Why having an MBA is a negative hiring signal for startups (2012)
daltoncaldwell.com
daltoncaldwell.com
If you're hiring, particularly in a startup, you owe it to yourself and your company to carefully consider qualified applicants. Yes, hiring signals exist, but all signals are not equal. Placing too much negative value on a person achieving a Masters degree can easily turn out to be a mistake.
I also don't buy the opportunity cost argument. Does the author examine every line of every resume to determine what the applicant could have been doing instead and gives the best score to the applicant who left the least on the ground? Or is this pedantic behavior executed exclusively on MBAs, because they deserve the stereotype?
I question the value of yet another article like this. It's just amplifying the noise in the echo chamber. The author states he knows several MBAs who have worked at or founded successful startups. Why not write about that instead of rehashing the same, dull, unsupported claims?
Why? none of the reasons in the article.
I'm a code monkey, I've been coding for over 30 years. But in my career in IT I've found that the hard problems are not the tech problems. The hard problems are the people problems, and most of them derive from communication difficulties between the finance/biz world and the actual implementation required.
Finance and biz types are not going to learn to code, because whatever. So if anyone's going to solve the communication problem it's going to have to be me, by learning finance and biz speak.
I wouldn't recommend it for everyone. But it's doing the job I intended it to do. I find that just the knowledge that I am studying an MBA has a dramatic effect on attitudes around me; I'm no longer just a code monkey technician type who isn't qualified to have an opinion.
The author also said we'd find counter examples. I still agree with the author for most MBAs having come out of traditional programs, for MBA holders which do not have an engineering background.
At the time I was technical director for a online service so already pretty business aware.
It helped me to fill in some of the gaps in my knowledge but most of all it taught me how to think - how to hold two opposing ideas in my head and work out possible solutions, it really helps to pick ideas and arguments apart and look at the alternatives.
Nearly ten years on from my MBA, I'm still doing hands on technical work and enjoying it but I also can talk to anyone from development, ops etc. right through to board level execs in their own language and that works wonders.
MBA: bad, PhD: bad, I get it. CS-degrees are horrible because you could have build an entire company in the time it takes to get one of those post has to be around the corner.
Those MBA folks are too dumb to understand that startups are different than big corporations (or in other words they can't pick up any of the lean XXX books and read the first 10 pages). Amazing that evil Wall Street is willing to hire such morons let alone pay them enough money to be too demanding on average. Those snobby old MBAs and their entitled friends, those networks could never be useful either.
Putting a disclaimer at the beginning of a post doesn't turn it into less of a rant.
Supply and Demand
There are some basic supply and demand issues for CS graduates. On the supply side, a surprising number of jobs are at angel and venture-backed startups that are burning through cash to pay "market rates" for engineering "talent" and likely won't be around in five years. On the demand side, while there is currently significant demand for candidates with CS degrees, if you didn't graduate from a top CS program and/or don't excel at FizzBuzz, your options may be limited.
Entitlement
CS graduates think of themselves as special snowflakes, future Mark Zuckerbergs, worthy of extremely high compensation and authority.
Misguided Thinking
"CS thinking” involves putting all of the value in technology and then, when it doesn't sell itself, scrambling to find a "growth hacker" who can take it to market. When that fails, "lean startup philosophy" suggests that you pseudo-scientifically iterate over and over again until your angel investor's money is depleted.
Selection Bias
Because building functional CRUD applications that offer value doesn't require a CS degree, it really bears examining a person's motivation for getting one. Was it because he or she is more interested in the theoretical than the practical? Is the individual going to make decisions based on what is best for the business or on what technology or approach is sexiest? Will he or she be able to compromise when business needs dictate compromise?
Limited usefulness
How many startups ever need someone who can reproduce common algorithms that every popular programming language has functions for?
Opportunity Cost
The time someone spent getting a CS degree was time they could have spent actually developing domain expertise.
This is in a country with a pitifully low literacy rate.
Both my wife and I are very luck - we both have MAs in English (she focusing on rhetoric and I on technical communication) and we each landed great, full-time employment in our fields.
Still, we have friends with similar degrees and focuses that work in the same jobs they had when starting college, or worse are without employment at all.
I am not going to argue about importance of each field. But computer (and technical) illiteracy is very high as well.
It turns out that if you're motivated and smart then there's a great deal that you can do with an English degree (disclosure: I earned an MA in English). But that's true for all degrees.
Unfortunately, few people will sit down and tell a new student that all degrees, rather than just humanities degrees, are basically worthless if you don't do professional development and networking. My degree wouldn't help me at all if I hadn't impressed important people and made them remember me. That way they can give references and recommendations. But the same is true for CS degrees, MDs, and pretty much anything that's worth doing.
That's just MOO.
As the author points out, there are exceptions to what he's saying (as with most things), but if something is an observation (or stereotype) of a measurable portion of a group, I find that to be of value when taking things into consideration and 'grokking' the world. It does not mean to ignore conflicting evidence.
How would you propose he provide 'facts' to back up what he's saying, When you provide no facts to counter what he's said? Agree with ricricucit that his experience in the field is sufficient facts for me (also helps I have similar experiences in the field, and so concur with his facts)
And providing facts to back his opinions wouldn't be hard if he was serious about making good points.
"Given that a high percentage of business school classes funnel into Wall Street and multinational corporations, it’s also a given that any top-tier MBA has classmates are all making ridiculously high salaries and have extremely powerful jobs" --> Really, what's the percentage? Do most MBA grads get "ridiculously high salaries"? How about doing some actual research and backing these opinions with facts.
For example - http://poetsandquants.com/2013/08/15/mba-pay-hbs-vs-duke-tex...
Points out that the median salary for Harvard MBA grads is only $120k, hardly what I'd call "ridiculously high". Duke and Texas are even less. You see, my argument is now much better now that I've provided a fact, rather than throwing around a baseless opinion.
2."any top-tier MBA has classmates" means that _not all_ MBA grads have ridiculously high salary.
3. i can ensure you that 120k as an average salary, for anybody working in a startup (the word "startup" is in the link title), might be considered "too much" although it depends on where the startup is. Considering the fact that he doesn't mention "USA" or "Harvard" you'll have to consider much more than that portion (so you didn't actually provided any fact, but just learned how difficult could be to prove it).
With this said, i personally see a "comparison"...so "ridiculously high" might imply "compared to what an MBA grad might make per year in his startup"...which (for a person that feels special) can result into a "probably i don't earn enough" kind of thoughts. I think that's why, i believe, you find that sentence inside the paragraph "Entitlement".
Opportunity cost...? What makes having a B.A. in Psychology not a negative hiring signal too? He could have been getting a business degree which would have helped him know more about accounting! Etc.
Feels like a pretty silly argument. An MBA is generally going to be more likely to be successful than a non-MBA in running a business, startup or not. It might not be worth the kinds of salaries an MBA would demand, but a negative? Feels a bit anti-intellectual. More knowledge is always better.
It goes without saying that the opportunity cost of a dual major in Psychology is extremely low (i.e. a few classes) if your primary major is already Symbolic Systems - a degree which integrates CS and psychology.
> in running a business, startup or not.
Saying that an MBA will be better at running any kind of company, implying some sort of equality between the completely different challenges of startups and normal large companies kind of undermines the credibility of this argument.
But then the MBA is not a negative signal, it's just not as strong a positive signal as two years of relevant experience.
The MBA is only a negative signal if between two people who are exactly the same except for one of them getting an MBA 'on the side', you'd pick the one without.
It is a negative signal. The BS in Symbolic Systems on the other hand, is a pretty positive one that more than compensates.
Dalton's full of shit.
I could just as easily write a diatribe about developers who think of themselves as special snowflakes, future unicorn founder/CEOs, worthy of extremely high compensation and autonomy, yet have zero clue about business, can't deliver a finished product to save their life and have no appreciation for the importance of usability when it comes to creating a product aimed at users who don't have a CompSci degree.
During my stint as CTO of a dot-com back in 1999/2000, I realised that there was a lot I didn't know about running a business, strategy, marketing, business development, finance, cash flow planning, accounting, cap tables, negotiation and all the other little things that add up to a successful venture. So, I decided to go to business school. But guess what? A lobotomy wasn't on the curriculum. I can still knock together a shell script, tail -f a logfile and pipe it through grep, get some vague clue about why something crashed by casting my eye over a Java exception error, and make a lazy developer deeply uncomfortable when he realises that - would you believe it! - this particular MBA actually knows what exception handling is and wants to know why the fuck we're not doing it.
Going to business school and getting an MBA added many new arrows to my quiver but it didn't take any away. It didn't narrow my horizons - it broadened them. The idea that an MBA can never be of any value to anything other than a large corporation is as ridiculous as the idea that a coder who learnt Java and the Waterfall method at college will never be able to learn Objective C and cope with Agile. True, some won't be able to but that doesn't mean that all won't.
MBA curricula are often perceived as out of date because the content must be approved as part of the academic accreditation process. As a result, they often don't incorporate the latest business methodologies. Whether that's a good or a bad thing depends on whether the latest business thinking is merely a fad or something that will last as long as Clayton Christensen's theory of disruption. But, either way, graduating from business school doesn't mark the end of the learning process. My copy of Eric Ries' "The Lean Startup" occupies the same shelf as "Strategic Management" by Saloner, Shepard and Padolny, "Let Me People Go Surfing" by Yvon Chouinard, "Against The Gods: The Remarkable Story of Risk" by Peter L Bernstein and John W Mullins' "The New Business Road Test". My last two Kindle purchases were Brad Feld's "Startup Communities" and "Four Steps to the Epiphany" by Steve Blank.
Dalton claims that, "to an MBA Strategy > Implementation" but it's truer to say that, to an MBA, Strategy comes before Implementation. To do the reverse, implementing blindly and pivoting wildly, is akin to blindly throwing darts at a dartboard - eventually one of them will end up in the bullseye but that isn't necessarily proof that the thrower is anything other than lucky.
Dalton's entitled to his prejudice. If he wants to take the shortcomings of a subset of MBAs and apply those as a stereotype across the entire population, that's his prerogative. However, to make broad, sweeping generalisations about someone based on a single fact - whether it's the fact that they have an MBA, what school they went to or the colour of their skin - is pretty foolish because the exceptions will bite you on the ass. For every lame MBA, there's a Sheryl Sandberg or Alexis Maybank. For every team of MBA founders with all the strategy and no product, there's a Matthew Prince and Michelle Zatlyn, who came up with the idea for CloudFlare at Harvard Business School[1], or a Neil Blumenthal, who attributes much of Warby Parker’s success to his and his co-founders’ experiences at business school, which Blumenthal described as "the most helpful and useful of any of my educational background."[2]
And, for every lame MBA, there are likely dozens of developers who scoff at the notion that building a successful company requires anything other than the ability to code, and certainly none of that crap they teach you in business school. Of course, if that were true, we'd have many more billion-dollar startups and far fewer founders making schoolboy errors that could have been easily avoided.
Maybe if Dalton had taken a few classes in strategy and marketing, Wired wouldn't be writing about "The Great App.net Mistake".[3]
[1]: http://www.cloudflare.com/our-story
[2]: http://pandodaily.com/2013/08/29/warby-parker-the-result-of-...
[3]: http://www.wired.com/gadgetlab/2013/08/the-great-app-net-mis...
Be constructive and civil. Instead of congratulating yourself for the transitory sadistic, self-righteous pleasure you obviously derive from making the developers you hired "deeply uncomfortable," try working with them. Teach them exception handling if you know this. That would demonstrate a collaborative team spirit.
Update: I was downvoted, as expected. In that case, I neglected to add "offensively smug." The humorless business attitude of dog-eat-dog with a facade of righteousness is here to stay.
Let me rephrase your comment to something you would approve of:
---
>this particular MBA actually knows what exception handling is and wants to know why the fuck we're not doing it.
It's not fun to be berated at work in front of colleagues, and the purpose it supposedly serves can be accomplished by taking the role of mentor, not drill instructor.
Don't you think that's a bit harsh? It's a bad mistake for a coding expert to make, but perhaps coding wasn't their first skill, or they had a bad teacher. Call them out legitimately with their faults, let them know that certain best practices are required, and move on. Or even better: If the organization is large enough, have a coding standards document in place, like the Linux kernel and other large software projects do.
The fact is, only the people actually implementing a project can know what the reality is. There are times when a technical tradeoff gets made (for specific example, turning exceptions off entirely in C++ is actually pretty widespread for various reasons, good and bad). Sometimes, that tradeoff may even be wrong in hindsight - a legacy of an earlier iteration that there was never budget to correct.
In that sort of situation, a technical person on the outside of the project trying to be helpful can come across as annoying. They are likely telling you what you already know.
However, many of these problems actually originate in people management land, and need a people management solution.
For instance, I think a lot of projects mess up because they are trying to achieve too much with too little budget, or because no one with the right skills for a particular task is on the project.
The people manager needs to solve those problems. It takes an unusually humble programmer to say 'Hey, I've mostly worked in python, and now I'm needing to write all these C++ modules for optimization, I'm in over my head'. If the people manager can understand his skill gaps and hire to fill them, that's really valuable.
Similarly, if you need to explain to your boss that 'In hindsight, the way we are doing this won't scale. I need a whole lot of money to rewrite, and you won't see a single new feature for a month', it's going to be a much better conversation if he has understood how and why things got that way, rather than feeling a betrayal of his trust in the guy who's job it is to understand tech stuff.
So, being able to say 'we should be handling exceptions' is important, but as a people manager, it is actually probably your fault. They are probably not doing it because you insisted they implement 'that important feature absolutely by next week'. If you are in charge, it's worth remembering that at some level, it's usually your fault.
BTW: that would have also proven the fact that there is no such a thing as "special snowflake".
As a self-taught programmer, I tell people wanting to get into software development that it's definitely not something you have to go to school for, and that the best programmers I've met are those who are always taking the initiative to enrich their own knowledge, and not those with the most academic degrees. In my experience, number of personal projects is a better indicator of the quality of a developer than GPA in CompSci classes.
Of course, being the CEO of a multinational corporation or a software developer on critical banking infrastructure is different than running your own 5 person business or developing alarm clocks for your phone. At what point does one really need an MBA to further their business development, and why did you believe you had reached that point?
Depending on your focus an MBA is a very broad program, well suited to running a business. My particular focus and program wasn't on high finance it was very focused on the myriad of skills needed to run a business I learned marketing, financial accounting, and operations - heck even shipping logistics in one or two classes each of 3 semesters (I did a night program). Appropriately used an MBA is almost a bootcamp for CEOs. I got a lot of very valuable information. As my small dev shop grows I constantly lean back on some skill or bit of information I picked up from my time in my MBA. Things like being able to project cash flows to know when I can't make payroll to all the science behind effective interviewing. There's a lot that goes into running a business that you can learn in an MBA program.
In business decisions, there is no test bed. Your choices play almost exclusively in time, money, and human capital. You can definitely try to self learn in that environment, and many successfully do, but it's a lot easier to screw up to the point where you can't continue.
You don't need an MBA to further your business development. It helps, but you can simply surround yourself with experienced people (and learn from them).
You will only get out of the MBA what you put in. Where it can be valuable is being exposed to other professionals who are taking the MBA who will share their own experiences related to whatever you're learning. For example, if you're learning about contracts, you'll hear what other people in the program have gone through and get more context of how things apply in varying industries.
But keep in mind, an MBA isn't some mandatory thing to succeed in business. I had a few key valuable takeaways from my MBA program, but I also don't think that made me any better in business, but it really depends on your exposure to things like accounting, business law, etc. from your work experience or prior education.
Startups need the former. Established companies need the latter.
I personally like, and agree with, Guy Kawasaki's formula for pre-money valuation of new companies:
pre-money valuation = ($1M * n_engineers) - ($500k * n_MBAs)
Generalize much?
Most MBAs have undergrads from a wide array of backgrounds, from liberal arts to engineering. Most MBA programs provide some useful education in areas like finance, business law and entrepreneurship, but you don't become a process geek from the curriculum unless you're already a process geek and choose to focus on process oriented courses.
The MBA is usually there to augment existing work experience and education. Most grads just go back to whatever profession they were in armed with a better business context for how things work in whatever industry they're in.
If your experience with MBAs is all about process creation, it says more about the people who hired the MBAs in those companies than it does about MBAs in general.
His startups could have failed for any number of reasons, and even the best strategy and implementation and ideas and people cannot guarantee a success. Nothing can.
Regardless of what I think of his opinions or ideas, I respect this man's attempts at starting his own endeavors, as I know firsthand how difficult that is.
You can also judge an idea around which a startup is built, but that's a tricky game. Should you do so, however, you would not be criticizing this man's strategy or MBA insights.
"MBAs are bad for startups" or "Dalton Caldwell is full of shit" or "All of parent poster's startups have failed; why should we listen to him?" are not useful conclusions. Exactly what actionable intelligence have you gained from them, other than the fact that you have gained no actionable intelligence? If you take "MBAs are bad for startups" at face value, all you do is disqualify a number of candidates who might otherwise be good. If you take "Dalton Caldwell is full of shit" at face value, all you do is disqualify a bunch of information that might come in handy at some point. If you take "All of parent poster's startups have failed" at face value, ditto.
Rather, the useful information is in the supporting details. You can take Dalton's statement that "MBAs think they are beautiful, unique snowflakes that must be better than their peers", and then when you're sitting across the interview table from an MBA, determine whether this MBA believes he's a beautiful, unique snowflake. You have a lot more information at that point, namely his answers to the interview questions, his past work experience, and just the general vibe in the room. Similarly, you can take the parent poster's assertion that he learned things with his MBA, but that doesn't take away from his basic technical skills, and factor that information into your evaluation. It's about having multiple perspectives available to you to decide a specific situation, not about drawing broad conclusions that are ultimately useless.
You're exactly right in that if success requires both competency and luck, then having succeeded means you were competent, but failing doesn't mean you were not. Depending on how much luck is required, failure can be either a fairly strong signal for incompetence or pretty much negligible.
This is very easily proven from the bayesian theorem.
To see why, let's take strategy. You seem to think that strategy is developed in the abstract. However, for startups, you need to be fully engaged in the day to day struggle of your competitors, customers, employees etc. From this up close reality you get a feel for the edge/secret that you have. That edge/secret forms the basis for your strategy. There is no optimal strategy out there. You can't think hard and come up with it. You need to work day to day and fit something that works for you in that particular time,customers etc. This ground reality/state of world and how you are single best suited to take advantage is the biggest power you have over incumbents. Not knowledge of some old case studies or porter's framework, ability to do SWOT analysis or whatever the latest framework is. If you are successful you will be the case study 10 years from now in a business school. At that point the frontier has moved on. Specific to Dalton, if I were to do something in social/music oriented business, I would take his competence over any ivy league MBA. Mostly because he has that ground reality in his head.
Yes, there are basic business rules and concepts that you need to know, however spending two years for an MBA is an overkill for a startup. Truth be told, you come across as exactly the arrogant MBA people like to make fun of. You didn't fully understand the point. Made some silly non-arguments which are abstract and irrelevant and to top it off made some bold statements about your capabilities which had the opposite effect (you can tail files and pipe to grep and are proud of that, really? c'mon man).
Supply and demand: He says there are more MBA's chasing jobs than there are suitable jobs. That's fine: lower your salary or raise the hiring bar - it doesn't make any individual be worth less.
Entitlement: As an MBA, I'll agree with this peer pressure but I might argue that it can be a good thing being pushed to be more successful. How that plays out in team dynamics depends on the individual, some MBA's are team oriented some are not (like some developers!) - select in the hiring based on the role you need.
Misguided thinking: this one is totally wrong. Strategy should always come before implementation. Lean is a strategy, so if you are doing lean then it just means you've chosen that as your strategy. My MBA taught me strategy was on ongoing process, exactly as you describe above, not a rigid fixed powerpoint. An MBA teaches you tools to run this process (allowing you to see opportunities beyond lean for instance)
Selection bias: I agree with this point, but again it depends what you are looking for. Understand the person and their motivations, and make sure they fit with your team. True as much for an MBA as for any other role.
Limited usefulness: More than anything an MBA teaches you a way of looking at the world, more than facts and figures. It does mean you can read a term sheet and plenty of other things. Could you learn more online or by doing? Maybe, but the skills are valuable especially if you get a company to the point where it can scale with product market fit (I'd agree it doesn't help much getting to that point).
Opportunity cost: For me a career is a long time, two years at the beginning doesn't matter much. Could a CS masters or design masters be more useful - for the first phase, getting to product market fit yes - but not longer term.
However, he merely said that it is a negative hiring signal, and on this point I must agree with him. For a good majority of MBAs I know, the degree is either a way to move into a business-oriented role, or a way to get out of their current field and into something else (usually from tech, into banking or consulting). There is nothing wrong with that, but it's not exactly an entrepreneurial mindset, which is what you want at a startup.
If a company doesn't hire me just because I have an MBA, but am a great fit otherwise, I would consider it their loss. If they consider my MBA a negative signal that turns out to be insignificant once they get to know me better, I would certainly understand their initial mindset.
Big news, huh?
Just like a degree in computer science teaches you the inner workings of a computer, a degree in business administration teaches you how to run a business. How can that knowledge be invaluable in a startup?
I do believe that certain segment (including the author) of the population has a strong negative bias against MBAs but majority aren't... Most mature+experienced tech founders understands the value of an MBA degree and even if they don't, they treat it as any other degree...
--I had to re-choose my co-founder because I found this to be an exact fit of my situation. The person with the MBA felt entitled to everything but would not do any of the hardcore work involved. In fact, at Columbia U, I know tonnes of MBA students and they all have the same characteristic described in Dalton's article.
$$$ glisten in their irises whenever they talk about startups. For me, someone who has no MBA and would not get an MBA if it were the only academic degree on the planet, a startup is about the 24/7 work involved to create and nurture a good, innovative, useful and interesting toy that can do big things for other people. But that is why in the world, we need a million flowers blooming. People are supposed to be different. Variety is good. But as an initial co-founder, someone with an MBA--chances are--isn't the best choice, according to my experience most humble. : )
Ironically he recommends a Masters in CS over an MBA and then talks about lean startup philosophy, a philosophy that places business development and product management above development.
An MBA doesn't invalidate their previous experience. An MBA doesn't specialise a person or decreases his/her usefulness to only C-level positions (quite the opposite in my opinion, as they often acquire additional skills). An MBA doesn't make you a strategy guy/girl per se or makes you less an implementation person.
Apart from the social pressure one -might- experience because of their achieving peers (and maybe even the financial pressure to pay off their debt), I only believe it increases a person's skills (be it soft, finance, ...)
Eventually, it always boils down to peoples motivations to join X or Y. An MBA should at most encourage you (the recruiter/hiring person/... to ask some other questions during the hiring process.
Next in the series I expect:
"Why having worked for McK/BCG/Bain is a negative hiring signal (for startups)"
"Why having investment banking experience is a negative hiring signal (for startups)"
"Why having studied law is a negative hiring signal (for startups)" ...
http://www.quora.com/Management-Consulting-and-Management-Co...
Now that that is out of the way, let’s get to the point: If a person has a particular skill-set, experience, personality & undergraduate education, that person choosing to buy an MBA has the net effect of the startup market valuing that person as being worth less, not more.
Why?
Supply and Demand
There are some basic supply and demand issues for MBAs. On the supply side, there is a surprising abundance of people with MBAs who want to work at startups. On the demand side, a candidate with those three little letters on their laptop will need to be vetted more closely and will be automatically isolated into a small number of highly-specialized potential roles.
Entitlement
Apple trains people to think of themselves as special snowflakes, future masters of business, worthy of extremely high compensation and authority. Thus one primary motivation of an MBA owner is to secure their own massive salary, stock and title… and this motivation is diametrically opposed to the psychological makeup of a successful startup team-member. Given the social pressure MBA owners must feel from their coffee shop friends, we can’t really blame them; it’s human nature 101.
Misguided Thinking
In my opinion, the lean startup movement, startup genome project, etc have roared into existence as an antidote to "MBA thinking." "MBA thinking" involves putting all of the value in high level design, which is then rolled out to underlings who are responsible for actual implementation. In other words to an MBA owner Design > Implementation.
Lean startup philosophy suggests all of this design stuff is misguided bullshit, and rather you should personally build things as quickly and as cheaply as possible then scientifically iterate over and over again. To an early stage startup Implementation > Design.
Selection Bias
It really bears examining a persons motivation for getting an MBA. Was it so they could skip ahead to get rich? Because they wanted to be powerful? Because they hated their job and showing off in coffee shops was a good way out? Because they originally wanted to work at 37 Signals but are only now considering your startup because they heard that your're building the successor to Ruby on Rails?
Limited usefulness
If someone is on a startup career track that is in design or high-level architecture, an MBA makes a lot of sense. For instance, a smart startup founder might want their lead designer to have an MBA. But how many startups ever get big enough to need a lead designer? How many high-level design gigs are actually out there? This is a very shallow pool to swim in.
Opportunity cost
The time someone spent getting an MBA was time they could have spent installing Linux on a Thinkpad. Losing two inches of screen real estate puts you at a clear disadvantage vs someone with the same CPU who can actually see a decent amount of code at once.
A thought experiment
Imagine that if instead of getting an MBA, ambitious young over-achievers spend two days upgrading and configuring their hardware and software. Or two days building a desktop. Or two days shopping around to see what else they could get for the same price.
Who would be worth more in the open market when all is said and done? Who would have a better chance of building their own great company?
Imagine that if instead of getting an MBA, ambitious young over-achievers spent
two years in design school. Or spent two years getting a masters in computer
science. Or two years getting into Y-Combinator and doing their own startup.
Who would be worth more in the open market when all is said and done? Who
would have a better chance of building their own great company?
MBA's are best suited at places where you need things to be generalized and managed even if it is at the expense of efficiency.
If you are looking at hard focus based work which requires a lot of application of specialized knowledge and effort. MBA's not just make a bad match for those jobs, but will likely mess it up.
You need MBA's when you need some super abstracted generalized knowledge applied to non critical tasks. You can hire an MBA to run a hospital's billing unit, but not to treat patients. Same with software and start up's. You can use them to do some work on stuff like market research, setting up the pay roll unit, attendance systems etc.
Now a lot of people do an MBA directly after doing a first degree some of this is to game the immigration system as a masters qualification is seen as better than a BSC.
Exams are super easy(by any measure) and those three letters in the degree give an impression you are well read and educated.
For this reason alone. I've lost trust in M.S(MTech too). A friend of my mine has MS from BITS Pilani(Distance education program) and can't write a 100 line program. Masters degree programs, especially evening college and distance education ones are a joke. These are degrees only for namesake, and generally done for extra titles and because the person has nothing better to do.
Rubyists hate Java with all of its J2EE and XML configuration (never mind that Rails is at least as complicated, and Java moved on a long time ago). Certain religious groups hate gay people, with their immoral acts in the streets and the corrupting of the young (I hope I don't have to explain why this is BS).
And startup people have their boogeyman: the clueless MBA asshole stereotype.
Learn to see beyond this. There is always some fragment of truth in stereotypes, but it's more useful to understand why these articles are written.
As a result of B School, I am not nearly as opinionated as I once was, until I can cite data to support my conclusions.
The question is whether a particular signal, on the balance, produces better results for less effort than simply vetting the candidates the old-fashioned way.
But for the record, once one starts generalizing an entire class of people, it's a slippery slope: I hate MBAS -> I hate Marketers --> I hate women.
see: https://medium.com/about-work/aa49dffc975d
There are shitty devs just like there are shitty MBAs. And that's where I'll leave it.
Marc Andreessen
Eventually, people figured out that having someone with design skills early on your team can provide huge competitive advantage to your startup against tech only competitors. And today designer's role is very prominent in startup world.
Now all startups have technical and designing strengths on their team from day one, what do you need to stay one step ahead of the crowd ?
I have a feeling that code-wizard + design-guru team won't be good enough in near future.
Some thoughts:
—I can't speak to how widespread the entitled-MBAs-in-startup-roles (no direct experience) problem is, but MBAs definitely have good job prospects (in the traditional sense), which has made it much harder for me to convince former classmates to "take the leap" and try to start companies instead.
—At least on the West Coast, the startup classes treat leanness as a central principle. I didn't meet many MBAs (especially ones who took those classes) who believed strategy could be laid out and then executed by underlings. Your mileage may vary.
—I went to business school because I wanted to get out of the consulting job I didn't like, and loved technology and wanted to move to the Bay Area. That said, it didn't sit well with me that I didn't pursue my dream and try to start a company instead of going, which made me unhappy all year. The question of what motivated someone to go to b-school is generally a good one, though, as most MBAs will gleefully admit that their goal was to spend two years kicking back at "summer camp for adults."
—The limits to the degree's usefulness, in my opinion, come from the fact that much of the good learning is in the hard-won experience of visiting founders and leaders (a la Startup School speakers). Unfortunately, to quote Clayton Christensen: “Questions are places in your mind where answers fit. If you haven’t asked the question, the answer has nowhere to go...You have to ask the question – you have to want to know – in order to open up the space for the answer to fit.”[1] I often felt like visiting speakers were giving good advice, but that I didn't have the place in my mind for the answer to fit yet. Another reason to try to start something and accumulate better questions.
The opportunity cost was the strongest motivator for me. As a twenty-something tech nerd, another year felt like an eternity. And I'm already five months better at programming and building a product than I would have been. Which feels like a win vs. another piece of paper.
I deeply believe my cofounder and I have a better chance of success because we took this path instead (he quit his job). I guess we'll be one more piece of data for the experiment in a few years.
P.S. We joke around about our travails once a week at http://uncannyvolley.com/why-not-combinator-podcast/ if you're bored.
If there is anything I've learned in my career at multiple startups, it's this: credentials have little-to-zero effect on success.
The fact that a person might have an MBA, or a PhD, or a commercial driver's license (I hired an awesome dev who had one of these), has zero correlation to success or failure.
In my experience, what matters is the person, not the label.
Dalton leaves off what I'd consider to be the biggest red flag: risk aversion. Many MBAs are risk averse. They are career-track professionals. They are box checkers. They are bullet-point collectors. A lot of them are extremely smart, and the ones from the top-tier programs are among the hardest working sons of bitches you'll ever meet. These were the kids who ground their asses off in high school and undergrad, and who will (generally) land lucrative, but safe careers continuing to apply the same grind-and-optimize strategies that got them through school. They do well in regimented, structured environments where there are frameworks, processes, known inputs, etc. They flourish in career tracks that resemble academic environments: where there are "grades," tracks, clear progression, etc.
A lot of engineers are the exact same way, for what it's worth. They don't have a monopoly on risk-taking any more than MBAs have a monopoly on risk aversion. Nevertheless, as a general rule, an MBA is not a degree one pursues if one is seeking risk or adventure (and I'd argue that the same could be said of any master's degree).
I'd almost require an MBA of a CFO, COO, or CEO that I'm bringing on board to scale up a business or take the helm of a mature business. But I would be a little uneasy about an MBA's founding a tech startup from the ground up. That's not to say that MBAs can't do the latter, or are necessarily good at the former. But there's a correlation. (MBAs are perfectly capable of starting non-tech businesses, however, and often do. But to found a tech startup, the MBA would really need to be technical to a high degree.)
A startup founder needs to be risk-seeking, and to whatever extent he or she has collected a bunch of degrees, that's a pattern of risk-averse behavior. It's an indicator. I still think such a person could make a great fit working at a startup, provided the entitlement issue isn't there (which it really is for a lot of folks, owing in large part to the expense of the degree). But as a founder? I'd be a little leery.
MBA programs are changing these days, and it needs to be said. A lot of them are adopting Lean Startup methodologies, or refocusing on innovation, or encouraging and teaching entrepreneurship (to whatever extent the latter can be taught, which I'd guesstimate to be maybe 50-60%). Today's MBAs are not your grandfather's MBAs. They're not the 1990s tech-bubble MBAs, either. Nevertheless, a lot of them are not risk takers.
The ones who are? Give them a fair shot. You'd be surprised. They are incredibly smart, well trained, quantitatively analytical, and make great marketers, biz dev & corp dev types, CFOs, and operations managers. Few of them walk into startups expecting $200k + signing bonus + equity the way they might have 20 years ago. That stereotype is out of date. But if a well-qualified candidate shows up at your door with realistic expectations about the job, the title, the compensation, and so forth: I see nothing wrong there. He or she has self-selected out of entitlement issues. (On the flip side, spotting the entitled ones -- MBAs or otherwise -- is fairly easy.)
The Columbia MBA who becomes the VP/Finance of your dopey startup (instead of going directly into the smoke-filled rooms and half-million salaries) is going to have a gigantic chip on her shoulder, guaranteed, because she had to be in the bottom 5% of her class to be there.
If you want to be an attractive candidate for startups, and you have an MBA, first you need to succeed on the MBA track for a good 5-10 years, then you need to make a credible case that you've genuinely decided (after a few wins) that you want to take your life -- and that you're not just some carpetbagger who failed out of "real business" and is using the startup world to get a second chance.
Also, I have to agree that business people in startupland massively overvalue themselves. I'm a Tech 8, which means that if I'm looking for a CEO co-founder, I'm looking for a Business 8 (or 9; but since they generally have better negotiation skills, that match is almost impossible for now). I'm not going to take a subordinate role (and 2% equity) to a Business 6. If you're not coming to me with the resources in hand (funding and first clients already lined up) and you're not on a first-name basis with the top names of Sand Hill Road, you're not a Business 8. A Biz 7 comes with resources in hand and can get any article put into credible press; a Biz 8 can make any introduction in the world happen.
To tell the truth, though, Business 8 startup founders are exceedingly rare. They're usually venture capitalists.
The ones who end up at typical startup management jobs are the bottom of the class, though. They weren't good enough for stat-arb hedge funds or billion-dollar deals, so they got stuck managing nerds.
If someone 10 years out of an MBA program with some success to his name said that he wanted to run a tech startup, I'd be inclined to support him. On the other hand, if he was a fresh Stanford grad and couldn't do better than a VP-level position at a Series A or B startup, I'd be inclined to think he was a third-stringer.
And Medium too !