80% of MBAs want to become entrepreneurs, but is the MBA actually going to help them or are MBA entrepreneurship classes just treading water until they get out there and do it?
It’s a question we get asked a lot, so Angela Guido is here to weigh the pros and cons of MBAs for entrepreneurs, talk about different kinds of entrepreneurship and try to explain just why so many MBAs head the call of the entrepreneurial road. She will also cause her editor to google how to spell “highfalutin.”
Watch the same topic from the other side – “Should MBAs Really Become Entrepreneurs” – here.
Prefer to read? Here’s the transcript:
Entrepreneurship vs. Highfalutin Entrepreneurship & Immediately Post MBA vs. Ages Away
The MBA was originally conceived to be a degree for middle managers. Guess what job doesn't exist in a startup until many, many years in: middle management! Hello, everyone. Welcome back to MBA Monday. I’m Angela Guido, the founder of Career Protocol and your MBA guardian angel, helping you apply to business school, be successful, have more fun in the process, all while being true to your bad self. That's what we're doing here on this channel. And today I'm talking about MBAs for entrepreneurs. It's our third or fourth most requested topic on this channel and so as an entrepreneur and as an MBA, I'm going to talk to you about how the MBA helps and doesn't help you become an entrepreneur post MBA. All right, to have this conversation, we have to draw two sets of distinctions. The first is the distinction between entrepreneurship and highfalutin entrepreneurship (that's what I'm going to call it) and the second is the distinction between what you do immediately post MBA and what you do in the long term.
1. Non-Falutin Entrepreneurship
- It’s all around you
- You don’t need an MBA for it
So first distinction is entrepreneurship versus what we'll call highfalutin entrepreneurship. Look, entrepreneurship is an organic human trait. The guy who runs the dry cleaner on the corner is an entrepreneur. The 7-Eleven franchise, that's entrepreneurship. The woman who runs a clothing mending business out of her garage, that's entrepreneurship.
2. Very Falutin Entrepreneurship
- Sleeves remain unrolled
- Just like that, MBA stuff
When we think about entrepreneurship in the MBA context, we're mostly talking about the highfalutin kind. The kind where you don't necessarily build a business, like, from the ground up, but you get a bunch of capital, you raise funds, maybe you bring people together, you build a team, and then you build something at a slightly large scale. This is the kind of entrepreneurship that most people mean when they talk about it in the context of business school. But the thing to understand that anyone who starts a business is an entrepreneur, and there are a vast array of legitimate ways to be an entrepreneur that do not require raising venture capital. So, the first thing you need to understand is, are you a doer? Are you someone who just has an idea and you want to put it together and make it happen in the world? If that's the case, then frankly, you may not need an MBA. And talking about doing that in your MBA applications might make you seem a little bit foolish, because if you have an idea and you know what you want to start, you can just go do it now. The MBA isn't required, neither for permission nor for success criteria, because the MBA is mostly teaching you skills to be a middle manager. I've talked about this before in my videos. The MBA was originally conceived to be a degree for middle managers, to be a degree to help people who were in the middle taking pressure from the top and managing down below to do that job better. Guess what job doesn't exist in a startup until many, many years in? Middle management. So most of what you're learning in business school, even if you're taking the entrepreneurship classes, it's not necessarily training you for the guerrilla warfare that is building a business from scratch from the ground up. So, if that's the experience you want, if you're that kind of a person, then just go out and start something now.
On the other hand, if what you want to do is the kind of entrepreneurship that is going to require venture funding and lots of partners and a whole team, if you're going to grow something before you even launch it, the MBA will be quite helpful for that type of entrepreneurship because it will introduce you to a network, potentially collaborators, co-founders, potentially investors. The MBA will give you a certain air of credibility in venture circles and in people who might want to give you money to launch a business. But it's really, really important that you think carefully about exactly the kind of mark that you want to leave on the world as an entrepreneur first before you look to the MBA to give you the skills to do that. Because if you're going to go the highfalutin route, that's one set of skills. It's really things more about how do you put together a pitch deck, how do you court investors, how do you bring on board collaborators and structure a founder agreement. It's things that are a bit more strategic and high-level. And if you really just want to get in there and start something, then the MBA is actually not going to teach you that much on that front and the classes that you would choose will be quite different. Most MBA programs are sensitive to the fact that now, according to some articles, 80% of MBAs want to go into entrepreneurship. It's a very trendy topic, and in fact, I don't know what the actual percentage is. There's not any recent data on this and even if there were recent data, I'm not sure I would trust it, because you'd have to take a really longitudinal look at MBAs. You have to look and see, what do people end up doing in the 30 years of their career post MBA? And I bet if you looked at that information, you'd find that a huge percentage of MBAs end up in entrepreneurship. They end up starting their own company or co-founding something or launching something. And that's just natural because if you are a business leader, if you're driven, if you have ideas, at some point some idea is going to call to you so much that you're no longer going to be happy working in someone else's system. You're going to want to go out on your own and make something happen on your own terms. That's a feature of the type of person who's drawn to business school, not a quality inherent in the MBA itself. So, while it's true that many MBAs do eventually go on to start their own companies, that isn't necessarily where they started, it isn't necessarily what they plan to do post MBA, and it isn't necessarily the case that anything they learned in their MBA helped them. I'm very much in that category.
When I finally launched my own enterprise, very little of what I learned in business school was actually useful to me and I had to learn everything from scratch. I had to figure out my market, I had to figure out my marketing, I had to figure out my team strategy, my values, and how I was going to structure the company. I had to figure out all that all of that out on my own. The thing I will say is that the MBA gave me the confidence to know that I could figure it out. That’s one very valuable service that the MBA provided is that I knew, given what I had learned, that I would be able to figure it out. If you are just someone who wants to dig in and build something, do it now. Don’t wait. You might also do it while you’re in business school, but consider that the skills you need to grow something from zero to a hundred are very different from the skills you need to take something from ten to a hundred, or a hundred to ten thousand. And when most people think about entrepreneurship vis-à-vis MBA, they're mostly talking about that latter skill set.
3. Near? Far?
- Wherever you are, you’re probably en route to becoming an entrepreneur
- But it’s rare to do it straight away (take our word for it)
Okay, the second distinction you need is your post-MBA goal versus your eventual goal and I've already talked about this. A lot of MBAs eventually become entrepreneurs. They start a search fund and buy a business, buy a turnaround. They found their own company. They spin off from a division that they're in and grow something outside of an existing company. It's just natural to want to lead in that way in the long term for many people who go to business school, but starting a company during or after your MBA is a very different proposition. It's still something that very, very few MBAs do. And again, I don't have any recent statistics on this. I was googling around trying to find what percentage of MBA start their companies during their MBA or immediately after. The only date I have is quite old, but it's something like, at most, 10% or so of students are doing this and that's coming out of Stanford, and at most programs, the percentage is more like 2, 3, 5% of alums who are going right into their own startups. And there are a lot of reasons for this. The MBA is expensive, so the best time to start a business is not when you're in $200,000 worth of debt, which is the case for many MBAs. It's also because of what I said about what the MBA teaches you versus what it doesn't. So, the skills required to get something really off the ground are not the most obvious skills that are being taught in most MBA classes. So even the startup incubators, the launch programs, most MBA programs are going to have some kind of experiential learning course focused on entrepreneurship, but again, it's frequently the highfalutin style of entrepreneurship. It's not the kind of grassroots, like, get in there and build something right away. So again, you really need to figure out which style of entrepreneurship is right for you, and that will depend on your skill set, your appetite for the kinds of tasks that you want to do, and the idea, of course, itself.
But if you are interested in entrepreneurship of any kind and you know that about yourself, then I definitely encourage you to take as many courses as you can during your MBA focused on the skills and challenges that entrepreneurs face. You can write about that in your essays, and I strongly encourage you to take advantage of those resources while you're on campus, because even if you don't end up in entrepreneurship, you're going to learn a lot of interesting things in those courses. And again, most MBA programs have extensive offerings for aspiring entrepreneurs because they know how popular a choice that is among applicants and among their students. How to think about framing entrepreneurship in your personal statement as you're applying to business school is a very different thing, and it may or may not be the right decision for you based on your background, based on the schools you're applying to, and based on the prospects for recruitment afterwards. We have other videos that cover this topic. Please check them out because this video is not really about what to write in your essays, it’s really about how to think about the MBA as the launching pad for your entrepreneurial career. And so, if you see from the distinctions I've drawn, the MBA could be really great for you to move your career into entrepreneurship, either immediately post MBA, and if not, then definitely in the long term. However, for the most part, what you're going to need to do as an entrepreneur is going to require skills and abilities that the MBA will not give you. So you have to be prepared to just roll up your sleeves and use the Internet and friends and extra MBA paid courses to figure out what you need to know to get your enterprise off the ground in a successful and integral way.
Ideation, Actualization, & Managerial Skills
I want to leave you with one really useful distinction that I learned many years post MBA reading a book that sort of pretends or claims to be in some ways, a substitute for an MBA, and that's called The One Page Marketing Plan by Allan Dib. I actually really love this book! I should probably get it out, right? I have it right here because I talked about it in other videos. I really love this book. If you think you want to be an entrepreneur, read this book first. It will teach you really a lot of things that you need to know to launch your own business. But Allan draws a really interesting distinction between the three core skill sets required of the founder juggernaut, and he draws this distinction because it's uncommon for one person to really be able to embody all three skill sets. The first skill is ideation. You need an idea, you need to be able to envision a new reality and a problem that's being solved. The second category is actualization. I don't think I'm using his exact words, but this is what he says: the person who makes the business real from the idea. And if you think about the typical founder dyads, you've got Jobs and Woz for example — Steve Jobs was the ideator, Steve Wozniak was the actualizer. He was the person who took all this brilliance and channeled it into an actual product and actual company. And then the third skill set is the managerial. Once you've conceived an idea, once you've brought it into existence, then you need systems and people and structures to move the business forward, serve customers, and grow it. And it's highly unlikely that you, as an entrepreneur will have all three of those abilities. You may have only one of them, and at most you're going to have two of them, and that means that you're likely going to need a co-founder, advisors, a board, and staff. You're going to need other people who are going to bring your idea or whose idea you're going to bring into existence in the form of a company. And what a lot of our clients say is that the MBA is really, really great for that. For finding collaborators, investors, people that you're going to work with to build a company either post MBA or in the long term. One of the greatest benefits you will get out of business school is the network, and by network, I mean friendships. The people who will be a part of your career from that moment until the time you retire.
So, if you want to be an entrepreneur, think very carefully about whether the MBA actually gives you what you want to build the kind of business that you want on the timeline that you want. In many cases, the answer will be no. But if the answer is yes, hopefully this video has covered all, or if not all, many of the things that you can expect to gain from the MBA and how you want to be thinking about approaching your business school curriculum, school choice, and even to some extent the application itself, so that you can use it. You can use the MBA to propel your career forward in the direction that you want, even if that means you're going it solo and you're going to find your own company in the near future. If you're going to do that, I really wish you all the best. We love bold dreamers. We love people who stand for something. We love people who are willing to take risks to pursue solutions to problems that they find important. So I'm wishing you all the best on your entrepreneurial journey and on your MBA journey. Come back here next week for more advice on MBA Monday. I'll see you real soon!
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