My question of the day!
Here’s what I reaped from different boards on the matter:
Recently I have been considering, given my interest in entrepreneurship and strategy, whether or not it would be more worthwhile spending 2 years working with a ‘proven’ mentor at a start up.
There are lots of start ups out there being run by guys who have played major roles in some of the recent decades biggest tech names, for example.
What are peoples opinions on this? A friend of mine thinks that given my ultimate goal of running my own firm, finding a good mentor would be far more beneficial (and cheaper!) than doing an MBA
Academically, MBA provides you with the fundamentals on how businesses are run. However, the biggest advantage of an MBA is the network that it provides you. Albeit, most schools network are in the traditional business circle.With the start up mentor, it really depends on who the mentor is? What kind of start up it is? What your role would be? With the start up scene, the network is very important in bringing in funding and expertise. The network and expertise one has is usually limited in a specific industry. Say if you are interested in high-tech start up, but your mentor’s experience is in biotech, the mentorship may not be as helpful. Also, what role will you play in the company? If you are just a worker bee, you won’t see/participate in all the intricacies and the strategic decisions that happen. The chances are, you probably won’t unless you are an equity partner.
I would pass up MBA for the perfect start up opportunity, but would be very careful with the start up mentor. Make sure you are getting something out of it, and not being used a cheap labor.
The network you attain during an MBA is obviously a massive plus, and finding the ‘right’ mentor at a start up is risky..
To be honest though, as far as I see it, aside from teh cost the biggest downside of doing an MBA is wasting tonnes of time doing basic financial modelling, which could be gleaned from a book..
Life is too short to sit with a bunch of people trying to work out what WACC is..
Harvard MBA, 2005
Founder and CEO, Precision Essay
Should entrepreneurs get an MBA?
I was reading a polemic if entrepreneurs should, or not, get an MBA and I
would like to put forth my idea about the matter.**
We are always learning and will continue until dead. There is always
something that could be improved and, to figure out, knowledge will
facilitate the process.
I agree that many entrepreneurs develop their business skills with blood,
sweat and tears, as I did. I co-founded two high tech start-ups and, after
25 years of “bloody times” and two companies, I decided to get my MBA.
In theory, having a couple decades of experience in running a business, I
should already know almost everything about business management and
development. But, actually, getting the MBA, I learned, rooted and improved
a lot of processes and knowledge that I was already using, and also, I
learned a lot of new things (state-of-the-art techniques, theories, new
writers, new strategies, new “gurus”, and so on). I learned all that, even
being a compulsive reader of everything about management, strategy,
globalization and entrepreneurship, and had read hundreds of books about the
matter, before deciding to return to school.
Does getting an MBA make someone a better entrepreneur?
I’ve been involved with business big-and-small as a provider of technical services my whole life, which means I’ve been in a position to watch from the semi-sidelines how things would startup and then go, and in 100% of all cases, the enterprises to succeed were never started by MBAs, although the enterprise tended to run a bit better when the operation had achieved the point of changing from a startup to a running operation. At that point, the entrepreneur couldn’t be bothered with the boring day-to-day grunt operations.
Historically, to start a new business-idea required an Entrepreneur-sans-MBA, but then he/she had to be willing to turn the reigns over to an MBA once it had achieved level, stable flight, so that would historically have implied that it’s still good to get an MBA is you like executive-administration of day-to-day operations, but don’t like the chaos of startup.
However… things have changed over the last couple-decades, and those MBA with a mind to think about what it all means have responded to those changes in a not-necessarily pleasant way.
Changes in corporate liability regulations started by Reagan and carried though with vengeance by the Bushes made it so that you could be an owner, but not have to take any personal responsibility to the effective management of your organization.
It used to be that if you were an owner, you took the risk of investing time and wealth into starting and building up an operation, and if you didn’t know how to lead it, then that was a chance you were taking with trusting your own skills to manage and guide your own investment.
But now regulations say that an investor can dump in money with no thought about having to understand the business, and then he can order some executive-level administrators – usually MBAs – to be hired, and then, without knowing anything about the business or who he hired, he can simply hold their feet-to-the-fire over the delivery of quarterly profits.
That has two negative effects.
The first is that the balance of an investor being able to make fantastic returns by virtue of his investment was moderated by the investor taking some personal responsibility for the performance of the investment. In other words, he had to keep himself involved on some level with the operation and the investment, and it was because the owner would take personal responsibility that nobody cared if he/she succeeded and became extraordinarily wealthy. It was fair enough… the owner/investor risked his money in the venture, *and* he took personal responsibility for the care of his investment, therefore he deserves it if he succeeds.
But the way it is now a guy can make an investment, and then basically bully anyone hired to take care of executive-administrative duties, whether or not it’s their fault the businesses profitability was the result of management or external economic forces, which means it’s not fair, and so the MBAs demand some compensation for that unfairness by demanding *huge* bonuses if they’re able to keep the enterprise profitable when the owner doesn’t have a clue how the enterprise actually works.
Now, demanding huge bonuses given the conditions that the MBAs must do executive-administration makes a sort of morbid-sense given the realities of the situation, but what it means is that you have investor-owners on one side demanding huge quarterly profit-payments without knowing anything about the details of the operation, and you have MBA executives being pouty about demanding huge bonuses to be working under such conditions, and so they’re squeezing blood out of the organization as much as they see being bled off to the owner-investor, such that very little is left to do anything else, like invest in long term goals.
The organization turns into one where there’s tremendous pressure on the people doing the actual work to deliver more for less reward and with no rewards for being committed to the well-being of the organization for the long term (to-which they might react with unionization make demands balanced to what they see the MBAs bleeding out of the operation) and all you end up with is an organization that’s gasping and wheezing to stay alive, which is very bad for general welfare of the society as a whole.
And that’s the second problem.
I’ve dealt with Japanese industrialists, and they are always stunned by how short-sighted and selfish the behavior of the MBA-executives of north America are.
In Japan, if you get up to the level of being a high-executive (almost always achieved by promotion from within) then you will feel a duty to use long-term vision to help further empower the long-term strength of the organization by doing things like reducing corporate debt, or investing in new infrastructure and technologies that may not pay of for decades.
Indeed, whereas today’s MBAs can only see in quarterly profits, and whereas Soviet-style communists were thought of as strange for having set objectives as five-year plans, Japanese upper-management implement plans with an average of fifteen years to payout. Some go even further… the president of Panasonic had a 280 year business plan.
And people wonder why some islands with virtually no natural resources, where only 18% of that land is inhabitable – the rest being Appalachian-style forested mountains – a land with the highest earthquake rate on the planet – could compete with America and all her natural advantages, and could outperform.
Now, they can do that because Japanese – in spite of being some of the most hard-core free-enterprising competitive business people in the world – still have a sense of being members of a society, whereas far too many Americans think they’re expected to function as a wild rabid dog eating other dogs with no sense for there being any such thing as beneficial cooperative behavior.
If you even whisper the word “common-good” in the US, they’ll bite your head off for talking like a “socialist”, as if cooperation for the common-good is the same as socialism – which it’s not – and as if socialism is the is the same as communism – which it’s not.
The effects are unfolding pretty-much exactly how a lot of economists were warning back in the early 80’s when Reagen took over.
Each year the shareholding owners order their MBA drones to squeeze more profits out of the investment, the MBAs do so only if payed huge bonuses, most of the wealth flowing into fewer and fewer hands, such that year-after-year, Americans get gradually more and more accustomed to living at a second-world standard of living, while other nations with economies being driven by investors with long-term vision and who take personal responsibility for their investments continue to grow and get richer.
MBAs get a lot of flack for their bonus-driven behavior, but really… it just means they understand what the hell is going on in the post Reagan/Bush era, and I know several MBAs who *wish* they could manage with long-term vision, but their hands are tied, so they go for second-best and demand bonuses for amounts to functioning as mandarins in a tyranny… and those MBAs I’ve known with long-term vision have tended to switch to something else as soon as they can… things like organic farming or new-school material recycling facilities.
So… the answer to the question is this: Given the way the post-Reagen regulation-changes have enabled shareholders to offload any personal accountability for the quality of their investments onto the shoulders of MBAs, and given how that offloading is measured by quarterly profits that cut off at the knees any hope an MBA with vision might have to do something long-term, it means that even if you did find someone with an entrepreneurial spirit who bothered to get an MBA because he thought it might help, he’s not going to be using it by the time he graduates – having learned in school what the real liabilities are that he’s going to face by becoming an executive in an organization owned by someone else sipping margaritas on a beach in the Bahamas who doesn’t have to have a clue about how his money is invested, nor take any personal responsibility for his investment.
Having an MBA can make *some* people better entrepreneurs. If you’re an entrepreneurial long-term thinker who studies an MBA, then by the time you graduate you’ll understand with a vengeance that being some owner’s Drugi is not for you, and you fast-track yourself strait into a startup of your own where it *will* be possible to think with long-term vision, which means…
… In that respect, and for those types of characters…
… It *did* help, in a rather ironic way, for them to have obtained an MBA.
A qualified yes. An MBA is neither necessary nor sufficient to make one a successful entrepreneur, and if you don’t already have the temperament to be an entrepreneur an MBA won’t give you one. But, in the business world business smarts count, so an MBA can shorten your learning curve and help you see opportunities and avoid mistakes and perhaps that way make you a better entrepreneur. Realize, however, that sometimes people succeed precisely because they’ve never had the formal education that tells them how hard, or even impossible, their business idea will be to implement and their dream to achieve.
I think the answer has to be a definite “YES”, contrary to what most of the posts here say.
“Does getting an MBA make someone a better entrepreneur”?
The answer simply has to be “yes” – because getting an MBA cannot really make anyone a worse entrepreneur !
Any of the well-known entrepreneurs (Gates / Buffet / Trump etc etc) will say that the reason for their success was hard work, perseverance, setting goals, taking appropriate risks, managing people and so on. Every single one of them will also admit that they made basic mistakes at the start of their careers. Learning by other peoples mistakes is a faster way to success than learning from your own.
Think about this – do you listen to Gates / Buffet / Trump or whoever – are you (like I am) amazed by their stories and experience? Of course. Well then – write down what they have said and put it in an MBA course. Does their advice stop working ? Of course not !
In summary – an MBA can never hurt anyone.
Just my humble opinion
I think it is important to love to learn as an entrepreneur and really as a human. I do not have an MBA so I can not speak from experience, but judging from undergraduate there was not a lot of practical experience. I learned how to gather information and I learned social skills. Most importantly I learned that I knew nothing and it made me want to learn more.
My father on the other hand barely finished high school, if he did. He has ran a construction company for for 20 years and went through a few bankruptcies. He got a lot of things right but if he had just a little more he would maybe been great. Maybe he did not want to be great or maybe he will be great.
So what do I think it takes to be great? You have to have passion, be ethical but you have to be able to learn fastest and cheaper. Does an MBA help you learn faster quicker? For some people, but the benefit is the networking and the studying of all the failures and successes of others. Maybe you can get it other ways.
There is a long list of people that quit school. Mark Zuckerburg for one.
I hope not. Otherwise i won’t be able to become good entrepreneur.
I think there are some things which are very important to become entrepreneur. And those things nobody can teach.
1. Calculated risk is something you have to learn your self. I don’t think there is any course which can teach that.
2. You need to work hard to become successful entrepreneur. MBA degree includes course on that?
3. Don’t get disappointment by failure. Get up and start again. That is something entrepreneur have to have .. and MBA won’t add anything to improve that attitude.
MBA is very helpful to make connection. Broaden your knowledge horizon. But basic quality of entrepreneur depends on individual person and MBA degree won’t help to change that.
My answer to this isn’t going to add much to what has already been said but I keep thinking about this question.
Bill Gates founded Microsoft Corporation
Ray Kroc founded McDonald Corporation
Henry Ford founded Ford Motor Company
John Deere founded John Deere Company
To my knowledge this men didn’t have an MBA. They had an idea and a dream they believed in, worked on, lived for and developed.
No, being an entrepreneur requires creativity, instinct, and thinking on your feet. Those are traits that can not be taught in an Masters course or average B school. An MBA really is just a piece of paper that I feel would stifle an entrepreneurial spirit more than add to it. Living your dream and just going for it is the best classroom for an entrepreneur. Learn by doing and living is a priceless education that can not be found in college.
Definitely, but choose an MBA in Entrepreneurship. Not only you get to learn the “Know How” you also get to meke “Connections.”
NO NO NO. Go join a start up company and get your sleeves rolled up. Alternatively go join a small fast growth company or best of all be part of a management team taking a company through a MBO. All way better experience and you can use what you would have spent on an MBA to augment your salary during these growth phase in a smaller company.
Having an MBA is great for running an existing business. It is counterproductive if you want to start one from scratch. Remember, universities are designed to teach people how to be employees, NOT entrepreneurs. Someone who has gone through an MBA program knows how to be a super-employee, but not an entrepreneur. How many MBAs do you know who are willing to work for free? That’s not why they went to school. Entrepreneurs work for free. Employees don’t.
No-ish. I do not think getting a MBA automatically makes someone a better entrepreneur. However, an unexperienced founder with a MBA has a better chance of success than one who does not. This is because, one of the main sources of risk in any start up is the founder. A founder without much business sense – that may include having a MBA – will usually run an unsuccessful start-up.
So, business sense (that could include having a MBA) is one of the factors that you can use to judge a founder’s risk Level. Therefore, asking the question – “does having Business Sense make a better entrepreneur?” is a more meaningful question. Business sense is that innate understanding of business that some of us just are gifted with. However, gaining education through a MBA program or a mentor is a good substitute and expansion for business sense.
short answer, NO.
slightly longer answer, entrepreneurship doesn’t have anything to do with MBA degree.. or any other academic degrees for that matter. Most academic degrees (incl. MBA) teach students about known solutions of known problem. Yet entrepreneurship should be the opposite of it (look at source)
I think it opens more doors. The best entrepreneur’s are intelligent and creative individuals, MBA notwithstanding.