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First, I want to say that CompBanker’s recent article (here) was amazing and has really made me revisit my decision of not pursuing an MBA. While thinking about it, I stumbled across this article from Entrepreneur.com (here), which talks about the cases for/against an MBA as well as from this one Fox Business (here), which interviews entrepreneur Prasad Thammineni. After reading, I began to revisit a scenario I have often thought about…if I would choose to start a business or spend two years at BSchool getting an MBA. Either would be an amazing opportunity and the benefits for both are obvious, as are the risks. Personally, given the cost of an MBA (tuition + interest + opportunity cost), I think I could start a business and learn a lot from doing so, even if it was a failure. I also think that I would enjoy the MBA experience and being surrounded by people who are as passionate about business as I am…thus the dilemma.

Quote:
“I knew Princeton would be around for a long time and that I needed to take advantage of the opportunity in front of me.” – Prasad Thammineni

So, if a dead family member left you 350k (tuition + opp. cost) would you use the next two years to get an MBA or to develop a business idea (not a trading position) you have always had?

Which one do you think would be more beneficial? Enlightening? More fun? Best experience (for you)?

Comments (17)

  • HowardRoark's picture

    I'm still in UG so I have nothing to contribute here, but for those curious, that quote if from Prasad Thammineni, founder of OfficeDrop, in an interview he conducted with FoxNews

    jacobzhang.net - my thoughts and portfolio.

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  • jmr1991's picture

    I am also in UG and the second article I linked to is the interview with Prasad Thammineni. As a UG, filled with naive optimism, I would personally choose the entrepreneur route.

  • brutalglide's picture

    One of our portfolio company CEO's had the choice between starting up his current start-up or going to HBS. He ended up choosing starting up a company, and needless to say it's doing quite well (company probably worth $30-50mm right now and growing at a steady clip). It was quite a risky decision for him to turn down HBS given that he didn't have a ton of experience. He actually turned out to be one of our better CEO's despite being on the younger side (~26) and having no operating experience beforehand.

    In conclusion, if you want to do it and have a passion for starting up a company, it's not the worse decision in the world. However, I'd definitely think twice if you are using your own money (i.e. that 350k you are sitting one).

    Why don't you try spending a nominal amount of money (

  • cphbravo96's picture

    Personally, I would probably head to business school...assuming I was accepted someplace I wanted to go. I often think about starting a business and growing it but that dream is so very similar to the one where you meet the girl you're in love with she has a blank face. You wake up with that great feeling, but with nothing concrete to execute on. That is to say, I really like the idea of starting and growing a business, but I'm often so scatterbrained that I just don't know what I would really be passionate about. Honestly, that's rather sad and, admittedly, I'm a great example of the mundane, boring thinker that public schools crank out. I mean, how can I think outside of the box when I've only been thought inside of one?

    I am naturally risk adverse, so maybe my inability to find that passion is more a result of subconscious fear than anything else. I know it's something I think about often but I just never feel like I find a business concept that really motivates me to take the plunge.

    So, with that said, if I had an idea...I would really consider using the inheritance to chase after that dream/goal. As you said, maybe you fail, but learn much along the way.

    However, back to reality...maybe you should consider doing both. Most of the business schools I've looked at fully embrace entrepreneurial efforts. While visiting schools, I've met lots of MBA students that were toiling away in their virtually nonexistent free time working on a product or a concept. Additionally, lots of schools have structured programs that can offer financial grants and assistance to the students that are pursuing start-ups and product developments, etc.

    Being that I'm very risk adverse, I would realistically find myself pursuing the last option because it would provide me the safety net of the MBA, on-campus recruiting and the alumni network that could make me successful in a corporate job, all while giving me access to facilities and people that could help make my idea a reality.

    Just something additional to consider.

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • fleetersamuelli's picture

    Business opportunity all the way - here is why-

    I prefer to focus on DOING, not on pretending. Getting an MBA is ll about developing the pretense that you know something about business or can dd value. Any second year analyst at a big investment bank will tell you that MBAs don't know jack shit. If you want to spend time trying to convince people that you know something which you do not, and then hope that they give you opportunities because of it, then get an MBA.

    But,

    If you really want to learn business, or really want to DO something. There is no way other than to do it. Simple as that. Learning does not take place in the class room, degrees take place in the class room - and the value of a degree (college, highschool, PHD, MBA or otherwise) is ill deserved and primarily services to perpetuate legitimized nepotism that is consistent with the thinly vied pseudo-meritocratic underpinnings of the belief system that is prevalent in this country (the work hard and you will make it mentality, or the 'best' wins).

    It sounds like you have an exciting opportunity to do something different- I say go with it. Create your own path rather than mindlessly following the one that has been laid out before you.

    -f

  • In reply to fleetersamuelli
    cphbravo96's picture

    fleetersamuelli wrote:
    Business opportunity all the way - here is why-

    I prefer to focus on DOING, not on pretending. Getting an MBA is ll about developing the pretense that you know something about business or can dd value. Any second year analyst at a big investment bank will tell you that MBAs don't know jack shit. If you want to spend time trying to convince people that you know something which you do not, and then hope that they give you opportunities because of it, then get an MBA...-f

    Yeah, the freshly minted MBA that has never worked in investment banking is never going to know much about investment banking...just like every first year analyst doesn't really know much either...but that doesn't speak to the value of an MBA.

    An MBA can be very valuable and the skill set learned can be put to very good use. Maybe IB isn't the best place, but I've talked to many MBA'ers that have used their degree and the knowledge gained to add value to companies and support their growth, especially on the buy side.

    Not everyone wants to be an operator and run a business, but that doesn't mean they can't add value. I've seen hundreds of businesses that were grown to a few hundred thousand dollars of EBITDA per year, but don't go any further because the skill set of the owner/operator prohibits them from doing so. Are they just pretending they can't grow or are they choosing not to do it?

    Outside that, an MBA offers benefits that are hard to value, like providing legitimacy to the resumes of those that didn't attend well known undergrads and access to a network of experienced, motivated and practically always successful people...across a wide variety of industries. I've seen many times when a guy I worked with picked up the phone, called a b-school buddy and spent an hour getting free advice about a company we were thinking about investing in. Didn't cost the fund any money or take days or weeks to line up an industry expert, etc. Saved us time and money up front and could have stopped us from making a potentially bad decision.

    At the end of the day, there is more than one way to skin the cat.

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • In reply to cphbravo96
    jmr1991's picture

    cphbravo96 wrote:
    I am naturally risk adverse, so maybe my inability to find that passion is more a result of subconscious fear than anything else. I know it's something I think about often but I just never feel like I find a business concept that really motivates me to take the plunge.

    I feel very similarly. I too have yet to find anything I would be able to commit passionately to...however, I really want to find something to take the plunge for. Its almost like I have chosen that starting a business is the way in which I can prove myself, as opposed to being an MBA (not knocking MBAs, they certainly prove a lot).

  • In reply to jmr1991
    wannabeaballer's picture

    jmr1991 wrote:
    cphbravo96 wrote:
    I am naturally risk adverse, so maybe my inability to find that passion is more a result of subconscious fear than anything else. I know it's something I think about often but I just never feel like I find a business concept that really motivates me to take the plunge.

    I feel very similarly. I too have yet to find anything I would be able to commit passionately to...however, I really want to find something to take the plunge for. Its almost like I have chosen that starting a business is the way in which I can prove myself, as opposed to being an MBA (not knocking MBAs, they certainly prove a lot).

    With your english, I don't think you'll need to worry about getting an MBA. I'm starting to get tired of these WSO SEO optimized posts that all have tons of keywords and link-juice, but no substance. What legitimate poster ends with 2-3 lines of bold questions that cover all angles of a specific subject? Just state your opinion and you'll get a better conversation going.

  • shorttheworld's picture

    i love how many people will bash the idea of getting an MBA yet will circlejerk around the idea of being an 'entrepreneur' when they dont have a business plan or executable idea or niche. if your idea sucks and it fails then youre both fucked opportunity cost, time, money, everything.

    and theyre also sitting in a cubicle excel monkeying all day in IBD

    kill the conjecture and actually do one or the other rather than monte carloing your thoughts to death on an online message board

  • In reply to shorttheworld
    wannabeaballer's picture

    shorttheworld wrote:
    i love how many people will bash the idea of getting an MBA yet will circlejerk around the idea of being an 'entrepreneur' when they dont have a business plan or executable idea or niche. if your idea sucks and it fails then youre both fucked opportunity cost, time, money, everything.

    and theyre also sitting in a cubicle excel monkeying all day in IBD

    kill the conjecture and actually do one or the other rather than monte carloing your thoughts to death on an online message board

    I agree. Ideas aren't worth much without execution.

  • In reply to wannabeaballer
    cphbravo96's picture

    wannabeaballer wrote:
    shorttheworld wrote:
    i love how many people will bash the idea of getting an MBA yet will circlejerk around the idea of being an 'entrepreneur' when they dont have a business plan or executable idea or niche. if your idea sucks and it fails then youre both fucked opportunity cost, time, money, everything.

    and theyre also sitting in a cubicle excel monkeying all day in IBD

    kill the conjecture and actually do one or the other rather than monte carloing your thoughts to death on an online message board

    I agree. Ideas aren't worth much without execution.

    Gotta agree here. Even more to the point both you and shorttheworld are making, business school seems like a great place to get a real idea off the ground because you're pretty well shielded from the fallout of your start-up failing. I've talked to a number of people that had an idea here or there, decided to go to business school, met another student, brainstormed a solid idea and then ran with it.

    I feel like people too often approach it as one or the other when it can be both. I realize the greatest value of an MBA is extracted from the on campus recruiting and the network, but people do actually learn stuff...which can be very helpful when starting and running a business.

    Obviously the premise is an 'either/or' and not a 'both' but reality is a bit different. In my mind, most ideas aren't million dollar ideas like many think. I could probably come up with half a dozen ideas that could make me $10k-$30k per year, maybe...but that isn't enough to make me walk away from finance, because as cool as it is to be a CEO and Founder and to work for yourself, sinking a bunch of time, effort and capital into a mediocre idea doesn't do it for me. Of course, everyone is going to be a little bit different from everyone else. Some people can't stand to work for anyone else, so a couple $30k a year ideas might be worth their effort because they place a high value on being their own boss...that just isn't the case for me, yet.

    For me, I enjoy a fair amount of what I do, so I'm not necessarily trying to escape, however, I want the ability to walk away when I want to, so if that means putting in some time as a slave but being able to bankroll some side investments whether it be rental properties or a few Dunkin' Donuts, then so be it. If, along the way, I come up with some amazing idea, then I hope I'm in a position to take that plunge and run with it.

    Regards

    "The trouble with our liberal friends is not that they're ignorant, it's just that they know so much that isn't so."
    - Ronald Reagan

  • NorthSider's picture

    I'm a person that thinks there is very limited value in an MBA, but I still think this question is overly simplistic.

    As has been said, being an entrepreneur is about more than just a good idea, but it's also about more than taking risks. In finance, you're taught that risk and reward mostly balance out, but I don't think that's the case when it comes to starting your own business.

    For that reason, bankrolling all of the costs of starting a business is probably a bad idea. If you can't get your business off the ground for less than $50k, I wouldn't just leap into it. The fact is that most entrepreneurs are already well-connected in the niche that they select for their new business. They are overwhelmingly in the 30s and 40s, and usually starting their own business doesn't come as a huge risk (i.e. they are using preexisting relationships to begin their business with clients, or have co-investors to reduce the monetary commitment). $350k is a lot to throw into a business with no track record. An angel would almost never do this, so it's probably safe to say that you shouldn't either. Bottom line is: if you can't get someone else with more resources to help finance your business after putting a small piece of your own money into it, it probably isn't worth it.

    Also, in this scenario, why can't you just use the money for tuition and start the MBA, then use the "opportunity cost" money to start your business?

    "For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible."