5 Reasons Why An MBA Is Useless For A Startup

Let’s play a guessing game. In 1998 he co-founded a firm with Max Levchin. Then started and managed his HF, Clarium Capital. In 2004, he angel invested in FB with a 10.2% stake as a VC. Who am I? For all of his success and wealth, not to mention a college education in law from Stanford, in 2010 he launched his own Fellowship which aimed to deter twenty under-20 young adults to quite college and pursue their own ventures. If you guessed Peter Thiel, then you’re right. Now a couple entrepreneurial MBA candidates share a similar view and have realized…that B-school is relatively useless! Read on to find out what they have to share about their education and experiences…

MARIA BRILAKI, Founder of fitnessreloaded.com
Maria has a B.S in Engineering from Stanford, is the author of Surprisingly…Unstuck: Rewire your brain to exercise more, eat right, and truly enjoy doing so, and is a current MBA candidate. To summarize, in her own words:

…the MBA is made for managing established companies, not startups!

Her experience has shown that the fundamental difference is certainty. In b-school you get a syllabus, assume the existing customer base and product histories. Also, if you don’t know a key metric you can always ask questions and get answers.

In a new venture there is no syllabus, you don’t know what the product is or how to price it, let alone the desires of your potential customers. Oh, and if you want to get a key metric there’s no all-knowing professor to ask for answers and in her words, “you have to make it all up as you go."


JOESPH DRASCHIL, Founder of spygames.com
Joseph is currently participating in Start-Up Chile and is a Babson MBA candidate. His co-founder, an MBA graduate admits that he can execute a business plan but he’s not equipped to turn an idea into a functioning business! Problem is, Draschil’s b-school professor who teaches a course on writing business plans repeatedly tells his class that upon completion it, “…is pretty much outdated as soon as it’s finished.”

Getting back to Brilaki’s point about certainty, he adds that they’re drafted in stable environments with key assumptions which can get you a good grade but thinks it's unrealistic in a working world application. Further, he admits to not knowing how to go about finding a business model that would work and adds,

1. Customer Analysis: Unlike cases studies and exercises with assumptions already made, in the startup world you need to go out and find these facts from experience.
2. Pitching Customers: There is no selling class in B-school and having persuasive skills to convince people to buy is essential to growing.
3. Making Stuff Happen: As an MBA candidate, you’re not involved in running a business per se, more like following instructions. In Maria’s case she had to shoot videos, build websites, and create mobile apps. The business starts at ends with you as the center of operations not simply doing a modular project or assignment.
4. Creativity: It’s a must! One needs to come up ideas and iterate them quickly in order to grow on a regular basis. I know personally that if I’m not impressing or over-delivering on my services then I’m not creating value. Good grades don’t necessarily equate to creative genius and it’s entirely possible to graduate still thinking inside-the-box.
5. Effective Writing: E-mails, approaching media, professional networking and mentoring, there are no classes taught on how to do this according to Brilaki.


A USEFUL DEGREE?
Let’s not throw the baby out with the bath water per say. Both entrepreneurs find value pursuant to their MBA’s. Brilaki thinks that it’s better suited to established firms and admits that some of her knowledge is transferable to her startup. Draschil goes a bit further, and is learning how his assumptions turn into facts. He’s doing an independent study on business model discovery and development which will lead him closer to execution where he admits that he can start to flex his MBA muscles. Subsequently, he gives two pieces of advice for pursuing an MBA before doing a venture…

1. Startups aren’t established business and require a different approach, so think creatively!
2. Business skills and education aren’t feasible during the discovery stage but will be during execution.


With that said, let’s hear it monkeys! What's your opinion? DO YOU THINK AN MBA IS NECESSARY WHEN STARTING A NEW VENTURE?