A long time ago, I had to make a really tough choice: invest in an MBA from New York University, or make do with my bachelors. I was newly married, had a child on the way, and didn't have much in savings. The degree would set me back tens of thousands of dollars and take years to complete"”especially if I did it part time. And I couldn't imagine doing anything but programming computers for a living. So why learn finance, marketing, and operations management, I wondered? Well, I decided to enroll because my understanding of the business world lacked depth, and I harbored a deep-rooted desire to get the best education possible. My wife and I moved into a small one-bedroom apartment in North Bergen, NJ, and we made do with what we had.
For a couple of years after getting my degree, I wondered whether I had made the right choice. Even though I scored a great job at CS First Boston in its IT department, I was just writing code and designing systems. Yes, I started to enjoy reading BusinessWeek and the Wall Street Journal; but had the financial sacrifice and time away from my family been worth it? It didn't seem to have been.
Over time, I started rising through the ranks in IT. I went from being a programmer to becoming a project leader and then a vice president. I found that I could communicate effectively with user departments and my bosses; I could deliver projects on time; I knew how to manage and motivate employees; and I had the confidence to present business proposals to managing directors and board members. I was even able to help persuade IBM to make a $20 million investment in the technology that my team had developed. We spun off a startup called Seer Technologies, and I became chief technology officer. And that’s when my education really began to pay big dividends.
In the startup world, it’s simply survival of the fittest. You have to involve yourself with almost every aspect of the business"”and use all skills. I would find myself having to develop and manage budgets; help market and sell; hire; assist in setting corporate strategy; and review legal contracts. As well, I still had to develop technology and deal with all the uncertainties and failures that come with a startup.
My MBA classes seemed to fit our business needs like the pieces of a jigsaw puzzle. Even obscure topics like corporate finance came in handy, in IPO discussions with investment bankers and later, in raising capital for my own company.
So I have no doubt that my MBA was the best investment I've ever made, and my education helped me achieve success. Which leads me to the reason for this post: a Twitter debate with Guy Kawasaki, Managing Director at Garage Technology Ventures. Kawasaki argues that MBAs are not needed in the startup world; in fact these provide negative value. He insisted that I was "in denial" when I challenged a piece he had written in Forbes several years ago:
What is the value of an MBA these days for young college graduates who want to start their own company? Probably about a negative $250,000. (I have an MBA, and I was once a young college graduate.) I don’t think an MBA matters very much for starting a company. A much better educational background is an engineering degree. You can always hire MBAs, but if you don’t have the ability to conceptualize and deliver a product, you’ve got nothing.
In email exchanges, Kawasaki explained that his issue with MBAs is that they are "taught that the hard part is the analysis and coming up with the insightful solution". In other words: implementation is easy and analysis is hard. "But this is the opposite of what happens in startups. Implementation is everything in a startup." Kawasaki believes that MBAs aren't a good fit for startups, and engineering graduates are.
I agree that engineering degrees are important. They provide a level of technical depth and analytical capability that is invaluable in the tech-startup world. But not everyone needs to be an engineer. You need smart people coming up with creative marketing campaigns; managing finances; and selling your products. And the CEOs and CTOs need to master all domains.
In my experience, the most successful entrepreneurs have been those with a strong technical background who have been through some sort of "finishing school". (I am not talking about college dropouts such as Bill Gates and Steve Jobs"”I consider them to be outliers). Engineering degrees can be very technical and can actually narrow one's horizons. To innovate, you need to understand customers and markets. To build a successful product"”one that actually sells and makes an impact, you need to understand distribution and finance. So even in the lower echelons of technology, a broader educational background is a plus.
Is the MBA the best degree for engineers? Maybe not. Programs such as the one I teach at Duke may be a better fit. The Duke Masters of Engineering Management program is a one-year program that teaches students marketing, finance, intellectual property and business law, and management. It's like a mini-MBA. Engineers don't need to learn how to price an option with the Black"“Scholes Model, for example. They certainly don't need to learn how to create new types of financial products. There are also many other degrees that can provide the needed balance to engineers. These don't have to be tech or management oriented; even an education in diverse fields such as psychology can be a plus: anything that broadens your horizons and teaches you how to come up with "insightful solutions". The point is that education is the best investment that one can make. Unlike stocks and bonds, education never loses value; and when you add experience, it gains even more value.
Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa
As the founder of a startup with only a degree from an undergrad biz program (wharton), I often wish I had a CS/engineering background. I find that my skillset would be most useful in the idea stage and in the post-launch stage. For now, in the development stage, I have to rely heavily on others for design, architecture and development. That said, the ability to understand how value is created is key in conceptualizing ideas.
I think MBA business partners are often a pain in the arse. They can complicate the startup process by injecting too much paper work. Often they force everyone to participate in the valuation process which shows the company is worth $2.5 million(example) because of the hard work the coders have put into the project. Then soon after this whole process starts people become hyper focused on stock value and all this crap.
After several startups I am now only interested in projects that make money from the first month of going live. The idea is to worry about stock valuation after the company is making money and running in the black.
Perhaps a good Masters degree is Buddhism :-)
They bring in too much process and waste resources on it..
And After all Bill Gates ,Warren Buffet & Steve jobs didn't have a MBA
Not everyone is Gates and Jobs. Some ppl need proper academia to launch their careers.
Too much generalization….Most startups would be lucky to reach the valuation stage, and that has nothing to do with MBA's
You shoulda gone dual with M&T =)
Thanks for making me feel better for losing two semesters' worth of sleep to operating systems and digital design and architecture.
good post, i agree! :)
What would you say about the Google Guys?
I would say, have a quick look at the google jobs website and search on MBA. See how many positions pop up.
plenty of them have MBA degree http://www.google.com/corporate/execs.html Nikesh Arora Laszlo Block Omid Kordestani Jonathan Rosenberg Susan Wojcicki Benjamin Sloss Treynor and others Most of them are in Google from the very first beginning of this company
Google guys didn't need an MBA when they started..But at the position they are in right now, it is well desired..
Not much to say – they took a different route, and ended up hiring a business guy in the end to be CEO.
A business guy with a computer science Ph.D.
I agree with Guy – MBA have a negative correlation with startup success.
Have any statistics to back that up?
Try every major dot-bomb
Actually those dot bombs were successful for the MBAs and early investors, it’s the dumbass public investors who got screwed. They knew what they were doing and succeeded.
IMO, need to be well-rounded & understand all aspects of business–MBA is one way of getting there, not the only way. Where an MBA can be really useful to entrepreneurs is in providing a strong network, as an MBA grad the value is not necessarily in what I learned in the classroom, but in who will pick up the phone when I call. This is only true of about 15-20 schools, I think once you leave the top tier and the clubby networks those schools provide, the degree loses much of its value.
"Where an MBA can be really useful to entrepreneurs is in providing a strong network, as an MBA grad the value is not necessarily in what I learned in the classroom, but in who will pick up the phone when I call. This is only true of about 15-20 schools, I think once you leave the top tier and the clubby networks those schools provide, the degree loses much of its value."
I agree – the price tag at a top ten MBA program affords an unbelievable network. Many or most of us don't have the luxury of having a well established network directly out of undergraduate school. Of course there will also be the outliers… jobs, gates, zuckerbergs, etc. But this is far from the norm.
i definitely agree. A deep understanding of how your processes at your start up work is essential for your success but how you gain that knowledge doesnt matter as long as you have it. the network is then what leverages your knowledge. for a while now i am actually professionalizing my way of networking. i use my website that is tuned to encourage the right people to get in touch with me in order to pursue new opportunities. when i meet people i try to figure out where their strengths are and if we have a common base to build something like a business relationship on it. it doesnt work from now to then but seen over a period of time it can definitely yield benefits…
Vivek – I agree with your sentiment. The original argument itself is a little misguided – Is an MBA a plus or minus? I can't see an argument for how additional education and interaction with other smart students could ever be a negative on its own merits. Now, if the argument is made that "something else" is better than an MBA, we can argue and there are two sides to that argument that can both be right.
I also agree with Guy's point that MBA programs emphasize analysis – but they are academic institutions and this is true for most academic pursuits. The onus is on the students to understand that bias given their context as a student. Not all MBA students have this view of the world and it's not MBA programs' fault if they do after graduating.
Companies require the skills that MBA programs teach – look at the number of schools and escalating tuition, there's clearly demand. However, startups often require different additional skill sets, namely more of a focus on product development. Therefore, an MBA grad without the focus on product dev is not a good fit at that stage. However, an MBA with the product dev skills would seem the perfect fit, and further, a better fit than just an engineer who's limited purely to product development.
It's easy to generalize, but as always, it comes down to the individual and their specific experiences (not just their 1-2 yrs of grad school).
(Disclosure: I'm both an engineer and MBA grad)
Totally agree. Its more about the individual, and how they utilize their engineering degree or MBA degree. But if you're a VC looking for "pattern recognition", then I can understand why you'd focus your time on entrepreneurs with engineering degrees over MBAs – but that's not necessarily the right thing to do.
I'm also from an engineer & MBA grad.
I agree with both Vivek and Guy Kawasaki. If you are a Techie and already into start up world, with your first or second venture, you may focus on your Start up rather than MBA, I guess.
So it depends.
The degree is irrelevant. You might have a great coder who has a doctors degree in computer science, and you might have an even better coder who has never had any formal education. Likewise you might have a guy who holds an MBA, but is absolutely useless when it comes to actually doing things, and you might have an MBA who's the most savvy business man you ever meet.
Good people will succeed and be beneficial in a startup, regardless of their degrees. What's on the paper is irrelevant.
I achieved 3 degrees in math, business and physics and I have to say that this notion is very close to the truth. the quality of the persons character will drive business success, not the ability to price an option using black-scholes (which any good engineer can implement in a day by the way).
almost nobody in my entrepreneurial career cared about my education and skills; only delivery and implementation seems to get people on board.
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