Could a Harvard Business School degree hurt more than it helps?
Entrepreneurial-minded people often face a point in their career when they are forced to consider the following question: Should they break ground on a new company or take time to refine their business technique and build out their networks at B-school?
At a Harvard Business School conference last weekend, however, closing keynote speaker and founding partner at VC firm Social+Capital Partnership Chamath Palihapitiya delivered students who had chosen the latter path a jarring message. Recorded DealBook:
It's really unfair to you guys, but I think you're discriminated against now ... I would bet a large amount of money that the overwhelming majority of us would not look favorably on a company started by one of you.
Quite tough love, but might the VC’s controversial statement have merit?
To see if Palihapitiya’s statement holds up against data, it’s possible to turn to research conducted by Aileen Lee for her viral list of ‘unicorns' – slang for the 39 tech companies founded since 2003 valued at $1 billion or more by private or public markets.
Only 12 of those 39 companies had co-founders with MBAs, and only three companies from that group had at least one founder who attended HBS: Yelp's Jeremy Stoppleman (who dropped out), Zynga's Mark Pincus and Gilt Groupe's Alexis Maybank and Alexandra Wilkis Wilson.
It’s important to note, however, that this probably isn’t a voiced prejudice against HBS students in particular; rather, it’s one that investors might hold against all business school graduates, no matter the ranking or the esteemed alumni, clarified Fortune’s Dan Primack. Referencing Lee’s research, Primack wrote:
For venture capitalists who pray at the altar of pattern recognition, it would be hard to ignore how few massive tech successes have been founded by entrepreneurs with MBAs on their resumes. In fact, Palihapitiya could have made the same comments at any other business school in the world, including Stanford.
In last week’s BostInno Beat, Streetwise’s own Greg Gomer contributed his opinion on the subject, standing proudly in the startup corner of the debate:
Listen, if I wanted a $100k, two year vacation I would go to business school. In fact, I'd love to go to business school to meet a ton of new people and party like a UGRAD. But I want to start companies and build shit and a school environment is just not the place to do that. Don't get me wrong there are incredibly smart people in business school, but they're in business school to learn how to start a company not to start a company. Starting a company requires a different type of education.
Learning how to start a company, and actually starting a company, both provide educational experiences, each furnishing an individual with applied business skills and expanding his or her’s professional network. We discussed the so-called "death of the MBA" in 2012: For those who pursue the startup path, the role played by accelerators and, ever increasingly, by online or individual courses, can play a significant role. For those that select the institutional path, the school’s alumni network and unique strengths of the curriculum should be strongly considered.
Back in 2012, HBS professor Tom Eisenmann explained to BostInno that those two-years in the classroom shouldn’t be a huge setback for entrepreneurs. Eisenmann admitted that, though Harvard’s first-year class load might be more rigid, the second-year curriculum is flexible, affording ambitious students the freedom to pursue business ideas. With classes and homework to complete, the company may not accelerate as fast, but it depends on the end-goal. Is this simply a side – or even assigned – project, or is it a serious endeavor?
But could a school environment perhaps serve as a preferred launchpad for a company? Universities often offer a fertile ground for ideas and broad user base, not to mention a network of mentors via professors and alumni. Rob Biederman, a second-year grad student at HBS, seems to have found the Ivy League business school a fitting start for his venture, leveraging a resource that the school has in plenty – talent.
While in Professor Clayton Rose's first-year required FIELD course, Biederman and classmates Peter Maglathlin and Patrick Petitti were handed $5,000 and told to go start a business. What began as a class project spiralled into a startup called HourlyNerd, a platform which helps match companies like Microsoft and American Apparel with MBA students who can place competitive bids on various consultory tasks. The platform sparked the interest of Dallas Mavericks owner Mark Cuban, who invested $450,000 in the company back in September. Since its inception in 2013, Hourly Nerd has raised a total of $750,000.
Said Biederman in a statement to BostInno via email:
Having learned a tremendous amount at HBS – particularly specific, tactical guidance on sustainably growing a new venture – I was disappointed, but not surprised, to hear about this. I agree that there's no substitute for on-the-job, real world experimentation and learning. And certain MBAs (not just HBS ones) have definitely brought some of this on themselves, with a bias for pontificating over action, managing over executing, talking over doing, etc. But I find it hard to believe that learning a cogent framework around marketing, sales, and strategy from a world-class faculty – most of whom that have real-world experience – can't make an entrepreneur more effective in creating a sustainably differentiated enterprise.
Another HBS grad and local founder (who asked to be kept anonymous) echoed Biederman’s notion, adding that attending business school equipped them with a valuable, yet perhaps limited, lens through which to view enterprises:
I feel an MBA provides a solid foundation of leadership, financial management, marketing and operational skills from which to build on as an entrepreneur. It would be difficult to get the same foundation or breadth of business knowledge from narrow, junior roles at larger companies. Even more notably, however, an MBA provides access to a large network of high potential business professionals. This network can be leveraged for guidance, industry knowledge, sales leads, introductions to potentials hires, partnership opportunities, etc.
In other words, a strong framework, particularly one provided from HBS, is better than nothing when beginning a company. Yet little can prepare an individual for the demands and the ways in which he or she will be tested whilst in the early stages of an enterprise. That’s where that MBA framework – and network – are often put into application.
Perhaps a business degree, then, is what you make of it, MBA-less Google Ventures Partner and Co-founder of Android Rich Miner told BostInno:
I have certainly seen some people work their MBA alumni networks very effectively. For others, it can likely round out some holes in their education. My approach, and one I sometimes preach, was to join a few startups and get on-the-job training. If you choose wisely, it can be a better approach. I don't have any regrets for having gone down that path.
Not everyone plans on breaking free of business school to go start their own companies. Those that do, however, will be well-equipped — but may not quite have the experience that comes from time in the entrepreneurial trenches as someone who has toiled in a few early-stage startups.
What do you think? Let us know in the comments below.
Image via NYMag
