The meaningless debate of whether MBAs can be entrepreneurs.
The MBA bashing by the startup community has been in effect for years. The most recent post I read was Howard Tullman’s A/B Testing Is So Yesterday—and So Is Your MBA. And like the others, it reads like click bait.
Why? Because it is a manufactured issue. Master of Business Administration programs are not meant to create entrepreneurs. The majority of MBA students do not enroll to found a company. They want to join investment banks, private equity firms, consultancies, and/or consumer product brands. In fact, over 89% of students at UPenn’s Wharton, Stanford GSB, and Indiana’s Kelley find placement in corporate America. Hence, the curriculum is designed to create super analysts and managers. And against that objective, the curriculum is effective.
Entrepreneurship is blind to a person’s degree. Founders come from all educational backgrounds, professional domains, and geographies. It is not a career you apply for; it is a career that seizes you through the pursuit of problem solving. And as long as business schools exist, entrepreneurs will come from MBA programs as well. It may be a former consultant MBA looking to make a better pair of pants or an International Studies MBA major looking to improve the way payments are made online.
The real debate is if MBA programs can strengthen entrepreneurs.
Tullman says probably not. He believes business school programs will evolve in a reactive manner. He adds that business schools will play catch up through:
“…frantic, and utterly expected and lemming-like responses by adopting the best practices from the outside world and adding courses in stats, data science, and A/B testing.”
My co-founder at Dashfire, Nick, received an MBA from Indiana’s Kelley School of Business. He concentrated in Decision Sciences and focused on simulation, split testing (the 1990s version of A/B testing), neural networks, data mining, real options, and optimization.
Nick graduated in 2002.
These disciplines are offered to prepare students to make risk reducing decisions at their future employers. That’s why Google has an “MBA preferred” for its highest paying non-engineering positions.
Though assumed to chasing huge risks to start world-changing companies, the best entrepreneurs don’t seek risk. They diligently seek to mitigate it. Hence, the risk framework taught in business schools strengthens entrepreneurs.
Further, since 2003, 12 of 39 or roughly 31% of all unicorns (startups with a valuation >$1BN) have an MBA founder. In 2014, 36 of the Fortune 100 CEOs had MBAs. The curriculum seems to be working in and out of the board room.
Meanwhile, MBAs are adding to the framework. The professor roster is regularly supported by entrepreneurs serving as adjuncts. Founder and VCs alums participate in classes, office hours, and pitch competitions. Endeavors like iLab at Harvard Business School or Chicago Booth’s New Venture Challenge offer funding through venture challenges, provide co-working space, and access to startup workshops. In Chicago, Northwestern’s Kellogg and Chicago Booth’s logos shine brightly as inaugural tenants of 1871, the city’s premier startup co-working space.
What it takes to be a successful entrepreneur is not prescriptive. The path taken — whether through a snowy night in Paris or through Stanford — is meant to be directional. In the end, there is not one perfect path. Rather, a number of directions, most of which become celebrated in hindsight. All MBAs don’t make great entrepreneurs. Just as all doctors don’t discover new vaccines. But every year, business school proves to be the right path for a group of entrepreneurs. Just look at Chicago’s Braintree (founded by a Chicago Booth Alum), Grubhub (co-founded by a Chicago Booth Alum), and Trunk Club (founded by a Stanford GSB Alum).