Hey Entrepreneur – Please Don’t Get an MBA

October 11, 2012 — 32 Comments
Some prospective MBAs

Some prospective MBAs

It seems that every time I am at a crossroad in my life, I contemplate getting an MBA.

In my head it sounds something like this: “By joining an MBA program you can quit your job to hang out with other smart and ambitious people. You will get to put your life on hold, your parents and friends will respect your decision, and you’ll be able to pretend that you’re taking a step in the direction of starting a company.”

You can probably guess that I have ultimately decided against getting one. I think you should decide against it too – if you would be getting one primarily as a first step to starting a business . My reasons are as follow:

1. What You Actually Learn

While MBA programs do contain courses in leadership, negotiation, and case studies which will no doubt prove useful post graduation, much of the actual content of the program focus on corporate skills and how to network to get a job. While useful for Fortune 500 companies, I question how vital they are to web-based start-ups?  Even if they will be useful down the road, how useful will they be when just starting out?  If they will be useful down the road, will you recall the material when the time arises?

For a web-based start-up, I personally would find it more useful to learn the ins and outs of topics such as customer acquisition, viral loops, search engine optimization, web development, customer development, UX design, and strategies to reach hard to reach people. While some of these may be included in an MBA program, they clearly are not the focus.

Furthermore, for a person who is motivated to teach themselves, many of these topics can be found online for free. The number of online video course platforms is exploding with a new one being announced every day.  You can use materials on LyndaTree HouseUdemy and Creative Live for technical knowledge while taking free University coursers on CourseraUdacity and EdX for the theoretical knowledge. Steve Blank is even currently teaching a free course on how to build a startup on Udacity!

2. Tuition Costs

Excluding cost of living, tuition from a top-five business school is easily over $100,000. While you could go to a cheaper school, I really believe that going to anything that isn’t in the top 10 somewhat defeats the whole purpose of going to a business school – to building a network and a good stamp on your resume.

Bootstrapping a start-up is actually dramatically cheaper. The highest cost in most internet-based start-ups is salaries of the team, so long as you are willing to downsize your lifestyle, you can live on your savings while you and your co-founders are creating the company and not drawing a salary..

The cost of an MBA was a huge hindrance to me and I was extremely wary of the consequences of graduating in debt. I felt that the biggest asset I possessed was the ability to bootstrap a business, while not taking on capital until the idea was proven.

3. Time Commitment

While most MBA programs last two years, after shelling out $150,000 to receive a degree, wouldn’t it be tempting to sign with a company who would pick up a good portion of the bill for you? I recently learned that  graduates in the top programs are frequently offered signing bonus from their first post-degree employer, who pays for a good portion of the cost of the degree. However, these signing bonuses come with the condition that you commit to stay at the company for at least a year or two. If you accept such an offer, the timeline to getting an MBA starts to look more like a four year commitment than two.

I personally felt that if I were to sign with a company after an MBA program, it would not be particularly easy to leave a steady paycheck behind in order to start my own company.  Four years after the degree, I would likely have other financial obligations tying me down (i.e. mortgages, family, car) that would make it more difficult to take the leap.

4. The Wrong Network

MBA alumni often cite their network and connections are the most important perks from the program. Many say that if they ever needed to find a job, a simple phone call is all it takes to get an interview. While this is great if you want an interview, how useful with a network of mid-level executives at Fortune 500 Companies like Sony, Yoplait, Amazon, Microsoft be to a bootstrapped entrepreneur?

I question the network’s ability to get you to the next level.  I would rather have a network of like minded entrepreneurs who are a step or two ahead which would help me reach the next level – ie a network from YCombinator alumni, rather than Harvard MBA alumni. I have also found that entrepreneurs really respect other entrepreneurs are happy to open doors once you are already have started a company.

5. Few MBA’s Start Businesses

Despite everything learned about business in MBA programs only 5% of graduates go on to start a business upon graduation!

Perhaps these are some of the reasons: 1 – Most of other graduates are going to be going to 100K+ paying jobs, 2 – the tuition from the program will land most in debt and 3 – by ones early 30s, most need to draw a salary to support your life style and family.

My Suggestion:

If you are currently debating getting an MBA, a vacation or a start-up – I would highly suggest taking a vacation + seeing how you feel about it. Every time I have contemplated entering an MBA program, I have always arrived to the conclusion that I was ultimately interested in a vacation that looked respectable on my resume.  If any of this ring true for you, I would encourage to give entrepreneurship a shot and define your own path through life rather than one, which some institution has crafted up into a nice and socially acceptable package.

I’m sure not everyone will agree with these conclusions. If you disagree, please do tell me why I’m wrong in the comments or in the comments on Hacker News.

  • David

    You said: “…I really believe that going to anything that isn’t in the top 10
    somewhat defeats the whole purpose of going to a business school…” Well, that sort of frames your conclusion while ignoring the vast majority of schools. Very few people have MBA’s from “the top 10 schools” (and you didn’t even list whose rankings you consider), and of those that do, few did it to create a startup. If you go to a state school, it can be around $30k, and you can do it while still working a day job (and you can even have your employer pay for it).

    I agree, if you limit yourself to only the 10 most expensive schools, and you quit working for two years to do it, it is a mistake for an entrepreneur; however, that doesn’t immediately translate into “don’t get an MBA.”

    • http://www.artsumo.com Naysawn Naderi

      Hey david – good point. Yes, i only considered an MBA from a top 10 school as I believe that most of the value that you get from the program is in the materials and the network. If you’re doing evening classes which is paid for by your employer, then it’s somewhat a different ball game.

  • Geori

    Since you didn’t get an MBA, how do you know the counterfactual? I got one from a top 20 school (not top ten, heh heh) and what I learned there has helped my startup immensely. I wouldn’t trade the experience for anything.

    • http://www.artsumo.com Naysawn Naderi

      Hey Geori – I’m pumped that it helped you. Seems like some entrepreneurs from smaller schools have a better experience than others. Did you pay for the tuition yourself?

      • Geori

        I went to the University of Texas (by no means a small school) and I paid for it myself ($100K). I came into school as a CS major with experience in corporate IT and knew absolutely zero about business. The classes I took and lessons I learned at b-school are serving me very well right now.

  • George Collins

    I went to business school and I agree completely. It broadens you, and it is good for getting a job, but you could say the same thing about entrepreneurship. And I think the way you learn entrepreneurship is by being an entrepeneur.

    People need to be much more critical of the economic value of an MBA. Schools point out that their graduates have increased salaries, but this is a bit misleading because they pick very employable people who would probably get raises and promotions during the two years they are in school. As the ranking of the school goes down the results diminish faster then the cost.

    That said, I did love my time in business school and it did allow me to transition from a career path I wasn’t interested in to one I loved.

  • mdb

    Some good points for sure…
    In biz school, one of the first concepts you will come across is opportunity cost — http://en.wikipedia.org/wiki/Opportunity_cost — even at a cost of 100k/yr (which is way exaggerated, Harvard is around 50k tuition/yr –http://www.hbs.edu/mba/financial-aid/Pages/cost-summary.aspx), school is only 1-2 years long, and if successful you should pull in well over 6 figs afterwards, so you have to view from an investment perspective and not simply as a cost.

    Certainly there’s plenty of ways to get similar education w/o the expense, and experience trumps education anyway. Just like other subjects of study, many schools have different sub-programs of excellence including entrepreneurship… but I found studying it isn’t the same as doing it. Still, being in a class with 20 other individuals is very different from self-learning… read as many HBR cases as you want, it still won’t provide the same level of insight you’d get from an instructor led review and a class full of different viewpoints. Most MBA programs are heavily focused on team based activities, projects, presentations, etc. Good programs will have connections with real businesses, other departments, incubator programs, etc.

    Still, the reality is that most business fail. You might be a great developer or have awesome ideas, but an MBA will (hopefully) provide a broader set of business skills so you can formulate better business plans and monetize your efforts. Or most importantly for a tech start up… be able convince other business minded folks to give you a tonne of cash! and be profitable.

    In my case, I fell into the pit you’ve accurately described. Doubled my salary from pre-MBA and now I don’t have adequate motivation to venture out my own. I do have friends from my graduating class that did the tech startup thing, sold out and traveled the world, but they are definitely the minority and the Musks/Zuckerbergs/etc are even more so. There are tons of examples of ‘successful’ tech companies that are never able to monetize their market and go belly up.

    Either way, I wouldn’t write off an MBA completely, but recommend exploring more specific programs of interest. Harvard is bullshit social elite nonsense, so overall top 10 really isn’t necessary. Instead, find top 10 in your specific area of interest which may be surprisingly much more affordable. Also, there is such a glut of MBAs now, you may be better off getting a more technical MS degree, which can take less time and money to complete and isn’t always so competitive although equally or more rewarding.

    Either way, most entrepreneurs are not MBAs, Studying entrepreneurship does not make you one. If you’re already an entrepreneur or entrepreneurial minded, an MBA would probably be helpful, but definitely isn’t necessary.

  • chakos

    well after four years the chances that non-mba is still bootstrapping company are pretty high… where mba guy would be looking for another good pay raise ?

    • http://www.artsumo.com Naysawn Naderi

      Sure though, I do believe the skills you learn in running a bootstrapped company, are extremely valuable to employers as well. It’s pretty hard to find somebody with the ability to build something from nothing.

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  • http://twitter.com/gozmike Mike Gozzo

    Naysawn, thanks for writing this. As an MBA and startup founder, I respectfully disagree.

    I wrote a counter-argument here:
    http://gozman.wordpress.com/2012/10/11/hey-entrepreneur-please-get-an-mba/

    • http://www.artsumo.com Naysawn Naderi

      Thanks for the thoughts Mike. Cool that you went to Concordia, I used to live in Montreal :) .

  • Bert

    Yeah, I think it’s a pretty forgone conclusion that you should only go to get an MBA if it’s a top school and/or you want to meet smart people of the opposite sex (seriously, friend of mine who went to MIT Sloan said something like one out of six married people got divorced during the program).

    Take a college friend who ended up doing Stanford GSB – after graduation he got a due diligence job for a clean tech VC (He had an MSME degree before) that paid him $80k/year to work 20 hours a week.

    It gave him time to work on his company but most importantly, it gave him the network to close his A round. And now he’s on his way as an entrepreneur…

    The point is, which you also alluded to, be smart and choose wisely – that’s all.

    • http://www.artsumo.com Naysawn Naderi

      Wow – 1/6 got divorced?! Know why? Too many parties or they just saw better options.

  • Safa

    Hey Nays,

    Love the post, as an MBA student it raised a lot of issues that I dealt with when deciding whether to pursue this degree or not. I’d like to share some of my views:

    With respect to how applicable MBA course content is to those with an entrepreneurial mindset – I would agree with you that most schools are not well equipped to teach you most of the things you are talking about (SEO, web development etc. – we only touch on these briefly). I can only speak for McGill, but what our MBA program WILL teach you are the fundamentals of business: finance, strategy, marketing, organizational behavior, operations/sales and so on. While these courses may not teach you exactly how to apply this knowledge to a tech startup situation, I believe a lot of entrepreneurs could benefit significantly from this basic knowledge.

    With respect to web-based learning (and I may be completely off base), I am of the opinion that there is no replacement for the school environment. Beyond the book stuff, we learn to work in diverse teams under time pressure and are taught, not by academics with no real world experience (like many other degrees), but by those who have worked in their respective fields for decades. Beyond that, the degree can dramatically improve your analytical skills. Case-based learning gives you a context for dealing with complex business problems across several industries and teaches you to decompose them in a coherent, logical way. While I’m sure everyone reading this blog can do this, you’d be surprised how many entrepreneurs I’ve spoken to (or consulted for) can’t.

    Like you said, the time commitment and tuition costs can be extreme. In my case it was the biggest financial risk I have ever taken. While this needs to be evaluated on an individual basis, I think you would be hard pressed to find anyone (entrepreneur or otherwise), who wouldn’t benefit from learning about the things I’ve listed above. Whether that justifies such a big investment is up to you.

    As far as networking goes – again, it depends on the school. Not many MBA’s go on to start businesses. However, they do often consult for, or work for companies which finance those who do – something to think about.

    Another important point is due diligence. You can read about MBA’s on websites and blogs all you want, but until you sit in a class and experience it for yourself, I don’t think you are in any position to make a true judgement as to its value.

    Whether you are an entrepreneur or an MBA student, I think we share one thing in common: we are all willing to make a huge investment of time, energy and money into something we hope will further our careers/professional lives and ultimately provide us with a good return on investment. Everything needs to be evaluated on an individual basis, but just like starting a business, an MBA is what you make it.

    • http://www.artsumo.com Naysawn Naderi

      Nice points Safa.

      For a lot of people it will probably be a good decision, for me personally, I felt that it wasn’t the right one for all the reasons stated above.

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  • Guest

    I agree with the premise of this, in fact if you look at Zuckerberg, Gates, Jobs, Larry Ellison and scores more, none of them had college degrees let along MBA, etc and they are all billionaires .

    Sometimes, its not who you know, its what you know. If you are in technology, read The Innovator’s Dilemma, Good to Great, and In Search of Excellance and then learn to program and database manage.
    Good luck with that…..

  • Ignacio Gomez

    I want to go to concordia ;) how much is it there? I´m entrepreneur…

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  • dfooter

    Naysawn, great post! My favorite part: “The cost of an MBA was a huge hindrance to me and I was extremely wary of the consequences of graduating in debt. I felt that the biggest asset I possessed was the ability to bootstrap a business, while not taking on capital until the idea was proven.” Very perceptive. Look forward to meeting up soon.

    • http://www.artsumo.com Naysawn Naderi

      Hey Derrick – Glad you liked it. Hope we get to meet up soon!

      • dfooter

        Naysawn,

        Should be in Seattle this month or next, will definitely connect. Let’s keep in touch.
        Best,

        Derek

        Sent from my iPad

  • Tammy Kahn Fennell

    Great post. I too have thought about it many times, but i’ve always opted for just “going for it.” If I had decided to get my MBA before launching my startup i could have missed out on a big opportunity to launch and grow MarketMeSuite. I suppose, in some respects, the same can be said for a college degree. Some people on my dev team have one, some of my programmers do not. To run the business though, i think minimally an undergraduate degree is a good thing.

    ~Tammy, CEO @MarketMeSuite

    • http://www.artsumo.com Naysawn Naderi

      Thanks for sharing your thoughts Tammy! Best of luck with MarketMeSuite. It looks like a cool product :) .

      • Tammy Kahn Fennell

        I think it is! Definitely come and give it a try, would love your thoughts :) I’ll be a regular reader of your blog now, great stuff :)

  • http://twitter.com/ichristianr_ Christian Rubio

    I went from a soft-skill-laden p.r. guy to being a start-up junky, and it was actually the Babson MBA that inspired me to go that route. The networking I did was of my own doing, mainly outside of school. Now 7 years removed, I keep up with the entrepreneurs who had start-ups or were founding their start-ups while in school. Unanimously, they say the MBA was an absolutely critical component to their success. A few have credited the extra-long hours and stress of taking it on with saving their businesses. The long nights in team projects in which no one could pull rank forced them to grow up. The emphasis on finance and strategy forced them to run their companies more dispasssionately and less by trial-and-error, the education in HR saved them ugly, potentially expensive lessons in proper compensation and motivation of employees. They honed their writing skills, were mentored by faculty at all hours, not just at board meetings or when they were in town, and on the humanistic side, they made lifelong friends from all walks of life and many countries.

    If you’re thinking weighing business school vs for the classes, networking and income, you’ll make, the author’s right. Take a vacation or change jobs. The skills he mentions are fleeting and worthy of no more than a couple of classes in b-school. If that’s what you think it’s about, you won’t be a satisfied customer.

    • http://www.artsumo.com Naysawn Naderi

      Thanks for sharing your insights Christian.

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