

Why are business schools failing at the education of entrepreneurship?  - jaf12duke
http://www.humbledmba.com/why-are-business-schools-failing-at-the-educa

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Paradosso
Jason:

I need to set aside a good hour to flesh out these ideas, but the first ideas
that come into my mind:

\- Adverse selection: most of the people in any MBA class have profiles that
are at the polar opposite of entrepreneurship, valuing social approval and
jumping into hoops someone else designed. A class is a very tight environment
where the prevailing ethos tends to take it all. Hence even potential
entrepreneurs are steered away. Remedy: change class profile --hard.

\- Self-assurance: in top MBAs, people are continuously told they are the best
of the best. The opportunity cost of entrepreneurship is then artificially
inflated and the relative contribution of other profiles (developers,
designers, salesmen) implicitly undervalued. Remedy: stop doing this, but then
how to justify a 200k fully loaded cost?

\- Hindsight: business school curricula are alla bout descriptions and not
about predictions. All business cases are written with a massive amount of
hindsight. There's the illusion of being able to explain what has happened,
but no out-of-sample fit whatsoever. Explanations are sought in outside factor
and not in assets such as individual talent, small teams and morale. Business
school curricula the polar opposite of what Hackers & Painters is about.

\- Skills: the curricula are slaves to student requests: they get easier and
easier, grades don't matter, and hard skills that could be learnt
(stats/machine learning, quant marketing, programming, sales) are not. A lot
of people graduate with no significant skills whatsoever. Remedy: hormetism in
business school curricula.

\- Bubble: for many people, an MBA is a 2-year vacation that is designed to be
as removed from the real world as possible (most people worked terrible jobs
100 hrs/wk and will return to do so). There's no amount of real-world work
that you can do for credit during the school year.

\- Faculty: same as studentry, it's an incredibly tight group where the
dominant philosophy wins. I believe many consider MBA sections as an ensemble
are demotivated jerks to be done with as soon as possible, to return to
research and undergrads willing to work their asses off. Also, most tenured
professors are out of touch with entrepreneurship and these are those who
grant tenure to the upcoming guys. Young stars who try to do something
radically different are pretty much alone and have to do superhuman efforts
for a payoff that might very well be negative in terms of their career.
Remedy: I have no clue.

Unfortunately, an MBA is a somewhat marvelous machine that pockets a lot of
money (often leveraged) to provide students a socially-accepted way to spend
two years out of the world while convincing themselves they are special
_because_ they are in the program, without any need to show special work. The
real magic is tapping into a corporate system that miraculously provides six-
figure jobs at the end, apparently validating the whole concept. Firms like
Goldman or McKinsey follow the exact same proposition, expect substitute
"pockets a lot of money" with "pockets a lot of time".

Disclosure: I graduated with an MBA from Wharton a month ago. I worked part-
time at Etsy during my second year and am now working at Squarespace in NYC.
The business school failure at teaching entrepreneurship (or, at large, how to
build things) bothers me as much as you, and I'd like to fix this, as I have a
hunch that an MBA class has a lot of people who could, if trained, go on to
build valuable things.

~~~
DevX101
Your first point on adverse selection is by far the biggest reason. An
entrepreneur at 27 or 28, will be working his/her ass off to build a business.
We ultimately have a very limited window in which to pursue starting a
business, and simply making the MBA decision narrows that time window
significantly, even if you leave knowing a lot more about business.

I'd be hard pressed to turn down McKinsey, Bain & Friends if I was $100k+ in
the hole after leaving b-school.

By extension, the same argument on adverse selection could be said for YC as
well. Although I'm certain YC adds great value to its participants, many
people who applied would have done well even without YC. The magic of YC is to
be able to get a concentrated group of smart/ambitious entrepreneurs and
amplify the success that they probably would have had without it.

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JacobAldridge
Teaching eship in the classroom is like teaching love by explaining where
babies come from.

Glib, yes, but it gets to my view on the heart of the matter: emotions.

Running a business plan project- in Grade School or an MBA- can never be
comparable to running your own business because the emotional connection and
the involuntary feelings are not present. This is why the lemonade stand
example is correct- a ten year old with a lemonade stand has more emotional
connection to their 'business' than an MBA student running models. If you sell
0 cups of lemonade you feel it, and you do something different tomorrow.

Jason- I will send through lonher thoughts by email when not on a train.
Disclosure: I coach business owners about business in the real world, so I've
seen many MBAs suffer when the theory hits their monthly cashflow. Great
discussion to kick off.

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PaulHoule
I think it's the students.

People who go to MBA school are making a big investment because they want to
get a good, safe, high-paying job for a big company. If they were on fire to
start their own company they'd spend that money on starting their own company
and shave two years off their time-to-market.

~~~
christopherslee
I'm not sure it's necessarily the students, although it could be part of it.

To me the question has always been "Why do we assume MBA is a degree in
entrepreneurship".

MBA's have a lot of different coursework, from strategy to finance, from
accounting to human resources. I would gather than some schools have a few
courses in entrepreneurship, but it is not a 2 year degree of back to back
courses in entrepreneurship.

There are some courses that are general, take Strategy for example. And the
strategies for optimizing and tuning a fortune 500 company are different then
how startups attempt to prove a new business model. Don't get me wrong, in
many cases the basic fundamentals are the same, but the overall goal is
different.

Summary: MBA schools may be failing to teach entrepreneurship, but I don't
think their #1 intent is to teach entrepreneurship anyway.

Note: I do have a certificate in general management from Kellogg. And while I
enjoyed my time there, I can unequivocally say, the courses were not intended
to teach entrepreneurship.

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damoncali
Business schools are _not_ failing at the education of entrepreneurship.

The argument just doesn't pass the sniff test. I look back at my B school
classmates and see that many of them have started businesses successfully just
a few years past graduation. Some bootstrapped, some raised VC. Some were in
tech, some not.

Like any business, the various flavors of entrepreneurship require lots of
knowledge of things that can't or shouldn't be taught in school. This is by
design. The same thing is true of i-banking, consulting, CPG marketing, and
the other traditionally MBA-dominated fields.

You can't teach entrepreneurship. You also can't teach toothpaste marketing or
oil wildcatting. You can teach business fundamentals that will work anywhere
and that will give you a leg up at the vocation you choose to follow.

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badmash69
I think blaming schools is the wrong thing to do. I have an MBA and I did not
consider entrepreneurship when I graduated as I was up to my eyeballs in debt.
So were most of my classmates. Finding a STABLE job was the uppermost concern
in my mind because I wanted to be able to pay off that debt as soon as
possible.

I would say that MBA gets in the way of launching a business for an aspiring
entrepreneur as you are saddled . with debt. However, should that launch be
successful, the skill set that you acquire at B-school will help you in the
long run in managing the company.

~~~
tomkarlo
I have to agree with this.

A typical top-tier business school graduate in the US leaves with $100K in
debt that costs at least $800-$1000 a month to pay off. That's going to
eliminate a lot of great potential entrepreneurs right off the top, and it's
going to make things painful for those who do try.

I did an MBA in 2002-2004 and went into banking after. I would have loved to
go do a startup, but when you have that kind of debt, and someone offers you a
job, it's a lot harder to turn down.

I did have a number of friends who launched businesses successfully during
school - they essentially used the two years and the debt incurred to
bootstrap a new enterprise. But in most cases they had those ideas before even
arriving at school and I suspect they would have been successful without
going.

That said, getting an MBA provides an invaluable toolset for leading a
corporate enterprise (if you pay attention.) I just don't think that learning
to be an entrepreneur should be one of the expectations. Similarly, getting a
CS degree will teach you how to code, but it doesn't necessarily give you the
capacity to build products people love.

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localhost3000
It would be interesting to see a program like Y Combinator reserve 2 or 3
spots annually for graduating MBAs. After a few years, we could have a debate
rooted in real, comparative results.

There are plenty of MBAs who have started financially successful businesses.
Most would not be websites, however. I think selection bias is the big culprit
here. The majority of MBA students don't actually intend on starting a
company, so you end up with a population in which 95% don't give a damn about
SV or Hacker News - so the broader startup community groups the 5% that do
care in with the others.

Other thing to consider: The majority of people entering an MBA program worked
for several years out of college in XYZ big bank, consulting firm, or fortune
500 co. A good number have likely never been faced with "get shit done. on
your own. NOW!" - they've been socialized to push papers, write reports, and
trust that somewhere down the line some factory worker actually puts a widget
in a box and ships it to some paying customer in Phoenix.

It does seem, anecdotally, anyway, that there is a shift happening in
B-schools with more students taking seriously the thought of doing something
on their own. Keep in mind, it is insanely tough to get into a top-tier
b-school, so there is quite a bit of raw intelligence there that could be put
to good use. I think you start with a group project that actually designs,
builds, and launches a product, no matter how small or trivial.

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akg_67
I entered in Executive MBA program after financially recovering from two
failed startups. Sorely disappointed with program and thinking of dropping
out. From my viewpoint,

1\. What are the root causes leading to business schools failing at the
education of entrepreneurship?

Most MBA programs do not have start-up teaching strategy. Most have one or two
courses typically at the tail end of the program and a course requirement of a
business plan. They need to have eship in program DNA.

IMO,a better approach may be to help form teams of students with
entrepreneurial mindset and personal compatibility after first couple of
quarters of the program. As the program progresses, have them focus on their
startup in every course. For example, during accounting course for team
projects, have these teams evaluate public companies in their target market,
during marketing course, have them come up with marketing plan for their
start-up, during HR/organization courses, have them come up with the culture
and structure plan at a milestone in their startup growth. Every MBA
coursework is an opportunity to work on different aspects of a startup.

I believe Steve Blank's recent experiment at Stanford is closest to my
thinking what should happen in eship portion of MBA. 10-13 week course may
work for another app/web 2.0 creation but most high technology startups
require months of planning and that is where MBA program can work and should
focus.

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techbelle
Why blame anyone? I'm an MBA and on a startup and working in consulting
concurrently... I believe entrepreneurship can't really be taught. You can
improve your general business skills but drive and passion Are intrinsic and
can't be manufactured. Many mbas (most?) are incredibly motivated. They just
don't want to start a company. Nothing wrong with that.

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castlej-uw-edu
The University of Washington Foster School of Business has been doing it right
for 10 years. The undergrad course is unique and effective,
<http://courses.washington.edu/entrecac/wordpress/> and their business plan
competition turns out many successful companies year after year.
[http://www.foster.washington.edu/centers/cie/businessplancom...](http://www.foster.washington.edu/centers/cie/businessplancompetition/Pages/BPC.aspx)
.

John Castle, Sc.D. Lecturer in Entrepreneurship. Foster School of Business

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dmitri1981
It is pretty difficult to figure out the problem without knowing in what way
the pitches were bad.

What in particular was missing? Did the teams make unrealistic assumptions?
Did focus on pie-in-the-sky financials? Etc...

~~~
damoncali
In my experience these types of pitches are bad because:

1) The students don't take them as seriously as real businesses.

2) The faculty place requirements on what a pitch should look like.

When I was in school, I wrote horrible, 25 page business plans and the equally
horrible slide deck as part of a new venture class. We knew it was shit when
we presented it. As a result, you see serious teams literally doubling their
efforts. They do one thing for class, and another for real life. (Well, maybe
not doubling - real life is much less work.)

This sounds stupid, and to a degree it is. BUT - if you write these monstrous
business plans and orchestrated piches, you will learn a thing or two about
what works, what doesn't, what is required, what isn't, and what falls flat or
gets ignored.

While I won't claim it's 100% intentional, there is at least some method to
the madness.

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emmett
The problem is, fundamentally, that entrepreneurship is not something which
can be taught in class. Skills helpful to entrepreneurs can be taught, but
determination and mental flexibility don't come from school.

You can't assign an essay on how to not give up when all hope seems lost.

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Apocryphon
I have to say, doesn't this story go hand-in-hand with the CS education
article?

<http://news.ycombinator.com/item?id=2652795>

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bonch
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