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 Lynda, Tree House, Udemy and Creative Live for technical knowledge while taking free University coursers on Coursera, Udacity 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.
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.