The Most Expensive MBA Programs

WHY ENTREPRENEURS ARE FLOCKING TO BUSINESS SCHOO

 

In entrepreneurial circles, a degree from “the school of hard knocks” is worth more than an MBA from Harvard or Wharton. Well, that’s how the joke goes anyway. I mean, why do readings and simulations when you can be out running a business yourself?

For starters, startups don’t run on Monopoly money. And remember Edison’s mantra that ‘he didn’t fail…he just found 10,000 ways that didn’t work?’ Well, just try pitching that to an investor. It doesn’t get far.

These days, more would-be entrepreneurs are foregoing the Gates-Ellison-Zuckerberg route and flocking back to b-school according to a recent piece in Business Insider. At the Kenan-Flagler Business School, for example, 40% of the 2015 class will graduate with an entrepreneurial concentration. And Harvard Business grads – not hippies – are this generation’s biggest export to San Francisco, with nearly a quarter of the 2014 class re-locating to the Bay Area.

So what’s behind this shift? For starters, to quote Wharton second-year Isabelle Park, “it’s not sexy to work at a bank anymore.” The Millennial mentality, with its devotion to setting work boundaries and forging a personal path, has hit business school with a vengeance. Suddenly, working 80-hour weeks for someone else doesn’t seem all the appealing. As a result, some sacrifice higher starting salaries for the chance to make the biggest impact. And onership is the most influential position in any company.

Make no mistake: Millennials are closely monitoring entrepreneurial success stories. These days, firms like Warby Parker and Zynga, which were founded by MBAs, could serve as case studies themselves. Now, MBA-founded companies are generating serious investment. For example, WildFire, a social media marketing firm founded by Harvard and Stanford MBAs in 2008, sold for nearly $450 million to Google (as Poets&Quants reported in its Top 100 MBA Startups). And Karma Science, a mobile commerce firm started by Stanford MBAs, generated over $80 million in investment in under two years! Who could resist that lure?

Alas, this crop of MBAs recognizes that ‘what got you here may not take you there.’ It takes a certain skill set – vision, audacity, and a grinder’s work ethic – to launch a firm.  But it takes an MBA education to stabilize, organize and expand it. “An early stage startup doesn’t need an MBA skillset,” concedes Ted Zoller, who heads Kenan-Flagler’s Center for Entrepreneurial Studies. “But when a company gets to scale, that’s when it becomes necessary.”

An MBA also confers credibility to would-be entrepreneurs and comfort to would-be investors. For example, Park tells Business Insider that her Wharton MBA shows venture capitalists that she has mastered one of the world’s most rigorous business curricula.

More important, an MBA program provides a place where students can lay the groundwork for a business venture. Here, students can learn from classmates, professors, alumni, and guests – the same people who’ll ultimately act as their network (and even investors and advocates). Alex Dea, a Kenan-Flagler second-year, cites alumni as particularly helpful when he reached out to them. “Business school gave many of them two years to dedicate themselves fully to testing ideas, customer research, entering competitions, meeting fellow entrepreneurs, VCs, etc.” In fact, business school often helps alumni come full circle, where they can pay forward the types of guidance and support that their predecessors had given them.

Along with the network, business school also provides practice and polish. In other words, students don’t just learn finance and scaling, but also how to carry themselves among various constituencies. That was the message from an anonymous 1985 Kellogg grad – and entrepreneur – who recently penned a column on this topic for Forbes. So what did this MBA learn at Kellogg that could applied to entrepreneurship? The results might surprise you.

As you might expect, teamwork was cited. “There were many times where we could not choose our team,” the author writes, “but were forced to collaborate together in imperfect groups. This is good experience for working with a variety of people who may not all have the same objectives and skill levels.”

Learning to meet impossible deadlines was another benefit of the MBA program. “Students often complained about what they saw as unrealistic deadlines by professors. Later, I realized that these impossible deadlines mimicked what happened in the real world as I had to work long hours to meet customer expectations.”

Surprisingly, sales skills – a neglected component of some MBA programs – made this list. However, the writer listed the ability to test concepts without facing repercussions as the biggest benefit of an MBA. “Students can pretend to start businesses or launch real companies with minimal risk if the company fails. Failing quickly, learning what I can and then taking a new action was a key skill I learned at business school.”

Sources: Business Insider, Forbes

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