Says the guy with an MBA.
> they are more valuable in keeping large, mature organizations up and running than Joe Nerd and his series of weekend projects
this is the same premise as the article. who says an organization has to be large to be successful?
The people who invested in it.
i believe the technical term would be ROI otherwise known as rate of return not the rate increase of the rate of return or ROI.
an investor who demands constant growth in their rate of return on an investment is either irrationally optimistic or stupid.
The most important measure is arguably NPV (Net Present Value) because it takes in to consideration the size of the amount of money you get back after adjusting for the required rate of return.
As an extreme example, imagine if I gave you the option to get a 1000% on a $1 investment. But, the entire investment could only be $1, in otherwords, you couldn't make a $1,000 investment and get $10,000. The most you could make is $9.
Now, imagine if I told you there was a 3% chance that you would loose 50% of your money, and a 12% chance that you would get just your money back and an 85% chance you would make 1,000%!
On the face of it, it sounds like a good deal, you have a really strong possibility of making a 1,000% return and a really small possibility of losing some money.
But, what if I told you that it would take you 10 hours to figure out whether my return estimate (1,000%) and probabilities, 3%, 12%, 85% were accurate? Would it be worth 10 hours to make $9?
Obviously it wouldn't unless your current hourly wage were less than $1 an hour.
That is one of the reasons VCs do not invest in businesses that don't have the possibility of becoming huge. There is really no reason for them to spend the time on figuring it out. It is also the reason that in order for a business to be "successful" the people who invest in it, must end up owning a part of a very large business.
Small businesses can be successful for the individual entrepreneur, but they are not investable.
Also, you don't become a CPA from just doing an accounting undergrad, you also have to have work experience in public accounting in most states. But, I do agree that you don't need an MBA to read a balance sheet. A few months of self study should allow you to understand the basics of financial statements. A few years of working with them will get you pretty good at analyzing them and may even give you the experience to construct them.
^ ---- by VC's
well that's a good way of explaining the VC's perspective on what to invest in. whether that is a wise and sustainable strategy or good use of resources or not is a different matter. But in present company you will win that argument. Doesn't make it true though.
On CPA's I wasn't implying that all you needed was an undergrad to get it you have to take the state exam at least. I was attempting to prove an mba is not required to make some sense of financial statements because it seemed that is what MisterBastahrd was implying.
An MBA is really an introduction to a lot of different business topics rather than helping an individual master them (bad name IDK?). In business/life etc. it is as important to know what you don't know, i.e. that you are shitty at accounting, or that investing is a very deep knowledge business etc. than almost anything else.
An MBA really helps you learn what you don't know so you can study it later. Accounting is complex and to be really good at it, it takes years to master. Reading a balance sheet is straight forward until you realize that you don't know exactly how everything on there got there and you don't know how the statements link together, nor do you know what a healthy balance sheet looks like over a non-healthy balance sheet etc.
Technologists on HN wildly misunderstand the world of finance and business just like we misunderstand the world of programming.
I comment on business topics and read without commenting on technical topics. I can't imagine hiring someone without an MBA for a business position unless it was really basic or unless they had deep experience in the same field. An MBA can seriously jump start business knowledge. Getting one in your mid to late 20s is a huge help at that point in your life if you are interested in business.
Its pretty scary that a little gaming decades ago puts me ahead of at least the absolute bottom of the CEO barrel. It would be like discovering that a couple hours playing Doom and Quake put me ahead in tactical skills of at least one SEAL team member. The amazing part NOT being my minimal skills, but the amazing part is the bottom of the barrel of "famous major real world players" is so incredibly deep that my minimal skills none the less easily beat theirs.
The other weirdness is I spent about $50 and a couple hours (well, maybe dozens... it was fun) playing a game and that boosted me into the low percentile of CEO skills. Apparently I would be well qualified to run an absolutely bottom of the barrel startup as CEO into the ground, and instead of spending $150K and thousands of hours to learn that, I just played a game for awhile. The financials and time investment must depress the guys who graduate at the bottom of their MBA classes knowing less than I know. That weirdness is an interesting aspect of tech/gaming/computers in that most people pay attention to the highest achievements but the effect on low end is also important and not discussed enough.