Why MBAs fail at Entrepreneurship

http://stuwall.tumblr.com/post/489661696/why-mbas-fail-at-entrepreneurship

by smanek • 16 years ago

92 36 16 years ago

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SamAtt• 16 years ago

Are there a lot of people who think getting an expensive MBA degree is worth something in the startup world? I'd never heard anything but the opposite until reading this article and now I'm wondering if there's some segment of the population that I've just never heard from.

pgbovine• 16 years ago

for laymen, startup is synonymous with business, and an MBA is a business degree.

smanek2• 16 years ago

Hi Sam,

I'm the technical co-founder of http://postabon.com (the crazy guy who wrote the entire thing in Lisp ;-)).

Based on my experience over the last 6 months, I think most MBAs start out thinking that they'll be fine at doing a startup with no domain expertise, and can just 'throw money' at that problem. This is true whether the domain is manufacturing, fashion, tech, etc. However, after they've been at it for N months and have nothing done, the smart ones realize the error of their ways ;-)

Business savvy (just like technical skill) is a necessary (but not sufficient) requirement for being a successful entrepreneur. Having co-founders with disparate skill sets helps you cover all your bases.

I think just as many engineers think they can build something cool (with no thought to marketing, capital, strategy, etc), and build a start-up.

wisty• 16 years ago

If you go to any engineer-focus start-up discussion site (JOS, RiR, Erik Sink, HN, PG, bothsidesofthetable .. you name it) that's exactly what they don't hear.

If anything, engineers are under-confidant about business things. They seem to think that selling stuff takes at least a 3 year degree (or equivalent experience) just like writing a program.

stuartwall1• 16 years ago

In my experience, a high percentage of b-school students are aspiring entrepreneurs (although most don't pursue directly after graduation). Last year there were 100+ teams in the HBS business plan competition from a class on 900. Several grads have since closed on funding, including RentTheRunway who closed Series B last month http://su.pr/25JmSw.

mikeryan2• 16 years ago

Its hard to say - but spend some time running through enough VC's and C level execs resumes and Harvard/Stanford B School seems to turn up a lot. I don't know if its the actual degree that helps but it certainly doesn't hurt.

minouye3• 16 years ago

It totally depends on what industry/vertical you are trying to take on. For web apps, yes an MBA is not vital since you can bootstrap w/out funding (as the author alluded to). However, I'd argue that the connections you get with an MBA can be worth their weight in gold.

Case in point: Gilt. Don't tell me that these MBA's are failing (http://www.gilt.com/company#team). I'd happily trade shoes with them :-)

ThomPete• 16 years ago

But those types of connections you can easily acquire somewhere else no?

minouye3• 16 years ago

Using the Gilt example I don't think I'd have the chops to do so. If someone was able to rally that kind of talent in NYC without an MBA, they'd have to be pretty amazing. Pedigree is still important, esp. with a Fashion startup.

smanek2• 16 years ago

You know Alexis and Alexandria (the two HBS MBAs who are ostensibly behind Gilt) had almost nothing to do with the company's conception - right?

The real founders are Kevin Ryan and Dwight Merriman (the founders of DoubleClick). They created and funded Alley Corp with their Google money, which runs a whole bunch of really great startups (like 10Gen, the company behind MongoDB). The story about Alexis and Alexandria dreaming up the idea in business school is just for PR purposes ...

minouye3• 16 years ago

I did not know that, but thanks for the heads-up. Sounds like there's an interesting story there...

ramit• 16 years ago

Can you say more about this? I'm a big fan (and customer) of Gilt, and I'd love to know where I can read more about this. Thanks for the heads-up.

lenley• 16 years ago

wow, that's definitely interesting... after reading the bios of both on Gilt, you can definitely notice the nuance of the language.

http://en.wikipedia.org/wiki/Kevin_P._Ryan

"Gilt Groupe is an online retailer based in the United States. Founded in 2007, Gilt Groupe stages online 'flash' sales, offering women's, men's and children's designer apparel and accessories, designer home goods and high-end travel destinations at discounted prices in a limited time sale format, typically 36 to 48 hours.

Kevin Ryan founded Gilt Groupe in 2007. Gilt first launched women's clothing and accessories in November 2007, men's in April 2008, Gilt Groupe Japan in February 2009, Gilt Fuse in August 2009 and a travel site named Jetsetter in September 2009. Gilt Groupe is based in New York, NY with warehouses in Brooklyn, NY and Andover, MA.

Gilt Groupe has raised a total of $48 million to date; its investors include Matrix Partners and General Atlantic Partners. [edit] " .. thx for the heads up.

mikeryan2• 16 years ago

But Kevin has an INSEAD MBA that's right up there.

pg3• 16 years ago

Man do I regret not funding these guys.

rjett2• 16 years ago

Are you saying you interviewed them and passed them over or are you saying this is the type of team that you like to fund?

akkartik• 16 years ago

The former. http://news.ycombinator.com/item?id=1191694

9oliYQjP• 16 years ago

Ever considered setting aside say 5% of your funding allocation for wildcard acceptances? Every company that gets rejected from YC could go into a lottery and depending on the absolute size of that 5%, a number of companies could make it in solely because their names were drawn from a hat.

Because the odds are so low that a rejected contender will win a wildcard spot, it removes any unconscious scoring bias you might implement. In other words, I was thinking of the scenario in which you might only make some of the rejects eligible for a wildcard spot based on a scoresheet. You might unconsciously bias your scoring to make some rejects eligible and others not. The beauty of the wildcard is that it's totally random.

EDIT: Another thought. Wildcard entries would set a nice benchmark for merit-based entrants to YC to compete against. They would have more to prove because they've been written off. I'd be curious how this would affect the larger group dynamics of the programme.

tjmaxal• 16 years ago

What I would like to know is what kind of Analytics are YC and PG running to avoid making this same mistake again.

pg3• 16 years ago

There are two phases of acceptance, the application and interviews. The first phase is where most mistakes occur, because written applications are so much lower bandwidth than face to face conversations. So if we were going to insert randomness, we should randomly invite people to interviews, not randomly fund them. But the trouble with that is that, unlike funding, interview slots are constrained. There is a physical limit to the number of interviews we can do. So to invite someone randomly we'd have to not invite someone who was (as far as we could tell) more deserving, and we are very reluctant to do that.

rjett2• 16 years ago

How does/will postabon make money?

kalid• 16 years ago

Getting in front of consumers looking for deals (i.e. ways to spend their money) must be a good thing -- consider it a "real world" slickdeals.

Just a few ideas:

Why MBAs fail at Entrepreneurship

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