As an MBA working in early stage tech, I’m ambivalent about the current conversation in the community about the value of these degrees. On one hand, I’ve met enough MBA founding teams to understand where the vitriol comes from, but I also believe that my graduate business education has been the most rewarding investment I’ve made to date.
Why Many MBAs Are Bad For Startups
An MBA education teaches students to analyze markets and assess opportunities from a high level [e.g. crowd-funding is going to be a huge opportunity and disrupt traditional business financing, an $xx bn. annual market in the U.S. alone!]. That thinking is fine, but it can only get you so far in the early stage.
The best consumer-facing products satisfy an unmet need. Consumers don’t care where a particular market is headed, they often don’t even know how to articulate the problem that they want fixed. Nothing in an MBA program really equips students to develop products that solve real world problems, so MBAs tend to create products that wedge themselves into what they view as a market opportunity. That approach often produces low quality products that don’t solve real problems. The best products start with an acute, definable consumer ‘problem’ and grow into market-disrupting companies, it’s never the other way around. While the difference in approach might sound trivial, it results in products that are usually worlds apart in execution.
Also, in the early stage there are very few day-to-day activities where having an MBA is actually useful. At most early stage companies, people are either building the product or selling it. Neither of those functions require an MBA, so the other skills become ‘nice to have’, but they don’t necessarily drive the business forward.
Why MBAs Can Be a Really Useful Tool
On the other side, I view MBA programs as a safe place in an unsafe world. I think they’re safe in two ways:
First, MBA programs tend to lag trends in the business world and that can be a good thing for your career arc, especially if you’re working in an industry that’s very fast-paced. Skills like strategic thinking, data-analysis and an understanding of the broader business world and global economy don’t run out of funding, they don’t exit and they don’t become irrelevant when the market is disrupted. MBA programs have curriculum in place that helps students navigate the business world for decades. That’s extremely valuable in the long term.
Second, MBA programs are a place to learn things that you’ve never understood and that the real world isn’t going to let you learn on the clock. If you’re an engineer, there are very few on-the-job opportunities to understand option values, venture financing, accounting, macro economics or product marketing. While it’s true that you can learn many of these things on your own, having a curriculum and a classroom are incredibly helpful aides to the process. Just having to show up with your homework done will propel you forward.
MBAs Are Useful After You’re Useful
Everyone has a unique set of inputs that should drive their decision about a graduate business education, but my broad advice to most young people interested in early stage tech and considering an MBA is to go for it, but only if you’ve already developed practical skills that will make you invaluable an early-stage company. An MBA alone will never be enough.