MBA Entrepreneur: An Oxymoron

Most real entrepreneurs blanch at the idea of putting their business venture on hold to pursue an MBA degree. Not only that, most of them realize in retrospect that they learned more about business in the six months of creating a new venture than they would have learned in two years in the classroom. That’s why this question to a panel of “MBA experts” during a forum in today’s Financial Times was really an objectivity test, one on which the assembled MBA advocates get highly varying grades:

A potential entrepreneur can deploy their cash to either start a business or finance an MBA. Is there any evidence that an MBA’s advantages outweigh the risk of losing a unique market opportunity?
Ian Rebello

Laura Tyson [Dean of LBS]: Timing is important, however you have to be equipped to bring your idea
to the marketplace. Here at London Business School we offer courses that cover the whole life cycle of a business  – from financing your venture to managing your growing business. We also conduct an Entrepreneurship Summer School that has seen the birth of many successful ventures. A survey of  alumni from top business schools has found nearly 80 per cent of former students have been a part of a new business venture in the first 10 years after graduation. Perhaps most importantly, business schools provide students with the networks that can make their business plans a reality.

Della Bradshaw [FT  business education editor]: Ian, the Financial Times has collected a lot of evidence over the years that studying for an MBA at one of the top accredited business schools does give a substantial financial fillip to graduates’ salaries. But there is no data that I know of which looks at the relative success of start-up companies run by MBAs and by non MBAs. I guess at the end of the day it depends on how compelling the idea is and your own attitude
to risk. Good luck.

Rosemaria Martinelli [Associate Dean, University of Chicago GSB]: The MBA is a long-term proposition – providing you with tools and perspectives on how to manage resources. We teach you how to think as challenges arise. An entrepreneur doesn’t necessarily need an MBA to start a business, but having the tools to sustain and grow that business may not come as naturally as developing the idea.

Related posts:

  1. The Myth of the Serial Entrepreneur
  2. Do You Have to be Rich to be an Entrepreneur?
  3. Is “Rich Real Estate Broker” an Oxymoron?
  4. The Myth of the Serial Entrepreneur — Part II
  5. Focused Funds and the Return of the Venture-Backed IPO

Comments

  1. I’m surprised that none of the panelists mentioned that the MBA program is a great way to meet other entrepreneurs. It seems to be one of the primary reasons why my peers chose to enroll.

  2. Fartikus says:

    i am seeing a huge move away from degree credentials to “project” credentials at least in the web industry. degree from MIT? so do two thousand other people, no one cares. got a two man project that actually has users? now we’re interested. the project website has become the interactive resume, with the upside of your hiring typically including some payout to acquire the intellectual property of the project site. look at the last ten or so acquisitions by yahoo…did anyone check or care about the degrees these people had?

  3. Franklin Stubbs says:

    True that, not just entrepreneurs but business contacts in general. My little brother is currently working on his MBA at U Michigan Biz School, and the way he sees it 80% of the value is in the network. Like a white collar friendster.

  4. Brent Buckner says:

    “I attended a small mid-Western Ontario business school, and I never thought it would happen to me but…”
    …I ended up as one-half of a start-up.
    There’s a lot to be said for the network and for having less to learn on the fly while actually running a business.
    There seem to be different outlooks on ideas and entrepreneurship. The question posed by Ian Rebello presupposes “the risk of losing a unique opportunity”. Other folks posit that entrepreneurs-by-nature will (in a sufficiently dynamic capitalist economy) always have access to ideas sufficient to drive a start-up. If you’re sure that there will be no lack of opportunities in a couple of years, the opportunity cost of doing the MBA is perforce less.

  5. I suppose I’m a bit unique in that I started a business before business school — a company specialized in the export of U.S. made pet food to Japan (yes, yes, *that* hoary old chestnut) — and ran it all thru b-school. Joined a couple companies after school but started my own gig again 3 years ago — http://www.TheLadders.com, the world’s largest $100K+ job site.
    I found business school to be the most rewarding 2 years of my life up to that point. Not because I learned *more* than I did as the owner of a little $3 mm business, but because I was able to put what I had lerned into perspective, a bigger framework; and the people I met were and have been invaluable advisors, friends, and inspirations.
    Might not be for every entrepreneur, but for those with a considered view of the world and interesting in knowing more about *how* they were successful (kinda like the trick shot pool artist who wants to, but doesnt need to, know physics) it is invaluable.

  6. Baker Scholar says:

    Marc, it is spelled “learned” ;)

  7. ed says:

    there’s no rule about what real entrepreneurs do, but there’s a decent body of evidence to suggest that a significant majority of MBAs are not well suited for entrepreneurial activity, at least, not outside of their own consulting, banking or investing gigs.
    clearly, you can’t rule out the potential of an entire body of young ambitious smart folks. but the data isn’t supportive of them – as a group – them as pure entrepreneurs (or as managers of major organizations as well, but that’s another topic).
    check out the first half of henry mintzberg’s “managers not mbas,” where he breaks all this down. he calls MBAs “new bureaucrats for a new age.”
    the MBAs i’ve seen (admittedly, at very large organizations) fit that description to a “T”. there’s nothing they are better suited for than creating powerpoint presentations that tell management what they wanted to hear. and they work damn hard at it!

  8. John M says:

    How could going back to college for two years of waxing poetic on the comings and goings of global business while ensuring a $120K+ salary NOT be personally rewarding? I mean….who doesn’t miss college!
    At the end of the day, though, the mechanics of business really are quite simple, so good, innovative ideas – unabated by the minting process – just don’t require an MBA. This is particurlarly true in a world where I can teach myself how to run a discounted cash flow analysis (or whatever) in a few hours of web time.
    That being said, I am amazed at the self-perpetuating nature of business school. Take banking and consulting: you better think and act like an MBA to get in on that action because they are basically run by and for MBAs (and they sure do pay well…). Great racket to get in on.