Two Types: I think you only need two kinds of people to create a technology hub: rich people and nerds. They're the limiting reagents in the reaction that produces startups, because they're the only ones present when startups get started. Everyone else will move.
I guess that could be a good clue onto what to teach. And I'm not sure this is enough actually. For example, you probably need rule of law. My guess, you also need ethics, trust, culture of working handshake agreements. Remove it, have a kind of people to which it doesn't apply, and this would ruin the valley. I would suggest to anyone who is organizing programs of training entrepreneurs to add business ethics as a cornerstone of the program. Please, think long term.
You need more than rich people, you need people who are rich and who embrace the kind of risk that startups offer. There's a big difference in the kind of investors you meet in NY compared to SV.
Startups boil down to "build and sell". So a nonbuilder must have the skills, dispositions, contacts, etc. to make the sale and optionally to guide the "what to build" (but never the how).
Alas, from what I have seen, business school students as a whole often see sales as beneath them and would greatly prefer to be in marketing or product management.
At MBA programs with accelerators, committed entrepreneurs often lose funding to polished classmates with Sales skills, but no actual immediate intention or ability to build a business. That is because between VC and high salaries elsewhere, the grind can be too big a leap when you have loans to pay. YC can easily filter that by looking at an applicant's execution experience in the past, or check if their resume shows more blue-chip brands than meaningful growth. For some, the MBA is a tool, for others it's a merit badge.
It felt like 30%-50% of my classmates got enough credits to get an Entrepreneurship major, because they want to build a business one day, after MBA (just not immediately after, and not necessarily VC-worthy stuff). Entrepreneurship through acquisition, running your own fund, joining VCs, leading family businesses, there are a lot more options for MBAs.
The bigger issue is that top 5 tech giants don't help by acquiring or cloning the work of CS MBAs or those who stick it out as Entrepreneurs. With lack of regulation and increasing market power for the giants, fewer people who can make something worthwhile will be wanting to do startups instead of working for 300-700k at a big company. Ironically, of my committed entrepreneur classmates with tech backgrounds, a lot more of those that started hardware, or healthcare, or food-chain, or other distinctly "non-virtual" startups continue today. That's because the virtual/social/saas ones were aqui-hired.
As a techie at a top MBA program (20 years of coding so far), I took VC and Finance classes, Patent Law, and CS Masters classes to round out my skills, while I built my company till 4 am every night. The MBA experience taught me when NOT to raise money. I've been bootstrapping and focusing on users and now run 2 different sites that are growing well. That MBA is actually paying itself back!
I'm an MBA and I just don't see the value of business schools preparing students for startups. The MBA skillset is only valuable at a certain maturity level. Before you hit that level focus on engineering/product/sales, not finance and strategy. I don't think MBA programs teach engineering management well and they aren't particularly good at teaching sales.
I kind of agree with the old idea that you deduct $1M off the valuation for each MBA a startup has on board. In all honesty, there's just not going to be a lot for an MBA to do at a startup.
Now to be clear I'm using the word "startup" in a strict sense meaning a company that's come into existence recently. An 8 year old multi-billion dollar behemoth is not a startup in my book.
Think of an MBA as a two year immersion program in the language of the C-suite. If you're just starting out you really don't need to learn that language. Instead focus on product/market fit, good engineering, and sales. Sure, MBA programs claim to teach all those skills - but I just don't think they're good at it.
An MBA program is good at teaching you strategy, finance & accounting, and maybe some types of business analytics (if you take those electives). And it's definitely good at teaching you corporate politics (perhaps it's biggest benefit), but you don't need to know corporate politics -just startup politics, which are a different beast altogether.
Business schools might be the wrong place to mint tech entrepreneurs. The number of wannabe tech founders vs those taking coding electives is telling.
And speaking as a technical manager, I'm also deeply skeptical that combing an MBA with a bootcamp/MOOC will make you a proficient technical manager. It might put you on better footing to hire a competent one, though.
Excellent back and forth. As someone considering an MBA post a failed startup, the meat, for me, was here:
> Michael: Because I think a lot of people here in the valley would argue ... spending two years at an early stage startup in the Bay Area might be more fruitful than spending those two years at an HBS or a like school.
> Jeff: Look, I think there’s an argument for that trade off in the short term. I think the harder question for people is 10 years from now, 20 years from now, 30 years from now, where am I gonna end up? Because if I spend two years stepping off the treadmill at a Harvard, or a Stanford, or an MIT, I’m gonna come back with a network, a set of relationships, and a skillset that may not be immediately high ROI.
As an MBA from a long time ago, I think it is important to point out that an MBA has the most impact on your career trajectory within the first five years. In my own cohort, some people leverage their MBA to get on fast tracks, some people chose careers that they did not stick with. If you recently got an MBA a lot of people will hire you for your pedigree and education. If you got an MBA ten years ago, people care about your most recent job experience. Employers will always screen for college graduates, but once you get to a certain point in your career they care less about an MBA and more about experience.
the difference is that it's pretty easy to tell a good b school (lots of objective rankings). at an early stage, it's really tough to tell a good startup- as a candidate you are at a significant disadvantage in choosing a startup employer due to the lack of available information. not saying one is better than the other, but that making that choice is far more difficult than the couple of sentences you mentioned.
On the other hand startups pay you money, B schools cost you money. With the delta easially being 300+k. So, you can take a fair amount of risk and still have the startup being a better bet.
As a both a business school graduate and company founder I witnessed this first hand. At my school, the majority of people wanting to do "entrepreneurship" were not really committed to it, but rather dabbling in it. They had an idea and did surveys to "validate" the need and were always looking for random undergraduate engineers to seduce into helping them.
That being said, there was a small handful of people who were serious, committed, and willing to do whatever it took to get their company off the ground. As with all stereotypes, there is some element of truth along with countless counter examples. For MBAs, the core issue is a lot of ambitious, idea-generating, risk-averse people without technical/tactical skills on average, looking to do something risky with technical/tactical requirements.
As someone wanting to start my own company, I hated that I didn't have the technical chops to get even a basic prototype off the ground and didnt want to just another MBA with an idea and no ability to execute. Luckily, my school, Chicago Booth, began offering a Ruby on Rails coding class. From the first class, I got addicted to it and spent all my timing building out an idea, that I didn't even initially think was good, just so I could learn to code better.
When I released the idea, 60% of the school started using it in the first month. There is no substitute for being able to cheaply and easily get a workable prototype onto the market. As a result of having a real product and the ability to iterate on it, we made it much further than any of our competitors in our schools New Venture competition and ended up winning it and raising a seed round.
We are by no means successful and are still in the startup grind for sure, but without bringing the initial ability to get something real onto the market through some technical skills, we would have been dead in the water no matter what. Our product is now used by half of MBAs in the country ( https://www.transparentcareer.com ) and it would have never of happened without at least getting some basic technical skills.
MBAs can start companies and be successful at them, and some companies require way less tech than others. That being said, I think everyone would wind up being better off learning to code no matter who they are. There is nothing more empowering than being able to create something real instead of just a powerpoint presentation.
Now that I have a team of engineers, working with them is way smoother as I more deeply understand the development process and can understand how to spec things out better. Even if i'm not coding on a daily basis, its immensely valuable to at least know the basics.
Ha! In 2013-14 I teamed up with another technical and a non-technical Booth student to create a class called Booth Hacks to teach MBAs and other UChicago students how to code in a practical way ( https://www.facebook.com/groups/boothhacks/ ). I have been coding for 20 years, so I co-wrote and co-taught the lectures. It was an 8 week, 3hrs week course and its success allowed us to convince Booth to offer a real RoR class to its students the following year (your year). You started at Booth the year I graduated. We also worked to launch the MBA/CS joint degree program that is now live. I was not allowed to compete in the New Venture competition you won a year or two later, because I created http://www.doerhub.com/at/uchicago to bridge the gap Michael is talking about in this podcast, and I was serving the startups that ended up competing (so I wasn't allowed to compete). The year I graduated, both winners of NVC and SNVC were users of the site and had found people or received help for their projects due to DoerHub.
Needless to say, I have a lot to say on this topic, and would love to talk to people who want to connect university brains in different disciplines in productive ways, including YC if they are interested. DoerHub is still running, but I just graduated YC Startup School with https://DreamList.com , which feeds off of similar tech, but applies and improves the algorithms by serving much larger and more lucrative problems.
Definitely not, it was my struggles with getting better data that I could trust through the recruiting process that made the idea strike me in the first place.
I do also have to say, the resources that Chicago Booth provided for entrepreneurs were quite amazing, similar to what you would get through a high-quality startup accelerator. Their New Venture Challenge is also really great and gave us the initial boost we needed to get off the ground.
In my particular case, the company would not exist without me getting my MBA, but this is somewhat of a unique example.
easy:
- get students to drop out of b-school
- encourage them to learn about deep tech field (cs, bio, etc.)
- help them raise $$ for said endeavor
more seriously, I have had numerous people from the b-school world (now VCs) tell me this, more or less. they want people w/ technical know-how, not b-school skills.
Since startups make things and things are the essence of the economy, gain the skill to make things rather than telling other people to make things.
If you are a master at business administration then you are a master at telling other people to make things, why would I want you to tell me what to do as a partner in a startup? You have to pay me for that kind of stuff.
My impression, working for a Fortune 500, is that management is largely an information processing task. They are gathering, analyzing, and communicating information, but typically have to deal with both quantitative and qualitative information of varying quality from disparate sources.
They are also skilled at certain kinds of tasks such as creating business plans, budgets, etc., and serving them up in a recognizable format that other people can use.
Supervision is a different kind of task, some managers are good at it, others aren't.
Hopefully your business grows to the point where you need someone who can perform these tasks for you.
Certainly, the ability to make things was what got my business off the ground. I'm still a one man shop, and my sales don't justify hiring myself full time, much less another worker -- management or otherwise.
management is largely an information processing task. They are gathering, analyzing, and communicating information, but typically have to deal with both quantitative and qualitative information of varying quality from disparate sources
This layer is going to be utterly destroyed by machine learning when it goes mainstream. The value of an MBA is trending towards zero.
Even machine learning isn't necessary. All that's needed is more widespread communication. For instance, my boss doesn't need to communicate the company's strategy to me, because I can figure it out by sharing information with workers at similar companies.
The question is which do you want to buy? And what can you buy.
Both are investments.
An MBA from a top school likely has a higher pay off long term as most startups fail (statistically). But you have to be accepted into the program. You can read about alumni, gather various statistics, where they are and how much they make etc... There are ~80,000 alumni from HBS programs.
For YC, you either join a YC startup then go to YC, or get into YC directly. It may be easier to do the former, prove yourself and then join YC as a founder. If you want this path. You also have to build something.
YC also reduces the risks of "failure" by building out their own network and keeping alumni within the network as partners or as employees in other YC startups.
As to the rise of entrepreneurial programs.. well it's business. MBA programs probably also want to attract entrepreneurial minded types to improve diversity/value but startups are hot and everyone is selling.
I can't remember where I saw it, but recently it was pointed out that business schools are there to teach you to run someone else's business, where as startups make you learn to run your own. I think I was looking into the benefit of an MBA at the time and in the end, what do you want to do?
I wouldn't necessarily put it that way. The top tier business schools teach a good amount of universally applicable soft skills like negotiation, conflict resolution/deescalation, performance management, etc. You just need to enroll. And those skills are applicable regardless of where you go.
Having seen friends go through business school, the real value is without a question the network you build during those two years. That's also applicable regardless of where you go.
I personally applaud Harvard's new combined major, especially because it supports the thesis that business leaders should also pay more dues than they currently do as technical practitioners.
I'm currently working through this struggle in Hawaii. I'm currently an adult student pursuing concurrent degrees in CS and Entrepreneurship at the University of Hawaii at Manoa, and trying to find ways to bring the two programs closer in ways that reflect my self-study on SV-style tech entrepreneurship and my experience in the professional workforce...and it's not easy.
Not mentioned in the video are a couple factors that probably influence the process in invisible and important ways:
1) At UH (and other universities I've checked on), the different departments are run as different business units, so trying to run mixed classes runs into the typical corporate politics of how funds are allocated, who gets credit, etc. We do have a video game design class that combines CS and creative media majors into one crossover class at the undergrad level, so I'm trying to gain insight on how that works at a pedagogical and administrative level.
2) Talking to the curriculum manager of our MBA program, he expressed that he didn't have any professors who would want to teach a multidisciplinary class, and he didn't have anyone he felt comfortable assigning to it anyway. When I asked him why, he said that business academia heavily discouraged multidisciplinary research, and publish-or-die culture has resulted in extremely "pointy" professors who are stellar single business discipline, but essentially worthless outside their skill silo. Because of this, he felt that a silo-breaker class would be either resource-intensive or ineffective.
We do have a couple "entrepreneurship" centers on campus, one oriented around tech (with a former technical SV-type manager), and one oriented around business. Sadly, they seem to be mutually exclusive for the most part, but I've been working on trying to build the connective tissue.
I do completely agree that business and engineering need each other, because I always see product without strategy or strategy that completely misunderstands the magical business properties of pure tech--and that's if the business kids are pitching tech at all. These two disciplines, at least at my school, are utterly ignorant of each other and it shows in the ideas they have. When it comes to preparing students for any kind of entrepreneurship, you need to have practitioners and managers mingling for it to work, and I doubt I'd ever go to a business masters that wasn't multidisciplinary. To this end, very happy I'm seeing things like Harvard's MBA/CS and the Stanford interdisciplinary programs pop up.
I doubt I'll get UH to see the light, but wish me luck. Hopefully the insights I got from administrators help someone look at the problem differently.
I thought the Columbia Startup Lab had an interesting approach: if you form a team consisting of one MBA and one Engineering M.S., they will provide $50K and 6 months residency. Networking events, alumni contacts, seminars, city government resources and much more are all available. But for the most part, they get out of the way and let the team figure things out.
Why do they require either an MBA or M.S.? Anytime you put restriction on something or force a combination, you don't allow it to breathe for possibilities.
How about b-schools working with creditors to establish a new kind of student loan where first payment isn't due until 5 years following graduation? Financial constraints are life limiting. If a student attends a top-tier program, student loan debt could easily reach mid-$100k
Same way engineering colleges should prepare students of startups: promote co-ops and internships. Forge ties with industry to ensure that such gigs are actually substantiative, i.e. the intern works on something that's more than drudge work.
I seem to agree with a lot of points in the discussion. As a recent MBA graduate from India, I noticed that most people who join B School, just want a comfortable life with a high pay. They just want to boost their salary from say 6 Lakhs to 15 Lakhs and believe slogging in industry isn't worth it... Why do I point this out? Because this fundamental assumption will explain the following.
1) If someone has a startup idea, they always wants others to work on it. Often times, put 5-10x more effort than themselves. I am yet to see someone who learned coding so that he can get his idea out of ground. Everyone is busy coaxing engineers from nearby colleges.
2) On the knowledge part, most people don't care and its not necessarily bad. B School curriculum is evolving, albeit a bit slow. Subjects like Digital marketing, Data analytics are being offered more now than ever (obviously). However, when people work for a grade rather than the knowledge, they are seriously limiting themselves. People who got A's in analytics are afraid of a simple regression. I don't want to hire them for their knowledge, I would be hiring them for their potential. But then undergrads from top engineering colleges are cheaper (.3-.5x) with even greater potential from my experience. Knowing some technical things, can actually help them bridge the fear of starting up.
3) Education Loan of 20 Lakhs. This makes sure that you work at least for a few years, before you get married and get a house loan and work to pay that off. The fees for most B Schools MBA program increased more than 10x in last 10 years. I am pretty sure the value add remained almost stagnant in all these years. This is a huge hindrance for people to even pursue their idea.
4) CV point mongers blocking some important positions. The Entrepreneurship cell in my college has not registered the incubator from 3 years despite having a check ready which can be en cashed. Why? They are not interested in start ups or anything, they just want a line in their CV (for extra curriculars/club activities) which companies, especially FMCG & consulting ones value. This noise, if separated can help a lot.
How should B Schools prepare? The first thing is try to change the selection process. I dont know in what way, but a few experiments here can help. Second is to change the loan payback policies, offer deferred placement for people who want to try their startup and failed. Third is to actually have a working incubator, recruit people full time, maybe a couple of developers who help students create their MVP (Viability validation required). Last but not the least, the placement process is one of the culprit in this ecosystem. Maybe a course or workshop on the "business side" of things such as "How to start a startup?" which actually gives them information on India specific resources or others which can help students think "Why India needs startups now?" (Seriously, current market can only employ ~30% of graduates).
Honestly, I think an MBA grad has quite a significant advantage in identifying the opportunity gaps purely because of the mindset, its just that not a lot of them (including me) do it actively.
By explaining to them what start-up options are really worth, what the hours really look like, what the office "culture" is, etc. All this so they can make an educated decision about joining one.
Ever wonder why startups prey on mostly young naive people?
By forcing them for half a year into a diffrent job and mindeset with difficult task on a weekly basis. Give them taks that force them to bump into engineering troubles, force them to communicate tech debt, show them there beloved numbers and have another team fabricate them from thin air, by gaming the systems.
Show them that a good CEO needs to know all the details.
Two Types: I think you only need two kinds of people to create a technology hub: rich people and nerds. They're the limiting reagents in the reaction that produces startups, because they're the only ones present when startups get started. Everyone else will move.
I guess that could be a good clue onto what to teach. And I'm not sure this is enough actually. For example, you probably need rule of law. My guess, you also need ethics, trust, culture of working handshake agreements. Remove it, have a kind of people to which it doesn't apply, and this would ruin the valley. I would suggest to anyone who is organizing programs of training entrepreneurs to add business ethics as a cornerstone of the program. Please, think long term.