Whether to obtain an MBA is a dilemma for entrepreneurs, especially those seeking to build category-defining companies. The conventional wisdom is that an MBA is not required to create a great startup — after all, Bill Gates and Mark Zuckerberg never even finished college, let alone business school. Some even look down on MBAs as opportunistic groupthinkers who lack good entrepreneurial instincts. Peter Thiel once famously said: “Never ever hire an MBA; they will ruin your company.”
The alternative view is that an MBA can provide valuable skills and resources on a founder’s startup journey. A top MBA program can provide a network that enables access to more than capital — it can open the gates to collaboration that helps spark a new entrepreneurial venture. Many well-known startup founders began their businesses while in MBA programs: Phil Knight started Nike in a Stanford MBA class, when he wrote a business plan on the Japanese athletic shoe market; food delivery business Grubhub, today a public company with a market cap close to $4 billion, was co-founded by Chicago Booth alumnus Matt Maloney, winning Booth’s New Venture Challenge in 2006.
TARGETING MBA STARTUPS THAT EXITED AT $500 MILLION OR MORE
More often, top MBA founders start their companies after graduating from business school. Michael Bloomberg, now one of the richest men in the world, started Bloomberg LP 15 years after graduating from Harvard Business School — after being fired from Salomon Brothers.
We decided to analyze the data to identify the traits of MBAs who build the largest technology startups. Our aim was to do a deep dive into historical statistics to find out the truth. What are the career paths of the best MBA founders, which MBA programs produce the best founders, and does an MBA provide a better chance of having a successful exit?
For this project, we analyzed a dataset composed of companies that had at least one MBA founder, and which exited for $500M or greater. We focused on technology companies in the software and consumer tech industries, and we included companies across geographies. To narrow our data set to a manageable set, we analyzed companies from the list of top business schools in the US News & World Report. Ultimately, we compiled a list of 91 companies that met these criteria and were founded by individuals from top business schools. From there, we compiled and analyzed data on these companies from sources such as Crunchbase, CB Insights, and Pitchbook. A representative list of the companies and data set can be found below.
WHO ARE THE TOP MBA FOUNDERS?
In this article, we summarize our most impactful findings from this study. Our aims are to provide insights into the paths of the most successful MBA founders and to disprove myths about how MBAs build successful companies. We are hopeful that this information will be useful for investors, students, current entrepreneurs, and anyone who is interested in entrepreneurship in the future.
Only 8% (7 out of 91) of the companies in our population were female-founded companies. We defined “female-founded” as having at least one founder who is a woman. We believe there are a few potential explanations for this low ratio.
One potential reason is the fact that women are under-represented in the pool of MBAs. The Forte Foundation diligently tracks MBA enrollment information and stated that “U.S. schools have roughly 39% women enrolled overall – up from 32% in 2011.” GMAC also stated in its comprehensive report that in terms of the top 100 MBA programs, women comprise 36% of students today, up from only 30% ten years ago.” As the enrollment ratio shifts, the ratio of exceptional female MBA founders may shift as well.
A second reason may be that female MBAs are less successful in raising venture capital due to well-documented challenges in receiving funding, which may make it more difficult to get to large scale. In 2019, only 20% of startups receiving funding globally had one female founder,3 and only 2.8% of U.S. venture capital funding went to all-female teams.
It is important to change these ratios in order to ensure a more balanced playing field for female MBA founders who are seeking to build billion-dollar businesses. In our view, access to venture capital is the most important factor. There are signs of progress here, with women raising more capital in 2019 than in any other year, and also an increasing number of women joining VC firms and starting their own funds.
HARVARD BUSINESS SCHOOL CLAIMS NEARLY HALF OF TOP MBA FOUNDERS
With regards to which MBA programs are producing the most exceptional startup founders, there were a few surprises in terms of which programs scored best, as well as which specific sectors they excelled in. To the left is an overall summary highlighting the total number of companies for each MBA program, as well as breakout by sector.
Harvard Business School led the pack with 44% of all founders, more than twice the figure of the 2nd place school (Stanford). In fact, HBS produced more companies (40) than the 2nd and 3rd place (Wharton) schools put together (34).
These three schools were the highest-ranked business schools by U.S. News in 2020. Surprisingly, MIT Sloan, despite its top engineering graduate programs, only produced 2 companies in our group, and finished toward the back of the pack.
While there appears to be a correlation between a business school’s ranking and the number of successful founders it produces, there are other factors to consider in order to draw a conclusion on which schools increase the chances of entrepreneurial success, such as the size of the MBA class. For example, HBS’s class size is more than two-times Stanford’s for the class of 2021 (938 vs. 417 students). As such, it’s possible Stanford may be producing more founders on a per graduating student basis.
The school’s focus on entrepreneurship should also be accounted for. Some schools pride themselves on providing an exceptional entrepreneurship curriculum as well as providing a plethora of resources for students who are interested in this space, which would result in a higher percentage of students starting companies, and therefore a higher denominator of total founders.