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Startups And MBAs: A Match Made In Heaven?

Silicon Valley has always been publicly skeptical of business school grads. Peter Thiel is not a fan. Keith Rabois from Khosla Ventures thinks b-schools teach “directionally wrong advice.” Even some Google execs are unimpressed by the “MBA approach”, which is apparently a “stupid” way to build a business or product. MBA grads, as the story goes, are simply not trained or suited for the fast-paced, world-changing environment of Silicon Valley, which bills itself as a meritocracy where academic credentials mean zilch and results mean everything. MBAs might be great for old-school, Fortune 500 employers, but their training is just not appropriate for tech startups.

This story is, to borrow a phrase from the Donald Trump, “fake news.” Despite its widespread popularity among the scions of Silicon Valley, anti-MBA sentiment seems to be based mostly on an overgeneralized and outdated perception of who MBAs are and what they do for the companies that hire them. While there remains a large subsection of MBAs who are drawn to more traditional industries like consulting and financial services, a growing number of MBAs are positively champing at the bit to work at tech startups. And while certain vocal critics remain skeptical, there is also quite a bit of hard data to suggest that savvy tech entrepreneurs are ignoring the bad rap that MBAs have in Silicon Valley and instead hiring them by the hundreds and thousands each year.

This is good news for both business schools and tech startups alike; the growing influence of Silicon Valley on business education is helping to shake up a sometimes stale and old-fashioned MBA curriculum, while the influx of MBAs into the tech startup world is helping more firms turn their products and platforms into viable businesses with solid fundamentals. Far from being an impediment to success in the fast-moving world of startups, the MBA skillset can be (and often is) a perfect complement to the disruptive approach taken by many startups.

Why Other Companies Actually Hire MBAs

The MBA degree was built on the premise that enterprises of all shapes and sizes could benefit from professionally-trained management; and more than a century after Harvard began awarding the first MBAs, top graduate business schools have become among the most selective academic institutions in the world. While the curriculum has been refined and expanded countless times since HBS’s first MBA courses, the underlying principles remain largely the same: the degree provides individuals with comprehensive business training designed to help them make the best possible decision in positions of organizational leadership. They are business generalists, trained to look at the big picture and incorporate multiple perspectives into their decision-making process.

Apparently, a lot of employers find this skillset particularly valuable – top MBA programs typically see nearly 100% of their graduates employed within 3 months of graduation. And despite the skepticism of the MBA approach among some in Silicon Valley, tech titans have become some of the biggest MBA recruiters in the world, hiring hundreds of MBAs from top programs each year. And it’s not just the post-IPO crowd that’s benefitting from influence of MBAs: according to research from David Fairbank at HBS, fully a quarter of the 157 unicorns in Silicon Valley were founded or cofounded by MBAs, and over 80% featured an MBA as a member of their executive team.

Why Tech Startups Should Hire More MBAs

Tech startups tend to start with a single product – a piece of software or hardware – and the success of any product is typically measured by how popular it becomes. This is one reason that traditional metrics like profit are seen as “crusty, old-fashioned benchmarks of the past,” according to Techcrunch, and many startups opt instead to measure their success in terms of “user adoption” or some other proxy for product popularity. Unfortunately, a successful product is not the same thing as a successful business, and the skillsets required to build each do not necessarily overlap much.

This is where MBAs can offer the most value to growing startups: in optimizing the business processes that are necessary to turn a successful product into a successful business. The breadth of business knowledge that MBAs bring to bear allows them to provide valuable insight and action in areas ranging from marketing/sales to finance to operations. In real terms, that means a capable MBA could design a targeted digital marketing strategy, build out pro forma financial projections, and identify actionable steps to improve customer service response time. Moreover, by capably handling general business tasks for a startup, an MBA can also allow the specialists they work with to spend more time building new products and improving existing ones.

How Silicon Valley Can Help Business School

Tech entrepreneurs seem to have a habit of overemphasizing their “revolutionary” approach to business (this cringe-inducing scene from HBO’s Silcon Valley is so realistic that it’s hard to tell it’s parody), but there are still lessons for MBAs to learn from the meteoric rise of the tech industry. Behind the casual dress codes and funky décor, many firms in Silicon Valley really do ascribe to some novel ideas about the role of business in society, the relationship between employers and employees, and the process of building and launching new products or services.

Some of these ideas have already begun to take hold on business school campuses; classes in design thinking and software development are not uncommon, and so-called corporate social responsibility is becoming less of a buzzword and more of an actual discipline. But updates to the MBA curriculum still occur at a glacial pace in many other respects, and schools across the board would benefit from channeling more of Silicon Valley’s innovative spirit. A more nimble and adaptable business school curriculum could not only do a better job of preparing graduates for a rapidly changing world; it could also make those graduates even more valuable to the startups (and non-startups) that hire them.

Zach Mayo is the chief operating officer of RelishCareers, an online platform that helps master’s-level business school students connect directly with corporate recruiters. Available to students and alumni from network schools, RelishCareers gives candidates access to employer branding and MBA and MS-specific career exploration resources (including exclusive webinars). Class of 2019 MBA and MS students (as well as other students and alumni) can sign up now to explore company pages, build an initial target list, and engage with on- and off-campus employers (applicants can create an account here). You can also join the Relish Campus Ambassador program to get exclusive access to recruiters and other resources (email recruit@relishcareers.com for more information).