Recently, there’s been an increase in the number of articles bashing MBAs joining startups. With the rising trend of MOOCs and accelerators (aka startup schools) I’d like to get in on the debate on why the product of business schools – MBAs- can coexist with its competition. As a recent MBA + Entrepreneur in Residence at the Accelerator, Startupbootcamp in Berlin, I can attest to the strengths an MBA, particularly from top schools, brings to the table.
Business Models Generation
This one seems obvious, but let me explain. MBAs spend countless of hours on models and real cases analyzing what worked, why it did, what failed, and the concise reason. They may not have eons of startup experience, but they have broad research skills and know what scales. If there is a market, MBAs can model and price it. In my time in Berlin and at the accelerator, there were several pivots and some challenges for some startups at the onset with figuring out a business model. Understandably, Berlin’s ecosystem is quite high tech driven. And while it’s still in vogue in high tech startups to innovate first/then think of revenue models second, there is always value in having a defined business model with your MVP. Translation: Involve an MBA in defining the pros and cons of several business models.
Perseverance and Pitch Ready
It is well known the battles that MBAs face when applying to top business schools. The average acceptance rate hovers at 10 percent. And some apply 2-3 times to get in and spend countless amounts of time and resources to perfect their application. There is a certain type of person who goes through this journey. They are called “go-getters.” Type A. Within this period, MBAs have had to pitch themselves from the first minute they walked on campus for interview slots, internships and a job offer after graduation. If there’s one skill-set that startups can use – this is one of them -perseverance and confidence. Within reason, they can sell their way into any given situation. Of course it’s a double-edged sword. Confidence perhaps does lead to entitlement – MBAs didn’t go to B-school to be in ancillary roles, they went to be on the front stage. For a startup, this translates into using MBAs in business development/securing partnerships.
Finance Planning and Operations
Another area in which MBAs are intimately familiar. Modelling skills are becoming ever so rare as designers, developers and online marketers rise in demand in the tech market. There are a number of template solutions on the market for financial modelling. None are going to teach you how to project your business unless you are a serial entrepreneur. These skills come naturally for MBAs from the number of years they have spent in large business environments (average 4 yrs pre-application) managing multimillion dollar budgets. They know what an income statement is, as well as cash flows, balance sheets, revenue and cost sheets, and they’ve become good at arriving at estimates. More importantly, they know how to defend those estimates, an ever important skill as investors like to know how their money is tied to KPI/metrics, quantifiable sales and operations. One last tidbit, according to Thomas Robertson, former Dean of Wharton Business School, it might be more difficult to raise money without an MBA. It’s easier if you have the imprimatur of a school and its network behind you! Translation: use an MBA for fundraising, investor meetings and manage funded operations. You are more likely to raise money with an MBA on your team than without one.