A nice little hornet’s nest has been kicked by Vivek Wadhwa’s WSJ blog article on why he has started to advise startups to not hire MBAs and recommends entrepreneurs against getting an MBA. Enough vitriol was flung his way that he responded with a LinkedIn article that more or less reiterated the same points from the WSJ blog article.
As someone who has been a consultant, a post-MBA corporate cog, and an entrepreneur inhabiting the very circles that he discusses, I respectfully disagree with his overall assessment. He does make some key points that are true, but his conclusions are wrong:
I no longer advise startups to hire M.B.A.s and I discourage students who want to become entrepreneurs from doing an M.B.A.
That’s because I have seen a growing mismatch between the skills that business schools teach and what fast-paced startups require.
This is true. He specifically points out that most business schools still teach you to write 5-year business plans for a venture capitalist. I wrote one for my entrepreneurship class. And, he’s right in that anyone who goes looking for funding with a 5-year business plan will be laughed out of Silicon Valley. However, that’s like saying that the one class that didn’t get it quite right discounts all of the other valuable knowledge I gained from my MBA. It assumes nothing else was applicable to starting up a company and in this, Mr. Wadhwa is very wrong. Classes I took that have been invaluable in my startup experience were Advanced Competitive Analysis, Strategies for Growth, Brand Management, Corporate Finance, Business Statistics, etc. Every single one of those classes provided me frameworks for thinking through business problems I encountered.
The focus on venture capital is also misguided. VCs rarely fund infant startups—it is angel investors, friends and family who provide the outside seed funding. So even when trying to teach entrepreneurship, business schools get the basics wrong.
False. Almost all of the top tier VCs now provide seed funding, like Andreessen Horowitz, Felicis Ventures, and Kleiner Perkins. Also, a new class of investor has cropped up, the superangel. Now, this is not to say that the business schools read the tea leaves and got this one right. I think we just happen to be in the part of the cycle where VCs are providing this type of funding.
Just visit the recruiting booths on university campuses. All you see are big corporations; the finance and management consulting industry is overrepresented.
This statement is like saying that because the ground is wet, it must have rained. Mr. Wadhwa’s assertion is the root cause is that startups don’t want the skills that MBAs have, so therefore, they don’t show up at recruiting events.
Here are the real reasons why startups aren’t at MBA recruiting events:
- The recruiting cycle at a business school is set up where you interview in the spring for a job that starts in the fall. Startups detect a need for additional resources, at best, 4 weeks before they desperately need that resource. The timing just doesn’t work. (You could make the argument that MBA programs need to change to make it easier for startups to hire MBAs, but Mr. Wadhwa didn’t make that point.)
- If you’ve ever attended MBA recruiting, it’s time consuming. While at Yahoo!, I was an interviewer at Ross and it took me two full days. No startup, especially in the earlier stages, can afford for any one person to disappear for two days. And when they do, they spend it with family and friends who they’ve been neglecting thanks to the startup.
- MBAs don’t want to take the positions that a startup would be willing to offer them. This is the only place where I concede to Mr. Wadhwa where I think he’s trying to make this point, but doesn’t come out and say it. Some typical positions inside of a startup would be marketing, product, sales, and engineering. Unless you had previous experience before your MBA that suits the startup, then it won’t happen. No startup has the time or money to invest in training you. Furthermore, would you really take a job doing the exact same job you had before you went to get your MBA? Probably not.
My biggest issue with his articles is that they make it sound like getting an MBA somehow makes you less desirable to startups because they only train you to work at large corporations. Nothing could be further from the truth.
Two final points -
A VC-funded startup’s goal is to turn a small company into a really big profitable one (and sometimes the profit comes way, way later). If Mr. Wadhwa is right that MBA programs teach big company thinking, then wouldn’t it be fair to say you’re going to need those skills when it’s time to scale the company?
I can’t help but think the WSJ blog article was a bit self-serving. At the end, he says, “I advise students with technology backgrounds to complete are one-year long masters of engineering-management programs like the one at Duke University—where I teach. These teach management, marketing, law and accounting skills and skim over the intricacies of finance and investment banking.” Oh? So, instead of an MBA, people should go to Duke for this engineering management program that doesn’t make all these “mistakes” that MBA programs make in entrepreneurship. I’m not so sure about that. Skim over the intricacies of finance? I wonder when Mr. Wadhwa last saw a term sheet.