
How Should Business Schools Prepare Students for Startups? - janober
https://blog.ycombinator.com/how-should-business-schools-prepare-students-for-startups-jeff-bussgang-and-michael-seibel/
======
dchichkov
As per PG:

 _Two Types: I think you only need two kinds of people to create a technology
hub: rich people and nerds. They 're the limiting reagents in the reaction
that produces startups, because they're the only ones present when startups
get started. Everyone else will move._

I guess that could be a good clue onto what to teach. And I'm not sure this is
enough actually. For example, you probably need _rule of law_. My guess, you
also need ethics, trust, culture of working handshake agreements. Remove it,
have a kind of people to which it doesn't apply, and this would ruin the
valley. I would suggest to anyone who is organizing programs of training
entrepreneurs to add _business ethics_ as a cornerstone of the program.
Please, think long term.

~~~
rdlecler1
You need more than rich people, you need people who are rich and who embrace
the kind of risk that startups offer. There's a big difference in the kind of
investors you meet in NY compared to SV.

------
dzink
At MBA programs with accelerators, committed entrepreneurs often lose funding
to polished classmates with Sales skills, but no actual immediate intention or
ability to build a business. That is because between VC and high salaries
elsewhere, the grind can be too big a leap when you have loans to pay. YC can
easily filter that by looking at an applicant's execution experience in the
past, or check if their resume shows more blue-chip brands than meaningful
growth. For some, the MBA is a tool, for others it's a merit badge.

It felt like 30%-50% of my classmates got enough credits to get an
Entrepreneurship major, because they want to build a business one day, after
MBA (just not immediately after, and not necessarily VC-worthy stuff).
Entrepreneurship through acquisition, running your own fund, joining VCs,
leading family businesses, there are a lot more options for MBAs.

The bigger issue is that top 5 tech giants don't help by acquiring or cloning
the work of CS MBAs or those who stick it out as Entrepreneurs. With lack of
regulation and increasing market power for the giants, fewer people who can
make something worthwhile will be wanting to do startups instead of working
for 300-700k at a big company. Ironically, of my committed entrepreneur
classmates with tech backgrounds, a lot more of those that started hardware,
or healthcare, or food-chain, or other distinctly "non-virtual" startups
continue today. That's because the virtual/social/saas ones were aqui-hired.

As a techie at a top MBA program (20 years of coding so far), I took VC and
Finance classes, Patent Law, and CS Masters classes to round out my skills,
while I built my company till 4 am every night. The MBA experience taught me
when NOT to raise money. I've been bootstrapping and focusing on users and now
run 2 different sites that are growing well. That MBA is actually paying
itself back!

------
tryitnow
I'm an MBA and I just don't see the value of business schools preparing
students for startups. The MBA skillset is only valuable at a certain maturity
level. Before you hit that level focus on engineering/product/sales, not
finance and strategy. I don't think MBA programs teach engineering management
well and they aren't particularly good at teaching sales.

I kind of agree with the old idea that you deduct $1M off the valuation for
each MBA a startup has on board. In all honesty, there's just not going to be
a lot for an MBA to do at a startup.

Now to be clear I'm using the word "startup" in a strict sense meaning a
company that's come into existence recently. An 8 year old multi-billion
dollar behemoth is not a startup in my book.

Think of an MBA as a two year immersion program in the language of the
C-suite. If you're just starting out you really don't need to learn that
language. Instead focus on product/market fit, good engineering, and sales.
Sure, MBA programs claim to teach all those skills - but I just don't think
they're good at it.

An MBA program is good at teaching you strategy, finance & accounting, and
maybe some types of business analytics (if you take those electives). And it's
definitely good at teaching you corporate politics (perhaps it's biggest
benefit), but you don't need to know corporate politics -just startup
politics, which are a different beast altogether.

------
spamizbad
Business schools might be the wrong place to mint tech entrepreneurs. The
number of wannabe tech founders vs those taking coding electives is telling.

And speaking as a technical manager, I'm also deeply skeptical that combing an
MBA with a bootcamp/MOOC will make you a proficient technical manager. It
might put you on better footing to hire a competent one, though.

------
waderyan
Excellent back and forth. As someone considering an MBA post a failed startup,
the meat, for me, was here:

> Michael: Because I think a lot of people here in the valley would argue ...
> spending two years at an early stage startup in the Bay Area might be more
> fruitful than spending those two years at an HBS or a like school.

> Jeff: Look, I think there’s an argument for that trade off in the short
> term. I think the harder question for people is 10 years from now, 20 years
> from now, 30 years from now, where am I gonna end up? Because if I spend two
> years stepping off the treadmill at a Harvard, or a Stanford, or an MIT, I’m
> gonna come back with a network, a set of relationships, and a skillset that
> may not be immediately high ROI.

Well worth the listen to / read.

~~~
keebEz
If you can't choose a good start up to join then most likely a b school is the
better option.

If you choose a good start up, then the start up (and payout) will most likely
be much more valuable 10-20 years down the line.

~~~
chetatkinsdiet
the difference is that it's pretty easy to tell a good b school (lots of
objective rankings). at an early stage, it's really tough to tell a good
startup- as a candidate you are at a significant disadvantage in choosing a
startup employer due to the lack of available information. not saying one is
better than the other, but that making that choice is far more difficult than
the couple of sentences you mentioned.

~~~
Retric
On the other hand startups pay you money, B schools cost you money. With the
delta easially being 300+k. So, you can take a fair amount of risk and still
have the startup being a better bet.

------
transparentlabs
As a both a business school graduate and company founder I witnessed this
first hand. At my school, the majority of people wanting to do
"entrepreneurship" were not really committed to it, but rather dabbling in it.
They had an idea and did surveys to "validate" the need and were always
looking for random undergraduate engineers to seduce into helping them.

That being said, there was a small handful of people who were serious,
committed, and willing to do whatever it took to get their company off the
ground. As with all stereotypes, there is some element of truth along with
countless counter examples. For MBAs, the core issue is a lot of ambitious,
idea-generating, risk-averse people without technical/tactical skills on
average, looking to do something risky with technical/tactical requirements.

As someone wanting to start my own company, I hated that I didn't have the
technical chops to get even a basic prototype off the ground and didnt want to
just another MBA with an idea and no ability to execute. Luckily, my school,
Chicago Booth, began offering a Ruby on Rails coding class. From the first
class, I got addicted to it and spent all my timing building out an idea, that
I didn't even initially think was good, just so I could learn to code better.

When I released the idea, 60% of the school started using it in the first
month. There is no substitute for being able to cheaply and easily get a
workable prototype onto the market. As a result of having a real product and
the ability to iterate on it, we made it much further than any of our
competitors in our schools New Venture competition and ended up winning it and
raising a seed round.

We are by no means successful and are still in the startup grind for sure, but
without bringing the initial ability to get something real onto the market
through some technical skills, we would have been dead in the water no matter
what. Our product is now used by half of MBAs in the country (
[https://www.transparentcareer.com](https://www.transparentcareer.com) ) and
it would have never of happened without at least getting some basic technical
skills.

MBAs can start companies and be successful at them, and some companies require
way less tech than others. That being said, I think everyone would wind up
being better off learning to code no matter who they are. There is nothing
more empowering than being able to create something real instead of just a
powerpoint presentation.

Now that I have a team of engineers, working with them is way smoother as I
more deeply understand the development process and can understand how to spec
things out better. Even if i'm not coding on a daily basis, its immensely
valuable to at least know the basics.

~~~
dzink
Ha! In 2013-14 I teamed up with another technical and a non-technical Booth
student to create a class called Booth Hacks to teach MBAs and other UChicago
students how to code in a practical way (
[https://www.facebook.com/groups/boothhacks/](https://www.facebook.com/groups/boothhacks/)
). I have been coding for 20 years, so I co-wrote and co-taught the lectures.
It was an 8 week, 3hrs week course and its success allowed us to convince
Booth to offer a real RoR class to its students the following year (your
year). You started at Booth the year I graduated. We also worked to launch the
MBA/CS joint degree program that is now live. I was not allowed to compete in
the New Venture competition you won a year or two later, because I created
[http://www.doerhub.com/at/uchicago](http://www.doerhub.com/at/uchicago) to
bridge the gap Michael is talking about in this podcast, and I was serving the
startups that ended up competing (so I wasn't allowed to compete). The year I
graduated, both winners of NVC and SNVC were users of the site and had found
people or received help for their projects due to DoerHub.

Needless to say, I have a lot to say on this topic, and would love to talk to
people who want to connect university brains in different disciplines in
productive ways, including YC if they are interested. DoerHub is still
running, but I just graduated YC Startup School with
[https://DreamList.com](https://DreamList.com) , which feeds off of similar
tech, but applies and improves the algorithms by serving much larger and more
lucrative problems.

~~~
transparentlabs
Haha this is too funny, definitely participated in Booth hacks, thanks for
getting this off the ground for us!

------
dgfgfdagasdfgfa
Mildly related, I really appreciate it when someone puts the effort in to
transcribe audio interviews.

------
Upvoter33
easy: \- get students to drop out of b-school \- encourage them to learn about
deep tech field (cs, bio, etc.) \- help them raise $$ for said endeavor

more seriously, I have had numerous people from the b-school world (now VCs)
tell me this, more or less. they want people w/ technical know-how, not
b-school skills.

~~~
sjg007
That's because they have the b-school skills already so they undervalue them.

------
crimsonalucard
Since startups make things and things are the essence of the economy, gain the
skill to make things rather than telling other people to make things.

If you are a master at business administration then you are a master at
telling other people to make things, why would I want you to tell me what to
do as a partner in a startup? You have to pay me for that kind of stuff.

~~~
analog31
My impression, working for a Fortune 500, is that management is largely an
information processing task. They are gathering, analyzing, and communicating
information, but typically have to deal with both quantitative and qualitative
information of varying quality from disparate sources.

They are also skilled at certain kinds of tasks such as creating business
plans, budgets, etc., and serving them up in a recognizable format that other
people can use.

Supervision is a different kind of task, some managers are good at it, others
aren't.

Hopefully your business grows to the point where you need someone who can
perform these tasks for you.

Certainly, the ability to make things was what got my business off the ground.
I'm still a one man shop, and my sales don't justify hiring myself full time,
much less another worker -- management or otherwise.

~~~
gaius
_management is largely an information processing task. They are gathering,
analyzing, and communicating information, but typically have to deal with both
quantitative and qualitative information of varying quality from disparate
sources_

This layer is going to be utterly destroyed by machine learning when it goes
mainstream. The value of an MBA is trending towards zero.

~~~
analog31
Even machine learning isn't necessary. All that's needed is more widespread
communication. For instance, my boss doesn't need to communicate the company's
strategy to me, because I can figure it out by sharing information with
workers at similar companies.

------
sjg007
These guys are both selling something:

1\. An MBA

2\. YC startups

The question is which do you want to buy? And what can you buy. Both are
investments.

An MBA from a top school likely has a higher pay off long term as most
startups fail (statistically). But you have to be accepted into the program.
You can read about alumni, gather various statistics, where they are and how
much they make etc... There are ~80,000 alumni from HBS programs.

For YC, you either join a YC startup then go to YC, or get into YC directly.
It may be easier to do the former, prove yourself and then join YC as a
founder. If you want this path. You also have to build something.

YC also reduces the risks of "failure" by building out their own network and
keeping alumni within the network as partners or as employees in other YC
startups.

As to the rise of entrepreneurial programs.. well it's business. MBA programs
probably also want to attract entrepreneurial minded types to improve
diversity/value but startups are hot and everyone is selling.

------
downrightmike
I can't remember where I saw it, but recently it was pointed out that business
schools are there to teach you to run someone else's business, where as
startups make you learn to run your own. I think I was looking into the
benefit of an MBA at the time and in the end, what do you want to do?

~~~
munchbunny
I wouldn't necessarily put it that way. The top tier business schools teach a
good amount of universally applicable soft skills like negotiation, conflict
resolution/deescalation, performance management, etc. You just need to enroll.
And those skills are applicable regardless of where you go.

Having seen friends go through business school, the real value is without a
question the network you build during those two years. That's also applicable
regardless of where you go.

I personally applaud Harvard's new combined major, especially because it
supports the thesis that business leaders should also pay more dues than they
currently do as technical practitioners.

------
spyhi
I'm currently working through this struggle in Hawaii. I'm currently an adult
student pursuing concurrent degrees in CS and Entrepreneurship at the
University of Hawaii at Manoa, and trying to find ways to bring the two
programs closer in ways that reflect my self-study on SV-style tech
entrepreneurship and my experience in the professional workforce...and it's
not easy.

Not mentioned in the video are a couple factors that probably influence the
process in invisible and important ways:

1) At UH (and other universities I've checked on), the different departments
are run as different business units, so trying to run mixed classes runs into
the typical corporate politics of how funds are allocated, who gets credit,
etc. We do have a video game design class that combines CS and creative media
majors into one crossover class at the undergrad level, so I'm trying to gain
insight on how that works at a pedagogical and administrative level.

2) Talking to the curriculum manager of our MBA program, he expressed that he
didn't have any professors who would want to teach a multidisciplinary class,
and he didn't have anyone he felt comfortable assigning to it anyway. When I
asked him why, he said that business academia heavily discouraged
multidisciplinary research, and publish-or-die culture has resulted in
extremely "pointy" professors who are stellar single business discipline, but
essentially worthless outside their skill silo. Because of this, he felt that
a silo-breaker class would be either resource-intensive or ineffective.

We do have a couple "entrepreneurship" centers on campus, one oriented around
tech (with a former technical SV-type manager), and one oriented around
business. Sadly, they seem to be mutually exclusive for the most part, but
I've been working on trying to build the connective tissue.

I do completely agree that business and engineering need each other, because I
always see product without strategy or strategy that completely misunderstands
the magical business properties of pure tech--and that's if the business kids
are pitching tech at all. These two disciplines, at least at my school, are
utterly ignorant of each other and it shows in the ideas they have. When it
comes to preparing students for any kind of entrepreneurship, you need to have
practitioners and managers mingling for it to work, and I doubt I'd ever go to
a business masters that wasn't multidisciplinary. To this end, very happy I'm
seeing things like Harvard's MBA/CS and the Stanford interdisciplinary
programs pop up.

I doubt I'll get UH to see the light, but wish me luck. Hopefully the insights
I got from administrators help someone look at the problem differently.

------
indescions_2017
I thought the Columbia Startup Lab had an interesting approach: if you form a
team consisting of one MBA and one Engineering M.S., they will provide $50K
and 6 months residency. Networking events, alumni contacts, seminars, city
government resources and much more are all available. But for the most part,
they get out of the way and let the team figure things out.

~~~
andybg
Why do they require either an MBA or M.S.? Anytime you put restriction on
something or force a combination, you don't allow it to breathe for
possibilities.

~~~
xiaoma
They're bureaucrats. Restricting things is their job.

------
Dowwie
How about b-schools working with creditors to establish a new kind of student
loan where first payment isn't due until 5 years following graduation?
Financial constraints are life limiting. If a student attends a top-tier
program, student loan debt could easily reach mid-$100k

------
Apocryphon
Same way engineering colleges should prepare students of startups: promote co-
ops and internships. Forge ties with industry to ensure that such gigs are
actually substantiative, i.e. the intern works on something that's more than
drudge work.

------
genieyclo
[https://twitter.com/mwseibel/status/851509298521944064](https://twitter.com/mwseibel/status/851509298521944064)

------
lowlevel
Make them work excessively hard for no reward and leave them worse off when
they ex... oh.

------
Spooky23
A: Tell them to drop out.

------
rak111esh
I seem to agree with a lot of points in the discussion. As a recent MBA
graduate from India, I noticed that most people who join B School, just want a
comfortable life with a high pay. They just want to boost their salary from
say 6 Lakhs to 15 Lakhs and believe slogging in industry isn't worth it... Why
do I point this out? Because this fundamental assumption will explain the
following.

1) If someone has a startup idea, they always wants others to work on it.
Often times, put 5-10x more effort than themselves. I am yet to see someone
who learned coding so that he can get his idea out of ground. Everyone is busy
coaxing engineers from nearby colleges.

2) On the knowledge part, most people don't care and its not necessarily bad.
B School curriculum is evolving, albeit a bit slow. Subjects like Digital
marketing, Data analytics are being offered more now than ever (obviously).
However, when people work for a grade rather than the knowledge, they are
seriously limiting themselves. People who got A's in analytics are afraid of a
simple regression. I don't want to hire them for their knowledge, I would be
hiring them for their potential. But then undergrads from top engineering
colleges are cheaper (.3-.5x) with even greater potential from my experience.
Knowing some technical things, can actually help them bridge the fear of
starting up.

3) Education Loan of 20 Lakhs. This makes sure that you work at least for a
few years, before you get married and get a house loan and work to pay that
off. The fees for most B Schools MBA program increased more than 10x in last
10 years. I am pretty sure the value add remained almost stagnant in all these
years. This is a huge hindrance for people to even pursue their idea.

4) CV point mongers blocking some important positions. The Entrepreneurship
cell in my college has not registered the incubator from 3 years despite
having a check ready which can be en cashed. Why? They are not interested in
start ups or anything, they just want a line in their CV (for extra
curriculars/club activities) which companies, especially FMCG & consulting
ones value. This noise, if separated can help a lot.

How should B Schools prepare? The first thing is try to change the selection
process. I dont know in what way, but a few experiments here can help. Second
is to change the loan payback policies, offer deferred placement for people
who want to try their startup and failed. Third is to actually have a working
incubator, recruit people full time, maybe a couple of developers who help
students create their MVP (Viability validation required). Last but not the
least, the placement process is one of the culprit in this ecosystem. Maybe a
course or workshop on the "business side" of things such as "How to start a
startup?" which actually gives them information on India specific resources or
others which can help students think "Why India needs startups now?"
(Seriously, current market can only employ ~30% of graduates).

Honestly, I think an MBA grad has quite a significant advantage in identifying
the opportunity gaps purely because of the mindset, its just that not a lot of
them (including me) do it actively.

PS:- Sorry for the round about rant.

------
dmitrygr
By explaining to them what start-up options are really worth, what the hours
really look like, what the office "culture" is, etc. All this so they can make
an educated decision about joining one.

Ever wonder why startups prey on mostly young naive people?

Because they do not YET know better.

~~~
gaius
In other words: an engineer should never take career advice from a VC.

------
dredmorbius
s/How //

------
louithethrid
By forcing them for half a year into a diffrent job and mindeset with
difficult task on a weekly basis. Give them taks that force them to bump into
engineering troubles, force them to communicate tech debt, show them there
beloved numbers and have another team fabricate them from thin air, by gaming
the systems. Show them that a good CEO needs to know all the details.

------
megamindbrian
"Fail" 90% of the students.

