The MBA And The Startup: A Worthy And Viable Path Or A March To An Approaching Bubble?

Vince Ponzo is the senior director at the Eugene Lang Entrepreneurship Center at Columbia Business School. Courtesy photo

‘WE EITHER HAD TO HIRE SOMEONE FULL-TIME OR SOMEONE HAD TO QUIT THEIR JOB’

Despite watching both of their parents work incredibly hard to keep their businesses running, the Kang sisters decided from an early age that they wanted to eventually create their own venture. Their father worked long hours at the scrap metal recycling company he founded and managed with his brother. “He was constantly inventing,” Dawoon recalls, noting her father has never had a boss. “Every moment he had, even outside of work, he was thinking about it.”

Their mother opened and managed a restaurant, and both parents worked with the intention of sending their three daughters to the United States for high school. “Parents sacrifice a lot to send their children abroad,” explains Dawoon, who ended up in high school in Hawaii with her sisters.

When the sisters began dumping their own resources into Coffee Meets Bagel, their parents were supportive but hesitant. “My father wanted to know why I was helping strangers find a husband when I hadn’t found one myself,” Dawoon laughs. With the workload too much for one person, it was time for the next sister to sacrifice her job.

“We either had to hire someone full-time or someone had to quit their job and start,” says Dawoon. She was the next to quit her job for the venture. “There were days where every time I looked at our company’s bank account, my heart sank,” Dawoon remembers. But in September of 2012, the sisters were able to raise a $600,000 seed and then Soo quit her job. In May of 2014, they announced a $2.8 million venture round and a year ago announced a $7.8 million Series A led by DCM Ventures. Still, in 2014, it was reported the Kang sisters were counting on continued growth and a $10 million profit year in 2015 to break even.

A DEFLATING BUBBLE?

Going the venture capital route to accelerating an enterprise is risky. And according to Ulrich, it’s getting riskier. Ulrich tells his students to avoid venture capital if they can. “You’d much rather bootstrap,” says Ulrich. “You’d much rather own your own business.” Despite a negative connotation often found behind a “lifestyle” business, Ulrich says it’s the way to go. “If you really think about it, a lifestyle business is a business that earns profits and pays its owner cash,” Ulrich explains. “And there’s nothing wrong with that. That is a beautiful thing actually.”

However, according to Ulrich, the Kang sisters might have nabbed their Series A at the right time. “I advise and invest in a lot of really early stage companies and it’s really hard right now to raise money,” Ulrich believes. “I don’t see the cash going into early stage, or more significantly, the big challenge is going into Series A. Getting the seed round to Series A. I don’t think that’s been harder. It’s really hard right now.”

Tom Eisenmann, the faculty co-chair at Harvard Business School’s Rock Center for Entrepreneurship agreed it’s tougher now than it was as little as six months ago. “The bubble is deflating,” Eisenmann insists. “Bubbles can deflate slowly. Or they can even stay the same size and the world can sort of catch up, if you will, with the valuations and so forth. But we have seen a deflation over the past six months or so. It’s getting tougher.”