Does getting an MBA make you a better entrepreneur?
People often ask me whether getting an MBA is, firstly, worth it and, secondly, whether it will better his or her odds of becoming a successful entrepreneur. I want to caveat this post by saying that the answers to these questions largely depend on each person’s distinct career, financial, and social situation. I’m far from an ultimate arbiter.
But I can hopefully offer a few useful insights based on my own experience. I started a company before beginning my MBA at UCLA Anderson (actually deferring Anderson for a year because of it) and ran the company for roughly six months while concurrently enrolled before eventually selling the company. Upon graduating from Anderson, I joined Hummingbird Ventures. Do I think the MBA was worth it? Do I think that it improves your chances as an entrepreneur?
Initially, I was skeptical of business school. I felt that my going to business school was emblematic of my failure as an entrepreneur. If my company had gone better, I wouldn’t have gone. Steve Jobs would never do an MBA, I thought. Neither would Elon. Well, most of us aren’t Elon or Steve. If you are, then good for you. So, I was what you might call a reluctant MBA.
Nevertheless, with hindsight, it was definitely a valuable experience and I’m happy that I went. The main benefits of the MBA can be broken into four general buckets:
1. Network
The MBA is an opportunity to build your network in a way that you would likely not be able to do so while employed. You can meet with boatloads of interesting people. In college, I didn’t understand the value of being a student. Students hold a special place in society. When you’re a founder on the hunt for capital, more doors are closed than open. When you’re a student, every door is open. The value of that is tremendous.
2. Branding and experimentation
If you go to a top ten / twenty school, you are positively branded by association. People assume that you are smart, rightly or wrongly. The process of an MBA also forces you to reflect on your personal strengths and what career centres call your “brand.” You come to understand that you are selling yourself and your abilities, which is something that does not come naturally for most people. The MBA gives you time to incubate your brand. I know this sounds forced, even calculated, but we do live in an era where we are forced to think of our professional selves as brands.
3. Learning
The curriculum at the top business schools is rigorous (though in some places very outdated) and you learn a lot. In my case, I had never properly worked in finance, so I focused on that. It’s true that there’s nothing in an MBA curriculum that is not available online but you do learn quicker if you have able teachers and some structure. Exposure to the different learning approaches and world-views of your peers, who are from various backgrounds and industries, is also edifying.
4. Career Advancement
In some cases, an MBA can help you accelerate your career or help you transition to a new industry.
I certainly experienced all of the above benefits. I’m confident that without the time and space granted by my MBA, I wouldn’t have interned at a venture capital firm in San Francisco nor had time to make some successful angel investments (and go down the crypto rabbit hole!) I don’t think I would be in the position that I am now without my MBA. Whether it’s worth it for you will depend on how much you take advantage of the experience and your opportunity cost of attending.
But will an MBA make you a better entrepreneur? This is a more difficult and contested question. It’s fashionable in Silicon Valley to aggressively dismiss the MBA. Paul Graham and Peter Thiel certainly love doing so. Though as Alex Taussig of Lightspeed Ventures has pointed out, there are a number of highly successful companies which were founded by MBAs including Rent the Runway, Stitch Fix, and Deliveroo to name a few. The jury is still out it seems…
My suspicion is that an MBA adds the most value to those who did something entirely different before the program. Combining an MBA with a Physics PHD, a love of law, or 5 years working as a music producer is more likely to synthesise into a unique set of skills and insights.
Looking at a small sample of successful entrepreneurs with MBAs, there is some data to support this notion: Marthine Rothblatt, the founder of SiriusXM, had already published five articles on the law of satellite communications before graduating UCLA Anderson; Phil Knight of Nike was a professional runner and obsessed with athletics long before he enrolled in the Stanford MBA program; Jeremy Stoppleman was a top-class engineer at PayPal before heading to Harvard for his MBA and founding Yelp. It seems that an MBA can add fuel to the entrepreneurial fire if you already have a an insatiable curiosity or burning passion that creates the spark.
By contrast, if you want to be an entrepreneur but did a business undergraduate degree followed by two years of consulting, then an MBA may not be the answer. In fact, an MBA could have the unintended consequence of compounding a stepping-stone mentality and leaving you with an undifferentiated skillset and worldview. Entrepreneurship is about creative problem solving and acting on unique insights. To be contrarian and right, you can’t approach the world like everyone else.
If forced to state a position, I don’t think an MBA increases your odds as an entrepreneur. This is particularly true for early stage technology start-ups and truer still if your start-up is product-focused. The early-stages of entrepreneurship are about product, passion, and people. And grit. Oh, so much grit. An MBA doesn’t teach you that. The financial and operational frameworks that an MBA teaches, will help you evaluate businesses and run them at scale. But it does not help you to take a product from zero to one, land those first customers, or make the first key hires. Realising those milestones is all about the product and the entrepreneur’s ability to sell. That hustle and vision needs to be innate. (Note: for some reason, there are no sales courses at business school.)
Nevertheless, one significant benefit of enrolling in an MBA is that you have an opportunity to start a company in an almost risk-free environment. If you’re willing to focus exclusively on schoolwork and your startup, you can do it. It’s a free shot at bat in a supportive environment with great resources; a chance to test a burning idea and learn first-hand whether entrepreneurship is a fit for you. If you are planning on doing an MBA anyway, there’s no real downside to this approach. Arguably, you might absorb more from your classes as well because you can apply some of the classroom teachings in real time.
For those aspiring entrepreneurs pondering an MBA, hopefully this helps some! As with everything in life, it mostly comes down to what you make of it.