Spend $120K in angel investing instead of MBA studies

http://www.fourhourworkweek.com/blog/2010/06/28/mba/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+timferriss+%28The+Blog+of+Author+Tim+Ferriss%29&utm_content=Google+Reader

by dirtyaura • 16 years ago

54 30 16 years ago

fourhourworkweek.com

dkuchar• 16 years ago

while that's a great idea in principle, in practice, no one's going to lend you $120k to invest in startups. If you've got the cash and you're looking to pay out of pocket, it's a nice idea. but to my knowledge the gov't doesn't over low interest loans for education-via-angel-investing.

mukyu• 16 years ago

You need to be an accredited investor in the first place for this to be an option--which means you have the money.

ahk• 16 years ago

Who accredits investors?

hugh3• 16 years ago

You could spend the first $1000 to fly to another country where they don't have such silly restrictions.

cstuder• 16 years ago

Discussed here: http://news.ycombinator.net/item?id=1470665

rms• 16 years ago

How to lose $120K.

oscardelben• 16 years ago

Some people would argue that they would be lost anyway by choosing an MBA.

tomjen3• 16 years ago

I sometimes think that it is better to burn the money (as in, set it on fire) than it is to get an MBA if you want to work in startups.

On the other hand, if you want a cosy job in a nice company that does something that relates to physical production, an MBA would be suitable.

kljensen• 16 years ago

This does not get you the two primary benefits of attending a top tier school: 1) the social proof that comes with a credential like an MBA from Stanford or 2) the instant network of friends and alums.

(Furthermore, the other comments about accredited investors is spot on. And lastly, imagine somebody told you they did this and lost it all, would you hire that guy? No, you'd think he's nuts.)

jacquesm3• 16 years ago

The accredited investor stuff is pretty US centric, so even if it is spot on it does not apply to everybody, but the advice is simply bad even without that.

ecaradec• 16 years ago

As an angel you are invited to many events where you can connect with other angels and networks.

Even better it's not a future network that will grow over the time as previous students get at better places and positions, it's an already active network of more senior people and you'll meet them as homologue not in a student/professor relationship.

You can probably get a better network by loosing 120k. May be you could choose the right categories of startups to meet the category of people you are the most eager to meet ?

jacquesm3• 16 years ago

That's about as false a dichotomy as I've ever seen.

You could spend that $120K in much more productive ways than either of these two, besides, when you're of the age to go in to studying usually that money is given to you as a debt with a purpose to spend it on your education so you'll be in a position to pay it back later.

If the return-on-investment in startups would be better than the return-on-investment of student loans you can bet that banks would be a lot more willing to borrow money to start-ups. At best this will teach you a thing or two about investing and leave you in debt to the tune of $120K. You'll be working for a bank the rest of your life.

If you are in the position of spending the money on a startup spend it on your own first, build a success large enough that you no longer lose any sleep over losing a 100K+ and then become an investor in other peoples companies.

Terrible advice this article.

rmc• 16 years ago

The author is intentionally not trying to earn money. As far as he's seeing it, he's fully expecting to lose the $120k.

jacquesm3• 16 years ago

If you have $120K to lose that's one thing. But most students don't have that kind of dough lying around and to borrow it in order to throw it away is inviting trouble. That's a $400 to $700 millstone you're tying around your neck with little to nothing in return and no easy way in to the workforce because everybody else was stupid enough to blow their money on their education instead.

RiderOfGiraffes• 16 years ago

Submitted 5 days ago:

http://news.ycombinator.com/item?id=1472622

but it garnered one upvote and no comments, and 6 days ago here:

http://news.ycombinator.com/item?id=1470665

where it got around 50 upvotes and 14 comments.

Another example of the importance of timing your submissions. In some senses this isn't a "problem" as such, but I'd like to see some way of better consolidation of the same item submitted over and over. The existence of the existing duplication detection shows that it is, in some sense, an issue, but better duplicate detection would be, well, better.

In particular, it would be nice not to have the discussion spread over multiple items. Either the same thing gets said over and over, or important and interesting points are made that get missed.

davidw2• 16 years ago

Seems to me that going into business yourself is a better way to learn than giving money to people going into business.

michaelfairley• 16 years ago

He had already founded and exited a successful business.

davidw2• 16 years ago

Ok, so what'd he need an MBA for then?

sachinag• 16 years ago

I'd love to be angel investor. I'd love to spend $120K doing 12 deals at $10K each. Guess what? I'm not accredited. Also guess what? I can't get loans to go become an angel investor. So I'm going to business school instead. (OK, not really, but this is really fatuous.)

Also, if you're going to B school to learn, you're kinda doing it wrong. Everyone here who's smart/disciplined enough to be an autodidact to learn new languages and frameworks is smart enough to learn B school skills from books as well. You go to B school for the social proof, the networking, the recruiting (if you're a top-tier full-time program), and, yes, the fun.

known• 16 years ago

Spend $120K in angel investing if you're not rich & connected.

priv_acy• 16 years ago

I had two of the best years of my life at B School. I met lifelong friends, learned a ton, and got to push the reset button on my life.

But business school is a bit of a scam, and the willing victims are the students. They sell glamor and wealth on Wall Street and throughout corporate America. "You'll be making half a mil in 5 years, what's $160k in debt?" Everyone is going to be a master of the universe. Except it doesn't work that way, even if you play by all the rules. Even at Harvard, Stanford, and Penn. Correlation is not causation.

Would I do it again? Hell yeah. But I was fortunate enough to go to a highly ranked public school for a fraction of that. I find it incredibly hard to believe that Stanford is worth 3-4x what I paid at Texas.

BUT... blowing $120k on angel investments seems like a very, very poor substitute for the B School experience. Yes, spend a crap ton of money educating yourself outside of school, but don't piss it away on angel investments. Spend it trying to do something.

jeza• 16 years ago

Sounds like a case of the blind leading the blind. If you figure you may need an MBA, it doesn't seem you'd be best suited to coaching startups, since that is part of the aim of angel investing. If they all turn out to be dud, then you're not really getting a complete picture. Perhaps it'd be quicker, cheaper and easier to study some existing successful and non-successful startups.

Furthermore, his suggestion to go out and deliberately lose say $5,000 on gambling just doesn't seem like sound business advice to me. Though if anyone does want to throw away $5,000 I'd be happy to talk to them, heh.

zacharyz• 16 years ago

The main message of this article is the importance of investing in yourself. Ferriss chose to do that through Angel Investing and the knowledge he would gain as an advisor. Going to an expensive MBA program isn't the only way to do it.

joshkaufman• 16 years ago

If you don't have $120K to invest in startups, I recommend spending ~$1,400 on a few very good books: http://personalmba.com/manifesto/

igorgue• 16 years ago

http://en.wikipedia.org/wiki/Accredited_investor

iamelgringo2• 16 years ago

To be an accredited investor and make angel investments legally, you need an annual income of $200k or a net worth of $1M. (ref: http://www.sec.gov/answers/accred.htm )

I dare say, if you have the means to become an accredited investor, you might not need an MBA to teach you how to make money.

kadavy• 16 years ago

I took a slightly more conservative approach: I wandered from cafe to cafe in SF for a year, coworking with other entrepreneurs, working on my own ideas while advising theirs, and eventually starting my own business.

Additionally, I started a DIY-MBA group of about 6 entrepreneurs that invites successful business people to brunch to pick their brain.

I've spent way less than $120k, and now I have a pretty solid business, and an even more solid network.

pramit• 16 years ago

Try The Success Manual method - It goes one step ahead of Personal MBA manifesto - Quotes and summaries from greatest business books and more - http://thesuccessmanual.bighow.com

Spend $120K in angel investing instead of MBA studies

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