In Defense of MBAs
Dan Primack at Fortune re-started a discussion around whether MBAs make good entrepreneurial founders, based on Chamath’s remarks at an HBS event.
While I’ve commented on this on a Quora answer in the past, I’ll weigh in again… While an MBA certainly doesn’t mean you’re going to be a successful founder, it certainly won’t hurt and it might even help.
I went to Stanford GSB, and a great entrepreneur and professor, Irv Grousbeck, inspired me with the notion that I was qualified to be my own boss, and that the life of an entrepreneur was a virtuous choice. I am certain that without his inspiration, I would not have chosen that path, and it was one of the most important decisions in my life. So on your scorecard of MBAs not qualifying founders to start billion dollar companies, we can mark one in. And I’ll add that in checking out all the people in the cheap seats with their views about what does and doesn’t make a founder — I see few with an MBA and none who founded billion dollar companies.
Dan says: “Only 12 of the 39 companies had any MBAs within their co-founding teams (i.e., just 28%) and, of those, only four had multiple MBAs. The leader (barely) is Stanford, with MBAs at five unicorns (Homeaway, Fab.com, Marketo, Tableau Software and Workday)”.
Jesus, how many multi-billion dollar companies are you looking for these poor 28-year-old kids to start? What percentage of statistically black swan events would you like them to be responsible, over a quarter of them isn’t enough for you?
Multi-billion dollar businesses created in a handful of years require a little bit of craziness. When Zuck turned down a billion from Yahoo, or Nest said no to whatever offer they had to say no to before Google got to $3.2B, you don’t get to those decisions by running the numbers. So it’s possible at the longest end of the long tail, the training you get in an MBA will teach you to do an analysis that keeps you short of that long tail outcome.
Also, MBA students have something to lose: with your Harvard MBA, if you don’t mess it up, you can have a near-certainty of a comfortable life. Entrepreneurship is a risk not worth taking for some of these guys. But that doesn’t mean there aren’t great founder Harvard MBAs — maybe it’s 10% of the class, maybe it’s 5% — but that’s still dozens of people every year. If unicorns are founded at a rate of 1-2 a year, and successful silicon valley startups at a rate of 100 year, a handful of great founders out of these programs is enough.
These programs select a large number of highly talented and smart individuals. Some will be risk averse, some will not be creative, some will not have the drive and willpower to break down walls. Those won’t be the ones. But there is talent there.
At Stanford, Irv taught me how to hire talented people. How to fire someone. How to reference check someone. These are critical skills to succeeding in a startup. I learned how to raise capital, how the law works in relation to business. I met many talented and successful people along the way. And the programs have evolved since I was in school, with a much larger part of the curriculum devoted to entrepreneurship.
Being a founder is a lot about making it up as you go along, figuring out how to do things that no one has taught you to do. You will not be successful if you can’t power through and do that. But that said, it is no point of pride: if the world has already figured out an easy way to do things, like tell a good VP Sales from a bad one in an interview and a reference check, there’s no merit badge for entrepreneurs to do it wrong three times before you do it right. If you can learn, from a book or a school or an incubator how to do it, you should. And the professors on staff at places like Stanford — not just Irv but people like Jim Ellis, Andy Rachleff, Andy Grove, Mark Leslie, Kevin Taweel, Russ Siegelman, and others — have a ton to teach you.
Will you learn to write code? no. Will you learn design skills? nope. Is being a great designer and coder a nice point of entry to founding a company today, and learning the business stuff along the way possible? Yes, that is definitely a possible path. But it’s not the only path.
So when Chamath, who is a good friend and a great investor, says: “”I would bet a large amount of money that the overwhelming majority of us [venture capitalists] would not look favorably on a company started by one of you [Harvard MBAs].” – I’ll just throw out that the door is open at Matrix.