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Dumb As Dirt & Disingenuous, Too: Elon Musk’s Anti-MBA Critique

Tesla Founder Elon Musk

Elon Musk is among this generation’s entrepreneurial idols. He is what Steve Jobs, Bill Gates or Mark Zuckerberg have been to earlier generations of aspiring entrepreneurs.

So it is with some level of frustration and annoyance to hear Musk bash MBA education as he did last week. “I think there might be too many MBAs running companies,” Musk told an online audience at The Wall Street Journal’s CEO Council summit. “There’s the MBA-ization of America, which I think is maybe not that great. There should be more focus on the product or service itself, less time on board meetings, less time on financials.”

For a guy in the energy business, this is a low-voltage argument and, even worse, hypocritical. Afrter all, a quick check of LinkedIn profiles shows that there are nearly 900 employees at Tesla with MBA degrees. Their MBAs were awarded from such big brand, highly ranked players as Harvard, MIT Sloan, Wharton, Chicago Booth, Northwestern Kellogg and Duke Fuqua as well as from such other well-regarded places as the Atkinson Graduate School of Management at Willamette University, Oxford University’s Said Business School and IE Business School in Madrid.

MBAS HAVE JOBS IN VIRTUALLY EVERY CORE AREA OF TESLA’S BUSINESS

Both the CFO and CIO of Tesla sport MBA degrees on their CVs. Chief financial officer Zach Kirkhorn got his from Harvard Business School, while CIO Nagesh Saldi has one from St. Mary’s College of California. MBAs are in a wide variety of jobs at Tesla, in strategy, product management, operations, business development, mergers and acquisitions, corporate finance, recruitment, global supply chain logistics, investor relations, even the general counsel’s office. They occupy rungs up and down the company’s management ranks, from Wharton MBA Colby Hastings, who is head of global business operations, to MIT Sloan MBA Jason Choi, who is head of operations in Musk’s energy business.

MBAs Hold Major Jobs At Elon Musk’s Tesla

MUSK’S CRITICISMS REPRESENTED AN ANTIQUATED VIEW OF MBA EDUCATION

More substantively, though, are Musk’s misinformed criticisms. They represent as antiquated a view of MBA education as cassette tapes in cars. What Musk and other naysayers often do is effectively construct a straw man for what is taught in an MBA program and then tear it apart. You know the drill: MBAs are sharp-elbowed professionals who focus on numbers instead of people, product or services.

None of that reflects reality. Steeped in the value of collaboration and teamwork and imbued with a strong view of what it takes to lead others, MBAs are trained to value and rely on the contributions of their colleagues at work. MBAs do not emphasize finance over any other discipline and certainly not in a way that devalues people, product or services. If anything, MBAs bring a sophisticated customer-focus to a business.

If public corporations are still held to quarterly earnings reports and short-term thinking, it’s a function of the mentality of investors and markets—not MBA graduates. Truth is, you can’t build or scale a business without fundamental know-how in business, no matter how many computer science and engineering grads a company hires. Those STEM grads get you nowhere without people who know how to analyze a market opportunity, raise capital to realize it, recruit and smartly manage people, plot guiding strategy, and execute on a plan. That’s the stuff of an MBA education.

A SILLY OBSERVATION: MBAS SPEND TOO MUCH TIME IN MEETINGS?

And what of Musk’s silly observation that MBAs spent too much time in meetings? If anything, well-trained business professionals know how to make the most of an effective meeting. A solid MBA education covers everything from making effective and clear presentations to leading sessions of other professionals to conclusions and decisions.

And if MBAs were of so little valued, why would Musk and other high-flying tech companies hire so many of them? In the last five years, the single largest annual employer of new MBA talent has been Amazon, hiring as many as 1,000 MBA graduates a year. According to LinkedIn, there are now 29,000 Amazon professionals with MBA degrees on their resumes. Microsoft employs 15,000 MBAs, while Google has 12,000 on the payroll. Apple currently has 6,200, Facebook 4,600, and Dell Technologies boasts 5,700 (see below table).

Of course, MBA bashing is often directed at those who seek the degree as a means to entrepreneurship. No matter what field you’re in or want to be in, the critics grouse that an MBA is not necessary for success. They’ll remind you that Steve Jobs and Mark Zuckerberg not only did not have MBAs; they were college dropouts.

IF YOU REALLY THINK YOU’RE THE NEXT STEVE JOBS, DROP OUT AND DO IT

Let me be the first to say that if you think you have the ideas and insights of a Jobs or a Zuckerberg and the moment is right for your brilliant scheme to change the world, then go right ahead and try. Truth is, there are very few Steve Jobs and Mark Zuckerbergs in this world. Over the course of covering graduate management education, I’ve met and written about hundreds of MBA entrepreneurs, all of them understanding and benefiting the knowledge and the contacts they made while in business school. We recently published our second annual ranking of the best MBAs for entrepreneurs, in partnership with Inc. magazine in fact. It’s the result of a months-long study of how business schools are tackling the topic in and out of the classroom as well as latest crop of MBA startup founders.

Suggesting that an MBA is worthless to a 20-something or 30-something entrepreneur is worthless in and of itself. MBA founders will tell you that what they learned in school was invaluable in shifting the formidable odds against entrepreneurial success in their favor. After all, research shows that the startup failure rate runs 70% to 80%. MBA entrepreneurs will tell you how they met their co-founders and angel investors as a result of getting an MBA.

They will also tell you that the professors they had in class, many of them serial entrepreneurs themselves, helped them refine early thinking about a product or service that they could then road test on their classmates before going to market. It opened the door to tens of thousands of dollars in seed capital from their own schools, if not millions from alumni investors who believe in their ideas.

THE TOP TEN MBA STARTUPS HAVE RAISED NEARLY $1.4 BILLION OF SMART MONEY

Unless you plan on buying a franchise or opening a simple business with a spouse, understanding markets and customers is something that would be highly valuable to you. Business is more sophisticated and complex than ever before. Learning both the business fundamentals, along with advanced study in leadership, strategy, marketing and operations can only be of great benefit to you.

Some of the world’s savviest investors are backing MBA startups. In fact, just the top ten MBA-founded startups last year raised a combined total of nearly $1.4 billion. One company alone—edtech company Guild Education launched by a pair of Stanford MBA women—has raised nearly $230 million in venture backing. This is smart money chasing smart ideas at MBA-led entrepreneurial teams at companies founded by MBAs. The notion that an MBA is worthless to these pioneering entrepreneurs is utterly ridiculous.

Sure, Musk is known for his off-the-cuff controversial asides. But when it comes to MBA education and the quality of professionals coming out of business schools, he is dead wrong.

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