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MBA - good or bad for a tech start-up? (medium.com)
26 points by comatose_kid 1549 days ago | hide | past | web | 40 comments | favorite

I really think that MBAs ruin good companies, especially when they hold all the top executive positions and the engineers are relegated to the lower ranks. You get big and all those people smell the money, as push those who built it below them. It's a really struggle to keep them in check. You can look to Wall St. for a very clear example to see what happens when they run everything.

That being said, many engineers tend to alienate customers and make bad business decisions. I know quite a few, and the idea of them interacting with our clients scares the crap out of me.

The key is balance, I think. Here's a tell: if your CTO can't code and only has a educational background in business, be worried.

There are so many generalizations here I wouldn't know where to start. I know plenty of folks that don't have MBAs that "smell the money" and "ruin good companies."

Also, might help to understand that MBAs come in all shapes and sizes. It's like saying you have an EE degree. Is that computer architecture? digital or analog communications? solid state?

Not all engineers are the same, so why do you seem to put all MBAs in the same bucket?

Of course it's a generalization. I wrote a three paragraph post, not a thesis. You want to argue the point or be argumentative-internet-guy because you found a way to deconstruct the intricacies of my three-paragraph post?

My point is, is that companies with top-heavy business-grad management tend to be crappier companies as opposed to companies with a balance between business and technology. Don't try to change my argument into, "Hey! My cousin Larry has an MBA and he's a great guy!"

"top-heavy business-grad management tend to be crappier companies as opposed to companies with a balance between business and technology"

I'm challenging the basis of your analysis, which uses a flawed example (look at Wall Street!) and seemingly anecdotal evidence to come to your conclusion.

I'm clearly not changing your argument. I'm challenging your analysis.

Yes, it's anecdotal evidence. Yes, it's a generalization. It's clear I was stating opinion. That's why I used pre-qualifying words like "I think" and "I know some". It's based on experience, not data. Congratulations for pointing out the obvious. So stop trying to deconstruct everything I said like it's some sort of thesis on the tech industry.

Sure, not every round peg fits into a square hole, and you can always find exceptions. But there's still a general consensus that can be built through common experience, and I think the truth of that is shown in all the votes my original comment is getting. Agree with it or don't, but please don't internet-argument-guy because someone on the Internet shared an opinion.

There's no truth in internet voting. I suppose that means you believe all the polls on MSNBC or something like that.

I also find it funny that you want to voice such a negative opinion of a group of people and not expect it to be picked apart from the obvious flaws in logic.

It seems like "in a vacuum" you'd think that MBA skills should be able to augment any business (even a startup), but because MBA programs self-select a certain subset of the population, you end up with the reality where the overwhelming majority of MBAs are characterized by pointy-hair-manager-ness.

It's almost like MBA programs aren't the problem, but the people who apply/selected are.

Which MBA skills? Can you elaborate?

Hmm now that you mention it, I'm not sure either. Maybe financial bookkeeping & dealing with VCs?

I think that's the point.

I really think that MBAs ruin good companies, especially when they hold all the top executive positions and the engineers are relegated to the lower ranks. You get big and all those people smell the money, as push those who built it below them. It's a really struggle to keep them in check.

I worked at a startup exactly like that. It was a hard-core Douchepocalypse.

So I know exactly what you are talking about. You win the thread.

I grant you an Honorary Indignation for your work, sir: http://www.youtube.com/watch?v=EtCiP8B2xpc#t=7s

It's amusing how quickly the HN sentiment can completely contradict itself.

Anytime there's an MBA article posted, the overwhelming number of comments are about how terrible MBA managers are and how many organizations suffer from their money-grubbing ways.

Then you get stories like the Ecomom debacle where the comments basically repeated the "Founders need to understand business and financials." platitude about 200 times.

Many commenters don't seem to realize that a huge number of MBAs (especially from good schools) have technical backgrounds and are doing the MBA to gain better organizational and financial knowledge. Granted it's less common in software, but most companies in the sciences and physical engineering domains have tons of engineer-MBAs.

As for startups, would an EE/MBA not be a huge asset for a newly formed company? Even forget the EE for a second, would a former sales guy with an MBA not be valuable? A good MBA teaches accounting, finance, marketing / advertising, market-research, supply chain / logistics, as well as the more recognized organizational structure, management, and conflict resolution pieces. Obviously, after only two years, students won't be experts in those fields, but they'll be much better off from anyone trying to learn accounting on wikipedia.

That depends originally MBA's where for high flyers in blue chip companies who did their MBA after a number of years experience.

Now you seen people getting an MBA with no or little real word experience not sure this sort of MBA is much use to a start up - though I am sure the big 4 consultancy can rent then out at a huge day rate to tell you the time using your watch.

And having worked on the campus at CIT the Business school was not regarded by at least a proportion of the students as being quiet as good as a proper MSC /PHD

The real value of an MBA is the signalling it provides future employers - that you are sufficiently smart, diligent & focused to get into a B school, and prepared to do long & arduous hours for the company in order to get ahead.

The content is beneficial but inconsequential - not much more than a broad survey of intro/mid level undergrad stuff - and certainly nothing that a mildly dedicated auto-didactic couldn't learn with a local library card.

The tech world is one in which there are many ways to signal competence, and I'd argue that an MBA is a highly inefficient way of doing that. And even if you do find a tech company that does value MBAs, do you really want to work for one that values inefficient mechanisms or academic pedigree highly over say, competent contribution to open source?

That said, I don't regret doing an MBA - it was the seed that lead me to where I am now - doing a PhD in Philosophy

There's the issue of path: this guy is intrinsically interesting because he got significant experience in the real world and then went for a MBA. These individuals are likely to have significantly benefited from it, vs. a direct path from undergraduate to an MBA program and then "hello, real world."

I'll bet he also has a good idea if the ROI is going to be worth all the costs.

Any MBA program worth it's salt doesn't let people in unless they have work experience.

That said, you may want to check out the average age at entry in the top-10 MBA programs. I was surprised how low it was.

For those wondering, average age is usually around 26-28, iirc. 4 years of experience is the average, with about 50% of the student body having 3'ish years of experience in a finance or consulting firm.

Yes, and you can bet that most of the 26-28 year olds have been on the track to an MBA since their undergrad, pausing only to gain just enough experience to make it into a top B-school.

And it's questionable if that satisfies my "significant experience" criteria.

They will have a grounding in the real world; whether they have enough of one will of course depend on the individual.

For that matter, if they grew up helping run the family business(es) as I sort of did, they could potentially go straight to B school with little to no harm.

I wouldn't phrase it as a question of Good vs. Bad, but rather Necessary vs. Unnecessary.

For me, it's a return-on-investment question, whether the 2 years and $100k+ in tuition would advance my ambitions more than 2 years of building and $100k that could go towards self-funding.

> $100k that could go towards self-funding

This is not really accurate. The 100K for the MBA will likely come from financial aid which can be paid over time, maybe 6-10 years. Thus it is generally not paid with cash on hand.

At the same time there is no $100k financial aid to start a company. Sometimes you can find family money or smaller personal loans, but 100K for a biz is much harder to come by and not the same as 100K of Gov backed financial aid.

This is apples and oranges here...

That being said, your main point re ROI stands..

The $100k of personal debt you take on to obtain an MBA is worse than startup funding: aside from the fact that most startup funding is based on equity and is never repaid, that "government backed financial aid" isn't dischargeable in bankruptcy; you are more or less going to have to pay it back no matter what.

That is true the terms are worse. If you can get seed funding go for it. The other thing an MBA gives you though is a pretty soft landing pad if your startup fails.

Disagree! Lots of people have MBAs. It's not an effective differentiator. A smart, ambitious engineer can do most of the jobs an MBA normally qualifies for, so MBAs have that source of competition too. Meanwhile: your landing includes $100k of non-disposable debt.

A couple years ago, I worked for a UMich MBA in a product marketing role. I remember hearing about how MBA's weren't worth getting unless you got one from a top school. But that was years ago. In 2013, even if you can pick one up from Wharton, you're still probably going to end up worse-off unless you manage to parlay the degree into a role in finance.

Don't get an MBA.

Great point. I just wanted to counter the prevailing wisdom that an MBA is not worthwhile & show how my perceptions of it changed over time.

ROI: Most choices result in opportunity cost - expense and time were considerations, but the skills gained will stay with me for life.

It depends on which type of MBA they are.

-"I got an MBA at night school so I could be a more effective manager" vs.

-"I got an MBA as a ticket to the upper middle class"

Obviously you may want to hire the former, but not the latter.

I once got accepted to an MBA program but declined to attend because I realized I was the latter of the two types and it would be a waste of money if I didn't use it for social climbing purposes. So I decided to focus on my career and skills rather than my educational pedigree.

If you are wondering if you should pursue an MBA:

"In the consumer Internet world, [an MBA] is a major disadvantage because of the opportunity cost of 2 years during the prime of your career." –Keith Rabois

Shameless plug: http://jfornear.co/diy-harvard-mba/

I would agree with this completely. I was in an MBA program from the ages of 23-25. A year later, the company I was working for started to run out of money. I had a lot of time on my hands throughout the day, so I started going through programming tutorials thinking it might be good mental exercise.

I started really getting into it, and now I've spent a ton of time over the intervening year learning and practicing. I think back and wonder where I might be now if I had started at 23 instead of going back to school.

It's not that what I learned wasn't worthwhile; it's that it took an amount of time and money disproportionate to its value.

On top of that, while I only (ha) paid about $58k for mine, having that amount of debt really hinders one's flexibility.

At 23, how much work experience did you have? Going into an MBA without adequate work (and life) experience is indeed a waste.

That might be true for certain classes or certain programs, but it didn't matter a bit for 90% of what I did.

Life experience doesn't help you project free cash flow, consider the complexities of pricing strategy, understand accounting rules, or really, do anything else we did over the course of those two years.

Maybe it helps with management classes, but the only management class I took was a complete throwaway.

Edit- Got hung up on the life experience bit and didn't address work experience, but in many cases, much of the same applies. There was nothing conceptually difficult about any of the classes I took. At times, my work experience was relevant, but the only benefit was needing less time than some of my classmates to internalize some of the ideas.

Now, I realize that I can't just jump in to a position where someone with 10 years of experience in X + an MBA would be, but that was never my expectation. My expectation was to get good foundational knowledge in a variety of areas. And I got that, just not to the extent I expected. I was just disappointed in how easy a lot of it was.

What's important about the experience is being able to put the information you're receiving in context and understanding how great the opportunity is to build long-lasting relationships with a group of people that will have a high percentage of successful members.

Getting an MBA is not just about the mechanical absorption of how to do a free cash flow or doing a paper on organizational behavior.

Frankly, more insight and knowledge was gained from classmates than from the textbooks and case studies we had.

Yes, sadly it's true, I'm an MBA Student right now, and I feel I don't have enough time for launching/producing anything!

That being said, I don't drop the MBA because of the insights I'm getting from so many different industries. As a full time programmer, it's being really helpful to have this extra knowledge.

Like most things, it depends. The opportunity cost is large but I mitigated this by doing a part-time MBA.

It also depends on what you realistically can get out of an MBA... some don't get that much out of it, while I believe I got tons out of mine (former R&D Engineer, went to top-10, or top-15 depending which publication you're reading)

Could you give examples of the kinds of things you've learned? Maybe top-3 or top-5. For instance, the first time I wrote a business plan in school, it was an eye opener.

Note: I took a bunch of business courses but do not have an MBA.

If you realize an MBA has little to no value in a real world tech startup, then it's probably neutral. If you think it has value ( = derive false confidence from it), then it hurts you.

With rare exceptions, I wouldn't hire any recent MBA who references their degree more than once in an interview.

good - (BSc Toronto, MBA Ivey) Having more exposure to tools, and an important network at your level makes an engineer with ideas far more valuable as a business leader in a smaller company or start-up. It doesn't help much in larger companies, or when everyone has an MBA.

The only good thing i've seen obtained from an MBA is connections. If you don't go to a school that can provide a wealth of that (really just the ivy-league MBA programs from what i've seen) then its a waste of your time and money.

Get real-world experience, it counts for more. Especially when i'm the one doing the hiring.

I think you might be underestimating the knowledge/skills gained from an MBA. A lot of non-MBA folk don't move up very fast in organizations (in business roles I suppose), one reason I think is because they don't completely understand how to manage people, I suppose you could learn it on the job, but it would be a lot easier and more structured if done through an MBA program. Now that doesn't mean everyone should go get one, but I do think it helps to a certain degree. I'm not just talking about it from a startup perspective, but just a company/managing people perspective. A lot of the bigger tech companies Microsoft/Google/Amazon etc do tend to hire a lot of MBA's each year though.

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