Earning an MBA as an alternative to a first startup experience
Over the past decade, I have had the wonderful opportunity to launch, lead, or consult for some incredible startups. From running a company as a founding CEO, finding investment, advising investors, to consulting with a startup as they shut down operations, my roles in the startup world have run the gamut. At several moments during this exciting time, I considered going back to school to get an MBA. After the first startup that I founded was in bankruptcy, for instance, I asked a board member and mentor for advice; he argued against the MBA.
“Your experience starting up and shutting down your business has taught you as much as you would learn in any MBA program,” he advised. “Rather than spending a fortune in business school, maybe you should learn from your mistakes, ‘get back on the horse’, and build a better business with all of that learning.”
Launching that first startup required an amazing amount of time and sacrifice. I was unable to hold any other jobs, I was working at least 80 hours per week, and all of my financial resources ended up being spent on the business. In the end, my team and I realized that we had timed the market very badly, and I made the toughest decision that I had ever needed to make up to that point in my life: we had to shutdown our business. All-in-all, this startup used up $75,000 of my savings, $55,000 of cash invested by others, about 5,400 labor hours, and (ultimately) the roof over my head. If we ignore the unpaid labor, a year and a half of forgone wages, and other opportunity costs, this venture had a price tag of about $130,000 dollars. (It is amusing how closely this matches the current cost of a good MBA in the United States.)
Over the next few years, I kept ‘getting back on the horse’ and working with other startups, and I sometimes questioned my mentor’s advice. In many ways, he was correct; launching a viable startup requires one to identify a need and develop a product (or service) offering to fill it, assemble a high-performance team, put together a realistic business plan, win the confidence of investors, and manage a business enterprise. These skills largely coincide with the skills that a student develops in a good MBA program, but (in my case, anyway) this sort of education came at a higher cost than mere dollars and cents.
If my startup had been successful, my career opportunities would have exploded, but I have found it hard to demonstrate that I would be a critical hire when my experience in startups has not led to any magazine covers or IPOs. Few HR people have seemed to care about reasons for startup failure or successes, and fewer still have placed value in all of that learning. For this reason, I finally changed my mind and applied for my MBA – not because I needed the knowledge, but because I needed the credential.
Before my degree program has even completed, my MBA had opened doors that my title of “failed startup founder” could not get me through. I personally would not change the path that I have taken, but I think any potential founder should spend some serious time considering whether or not the MBA might be a better choice for their career than starting a new business before they are knowledgeable and ready.
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Given the vast amount of money, time, and learning required to start up a company – and the very high probability that it will fail, perhaps that time and money should be invested in a good MBA instead. For most of the founders and business people that I have met in my life, I would recommend the MBA over the 1st startup.