Saturday, May 08, 2010

Should you get an MBA if you want to do a startup?

There's a continuing thread of discussion about the value of getting an MBA if you want to do a startup. Some people think that it will give you valuable business knowledge, while others believe that it will put you in a financial hole that will take years to recoup.

You need to know a little about my background in order to put my opinions in perspective. I've got a BS in Management as well as an MBA in Marketing and Management Policy. I went directly from undergraduate to graduate school, something that was common when I was in college but is very rare with MBA programs today. I don't have an engineering or CS degree, but as of this summer, I will have been programming for 40 years (although I earned a living as a software engineer for only a few years.)

My bottom line is that if you've already got a BS in Engineering or Computer Science and you didn't take any business courses in undergraduate school, a MBA degree can be very helpful, but not necessarily in the way that you might think. Yes, you'll learn about the business essentials: Management, marketing, finance, economics, accounting, business law, advertising, market research, etc. However, what's even more important is the network of contacts that you'll make and your access to the school's alumni programs once you graduate. These contacts and services can help you throughout your career. Getting into a highly-regarded MBA program is disproportionately valuable, not only because the reputation of your school will rub off on you, but also because the contacts that you make while in school are likely to be of a higher caliber.

If you can't get into one of the top 20 programs, I'd suggest going for the most cost-effective program you can get--possibly a college or university with a good regional reputation. You'll still get education in all the business essentials, but you won't have to pay the huge tuition and fees that many MBA programs charge. Some of the top schools offer night programs that are less expensive and time-consuming, but are still taught by the same professors and lecturers as their full-time programs.

If you're still in undergraduate school or even just at the point where you're thinking about undergraduate school, you should take business courses along with your EE or CS major. A lot of people will disagree with me, but in my opinion, there is very little difference in the information you'll learn in undergraduate and graduate business courses covering the same topics. If the school that you're going to has a good undergraduate business program, and many engineering schools do, you can get an excellent business education while you're learning engineering.

My experience is that undergraduate business courses are better at teaching you about how to really do things than are MBA courses. Students graduate from top MBA programs ready to be CEOs in big companies. They're far less ready to get into the trenches and do the grunt work, but that's exactly what you'll do in a startup. If you're part of the founding team in a startup, you may have to shift your thinking from development to finance to sales to hiring to marketing to legal, all in one day. You're going to be doing the work, not a cadre of subordinates and staffers.

So, do you need an MBA in order to do a startup? Absolutely not. Is getting an MBA counterproductive? Probably not, but it may take a long time to pay back your student loans. Should you get some kind of business education? Yes. It will help you to understand concepts and avoid mistakes, and can save you (and your startup) an enormous amount of grief.
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