Startup Success Without The MBA
Levine, a 22-year-old Bay Area native, should know. He left Stanford University after his sophomore year to launch a nonprofit and later a company, OpenGov. Earlier this month, that company raised a whopping $4 million from investors. It didn’t seem to bother anyone that he doesn’t have an MBA or even an undergraduate degree.
If anything, Levine sounds nearly dismissive of the Stanford culture and the pressure it imposes on students to conjure up the next Facebook or Google. “The ‘startup machine’ culture at Stanford has gotten people so desperate to start companies that they’re trying to solve problems that don’t exist,” Levine believes. “I don’t want our best and brightest people spending time on superficial challenges that they aren’t passionate about.”
Web and mobile technology have made it easier than ever to launch a profitable startup. Twenty-somethings are gravitating toward entrepreneurship like never before: a recent PayScale survey of 500,000 Millennial workers found that entrepreneurial studies is one of the generation’s preferred college majors.
But where does business school fit into the equation? An MBA from a well-known institution can be a fast ticket to a job with a six-figure salary and a signing bonus to start. But do MBA programs give entrepreneurs a competitive advantage that’s worth the price tag and the time?
Several founders’ stories say otherwise; Levine’s is just one example. Katie Kapler and Nihal Parthasarathi created CourseHorse, which raised $500,000 in an October 2012 seed funding round. Adam Swart founded Crowds On Demand, which has been covered by ABC, The Washington Post and GQ magazine. These founders have neither MBAs nor plans to get them.
On the other side of the debate are plenty of MBAs who essentially incubated their startups in a business school classroom, leveraging the expertise and knowledge of classmates, professors, and the alumni network. These days, virtually every B-school offers classes in entrepreneurship, startup centers and competitions with cash prizes for MBA students. Much of the startup action on B-school campuses is a direct result of student demand. Growing interest in startups by MBA students led the Tuck School of Business at Dartmouth University to launch the Entrepreneurship Initiative (EI) two years ago. The school found that half of its current class expressed interest in entrepreneurship. “Students come in with an idea and apply it to every single course and activity in Tuck,” says Joaquin Villarreal, who heads up the Tuck initiative.
And yet for every business school that is getting into the act of entrepreneurship, there are other organizations that have have sprung up to help would-be founders without the expensive tuition and commitment a full-time MBA entails. One of them is Galvanize, based in Denver, which goes a few steps beyond an incubator (see Galvanize: More Than An Incubator). Whereas incubators trade space for equity, Galvanize aims to provide entrepreneurs with a full-on ecosystem. “We’re trying to solve as many problems for an entrepreneur as possible,” founder and CEO Jim Deters says. Entrepreneurs work together, learning from each other, in a building with a bar, a gym, a ping pong table and about 100 other tech companies. They can also choose to enroll in the gSchool, which offers a six-month curriculum in web development.
Still, for every entrepreneur that takes one of those routes, another finds success with just a bachelor’s—or less, in two of the three cases below.
CourseHorse founders Katie Kapler and Nihal Parthasarathi might not have MBAs, but that doesn’t mean that higher education hasn’t played a role in their entrepreneurial ambitions. Their startup, located at the New York University’s Poly Varick Street Incubator, links people with local classes, which range from “PowerPoint 2010” to “Music For Aardvarks.” In 2011, Stern gave CourseHorse $75,000 for winning the Audience Choice Award at its 12th Annual New Venture Competition.
What’s more, both founders took Stern classes—just not the graduate ones. “I went to undergrad at Stern and I benefited tremendously from it,” Parthasarathi says. Initially, he had planned on going into finance or banking, but after graduation, he decided to work as an education and technology consultant at Caphemini.
There, he got an idea for a startup—why wasn’t there an online list of every test prep class in the area?—and pitched it to Kapler. She suggested making a site for all New York City classes. And so, CourseHorse was born.
Parthasarathi found that he had to shift gears in the startup world. “There’s a certain culture, and you have to learn things on the fly as opposed to banking,” he says.