkers. I'd say less than 10% of MBAs are sophisticated
thinkers (and by extension great problem solvers) and those 10% are the ones
you WANT to hire. The MBAs who can just churn out business plans - forget
those.

~~~
waterside81
I have a sample size of one school to pick from, but I have to agree with
this. The overwhelming majority of MBAs are quite normal in their outlook. I
graduated from the #1 ranked MBA in Canada and I believe it's top 20 in the
world (depending on whose skewed, biased ranking system you're using) and I
met only 2 or 3 people who thought "big". Most people I met were getting MBAs
because they wanted to move up in the organization or move away from
engineering and get into management.

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dman
Great points. Though one tangential thing is - MBA school is largely not
funded and I believe this largely cuts out the ability of people with MBA's to
be in a startup at the early phase. I do not doubt the fact that a lot of
MBA's and lawyers are very smart innovative people, just that the cost of
their education often undermines their ability to take risk.

~~~
samt
That and life stage. By the time you graduate from b-school a spouse, family
and house are coming soon. The years in which one can earn ramen wages are
precious and b-school takes up two of them, often at what might otherwise be
your living expenses vs experience peak.

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ajleary
US bschools have been overly focused on banking and consulting for the last 15
years (or more). Innovation programs have tried to balance that bias, but in
my experience those programs have mixed results. Someone with certificate in
entrepreneurship or innovation are trying to use coursework as a proxy for
being an entrepreneur. The best entrepreneurs may have gotten an MBA and maybe
a certificate in entrepreneurship but those are not future indicators of
entrepreneurs.

