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Entrepreneurship and MBA

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Entrepreneurship and MBA [#permalink] New post 09 Aug 2007, 20:46
The thread on Goals Essay and "Vision Statement" ( http://www.gmatclub.com/phpbb/viewtopic.php?t=50258 ) had adc_away bringing up a good point: Why would one need an MBA for entrepreneurship. kryzak, bherronp and I managed to throw some words towards adc_away to keep him quiet for now.

"The 21st century MBA" adress of Glenn Hubbard (Dean of Columbia) also mentioned a critique by Anita Roddick (Founder of Body Shop) on the same topic.

I felt that since this topic is in the minds of a lot of applicants, it may help a lot of us to discuss this on GMATClub and get inputs from the 2007ers too. So, what do you guys think: Why MBA for entrepreneurship?
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 [#permalink] New post 09 Aug 2007, 21:19
I guess thats coz while working in a company, you can never appreciate the amount of complexity that it takes to make a company run.

I went to a friends engagement some days before and met some of my college friends...a couple of them have opened up a coaching centre in a lesser known town of India called Patiala... and though there is no dearth of coaching centres in the country, these guys now have 600+ students attending in less than 1.5 years. So, while we were having lunch, one of these whips his phone out and goes and talks for about 15 mins....he comes back and we ask him, whats that about...turns out he was talking to a contractor to install glass panes in his classrooms...and then was talking one of his "teachers" into not resigning...so, its a whole different ball game out there.

Also, I believe an MBA can give you access to a network you cannot really get while working in a company.
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 [#permalink] New post 09 Aug 2007, 22:06
I think the real issue you must overcome is, if you're interested in entrepreneurship, why are you going to school instead of starting a company? Whatever answer you come up with, don't forget to detail why school is a better option than taking a chance on an idea of your own.

In one of the application guides, Montauk's I believe, they caution against stating in your application that you are a "risk taker". The truth of the matter is that people go to business school because there is little risk. To someone reading tons of applications day after day, an applicant that declares that they have entrepreneurial spirit or are risk takers are a dime a dozen; and if you can't back it up solidly it might count against you.
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 [#permalink] New post 09 Aug 2007, 22:59
I will be talking to some Haas entrepreneur club people when their school starts, and will ask them the same question and see what they say.

But in my mind, it boils down to the following:

- greater network/connections in B-school
- learn the foundations of how a business should be run, so you don't have to learn from your mistakes (or startups folding)
- speed up the learning process
- increase the possibility of success
- I've seen too many startups run by people with no knowledge of finance or the technical stuff that keeps a company afloat. B-school can help you avoid that.

wow, I just answered my own question.... now don't all go copying my answer now ;) hee hee hee (j/k)

But seriously, this site is awesome because I have writers block when I'm sitting in front of my Word document, but when I try to answer questions, I come up with good brainstorming stuff! :)
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Re: Entrepreneurship and MBA [#permalink] New post 10 Aug 2007, 00:22
mNeo wrote:
The thread on Goals Essay and "Vision Statement" ( http://www.gmatclub.com/phpbb/viewtopic.php?t=50258 ) had adc_away bringing up a good point: Why would one need an MBA for entrepreneurship. kryzak, bherronp and I managed to throw some words towards adc_away to keep him quiet for now.

"The 21st century MBA" adress of Glenn Hubbard (Dean of Columbia) also mentioned a critique by Anita Roddick (Founder of Body Shop) on the same topic.

I felt that since this topic is in the minds of a lot of applicants, it may help a lot of us to discuss this on GMATClub and get inputs from the 2007ers too. So, what do you guys think: Why MBA for entrepreneurship?


I'll be back....
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 [#permalink] New post 10 Aug 2007, 00:33
kryzak wrote:

- greater network/connections in B-school
- learn the foundations of how a business should be run, so you don't have to learn from your mistakes (or startups folding)
- speed up the learning process
- increase the possibility of success
- I've seen too many startups run by people with no knowledge of finance or the technical stuff that keeps a company afloat. B-school can help you avoid that.

wow, I just answered my own question.... now don't all go copying my answer now ;) hee hee hee (j/k)

But seriously, this site is awesome because I have writers block when I'm sitting in front of my Word document, but when I try to answer questions, I come up with good brainstorming stuff! :)


- learn the foundations of how a business should be run, so you don't have to learn from your mistakes (or startups folding)

Mistakes are unavoidable. And B/school isn't exhaustive. You may learn the general foundations, but every company differs.

- increase the possibility of success

Are there statistics on this?

- I've seen too many startups run by people with no knowledge of finance or the technical stuff that keeps a company afloat. B-school can help you avoid that.

Honestly speaking, this is definitely questionable. I've seen many companies and entrepreneurs start without any business knowledge. Bring in a partner with some understanding, or learn it on your own. Is it worth paying the 100k just to learn the basics of accounting and finance so you can run your own company? You would be better off paying 10k to the accountant and sitting next to him with a list of questions.

I'm not questioning the value of an MBA, I'm just wondering, if you're truly an entrepreneur, would you only be capable of running your own gig with an MBA? I would think if you're an entrepreneur, you would be running your own thing without an MBA. 2 years is time to build a business, and with the internet, information is everywhere. Not to mention that the 100k would be able to bring you far. Yes, it may be harder, but a 2 year advantage is huge.

What happens to the million of chinese entrepreneurs without an MBA, just a bicycle and some chickens to sell? What happens to the mom & pop shops? Or are we only looking at entrepreneurship in the sense of let's have a big idea, incorporate a company, have revenues of 100 million and sell out to google? I think that entrepreneurship doesn't have to be big, it can be small and successful too.

Point, I know a guy who started a business with just one plastic molding machine. 20 years later, he sold out for 15 million euros.... no MBA.. just technical knowledge of how to work the machine. Maybe entrepreneurship in the west is very different.

Maybe if you're going to select entrepreneurship, you could talk more about decision making than actually wanting to start you own business?

I don't know, maybe I'm babbling :(

heh :)
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 [#permalink] New post 10 Aug 2007, 00:41
adc, no one ever said you *need* an MBA to be an entrepreneur. We're just discussing how having an MBA *helps* being a better entrepreneur than one without.

You list good examples, and I'm not disputing those examples, but those are the success stories. It's like the thread "Is an MBA worth it" where I know a person named Bill Gates who, without a college degree, started a company and now is a billionaire. Does that mean you don't need a college degree to start a business too? Of course there are exceptions and people out there who don't have MBAs and have successful startups, but for those of us who haven't taken the risk or don't have the connections to get a job in a startup, an MBA is a more enticing option. That's all I'm saying.
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 [#permalink] New post 10 Aug 2007, 00:51
kryzak wrote:
adc, no one ever said you *need* an MBA to be an entrepreneur. We're just discussing how having an MBA *helps* being a better entrepreneur than one without.

You list good examples, and I'm not disputing those examples, but those are the success stories. It's like the thread "Is an MBA worth it" where I know a person named Bill Gates who, without a college degree, started a company and now is a billionaire. Does that mean you don't need a college degree to start a business too? Of course there are exceptions and people out there who don't have MBAs and have successful startups, but for those of us who haven't taken the risk or don't have the connections to get a job in a startup, an MBA is a more enticing option. That's all I'm saying.


Heh. I was hoping bill gates wouldn't be mentioned. I'm just wondering, is the opportunity cost of getting an MBA outweigh those of just starting up without an MBA?

To me there's really no right or wrong answer. But personally, although yes, while the MBA would give you certain skills, if I were an entrepreneur I would probably start something up without an MBA. For me the opportunity cost of an MBA is just too high if I wanted to get my own thing going. It may be riskier, but there may be higher returns - especially in terms of time costs.

My opinion is that while the schools want people to have the entrepreneurial spirit, they don't necessarily want them to have started their own business or going to start their own business. It's the mindset that they're looking for.
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 [#permalink] New post 10 Aug 2007, 00:58
to each his own... to each his own. :)
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 [#permalink] New post 10 Aug 2007, 01:00
:)

yeah. that's true

heh

all the best with your essays too
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 [#permalink] New post 10 Aug 2007, 02:08
adc_away wrote:
Heh. I was hoping bill gates wouldn't be mentioned. I'm just wondering, is the opportunity cost of getting an MBA outweigh those of just starting up without an MBA?

To me there's really no right or wrong answer. But personally, although yes, while the MBA would give you certain skills, if I were an entrepreneur I would probably start something up without an MBA. For me the opportunity cost of an MBA is just too high if I wanted to get my own thing going. It may be riskier, but there may be higher returns - especially in terms of time costs.

My opinion is that while the schools want people to have the entrepreneurial spirit, they don't necessarily want them to have started their own business or going to start their own business. It's the mindset that they're looking for.


You are correct that the entrepreneurial mindset is a very important factor. Darden's Dean posted in his blog a few months back that many venture capital funds will not give money to first-time entrepreneurs. The article was actually about the value of failure, and the point regarding entrepreneurs was that the type of person with "entrepreneurial DNA" will be back again even if they fail the first time, having learned valuable lessons from their failure. The entrepreneurial mindset is what venture capitalists are willing to invest in; and it's generally most evident in people with past entrepreneurial experiences (good or bad).
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 [#permalink] New post 10 Aug 2007, 06:07
I think the Business Plan Competitions schools have also make for some great experience. Researching opportunities and presenting your findings to the judges who come from all over should be a good experience in dealing with VC's later on your own. And of course if you win the prize money, you could start right away :-D

And some schools have incubators too. Darden has one. I don't know how they work but the idea is to test the business idea in a controlled environment. Where could you find something like this but in B-School?

IMO, B-Schools are the way to go for first time entrepreneurs.
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 [#permalink] New post 10 Aug 2007, 14:01
just talked with a Stanford GSB alum. he worked at a startup before going to b-school, and found the CEO to be one of the worst leaders he's ever seen. The only reason the startup was successful was because it was during the dot com boom in the Silicon Valley and that they hired some good management consulting people.

So yes, if your goal is to make lots of money and get rich by starting a company, you don't need an MBA. Just have a great idea, time the market perfectly, and hire some consultants or your buddy MBA friend to help you with the business side of things. But if you want to have a successful startup AND run the company so that everyone trusts you as a leader, the MBA helps you with those leadership/soft skills. As much as I want to just get rich quick, I personally prefer the latter because its would give me a more rewarding experience.

And what vikramjit_01 said about the business plan competitions. The Stanford Alum also talked about how you get your business plans looked over by the top and best VC's in the country when you're at Stanford. Definitely an "easier" way to get your name out there and increase your probability of being funded.
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 [#permalink] New post 10 Aug 2007, 21:00
mNeo, Kryzak, adc

OK. I am talking based on personal experience here and it may not be relevant to what you want to do. Here's my reason for the MBA.

I run a consulting business on the side and mainly work with government organizations and development agencies such as UNDP etc. One of my recent projects involved working with the local mayor's office and my primary obstacle in getting anything done or drumming up support to my idea is the lack of brand name US education. For instance, there was a task force to which I wasn't nominated mainly because I dont have a brand name MBA. It was unfair and it drove me nuts. Every person in the task force had an MBA or a top US degree. It did not matter that when crunch time came, they turned to me for advice and guidance. What it means is that in certain environments, it is extremely important to have an MBA even if you are the smartest person in the room.

For me, an MBA is very important not just because of the all-round business knowledge and the solid networks I will gain, but also because it will help me leapfrog over some of the red tape and obstacle that I face today. An MBA in essence provides the fastest route from point A to point B.

In my mind, entrepreneurs can succeed without having an MBA. An MBA's value proposition should be evaluated closely if you are already an entrepreneur. But if you only plan on being one in the future, an MBA can definitely give you an edge.
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 [#permalink] New post 10 Aug 2007, 22:40
Thanks for sharing man. It definitely gave me a different perspective.
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 [#permalink] New post 10 Aug 2007, 23:23
well said ncprasad, but I have a question: Would it be politically-correct to mention that you want an MBA because you want the "pedigree" that it brings in situations you just described? We all know it's true; the adcom knows it's true, but it's like the 500-lb gorilla in the room... no one wants to talk about it...
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 [#permalink] New post 11 Aug 2007, 00:14
kryzak wrote:
well said ncprasad, but I have a question: Would it be politically-correct to mention that you want an MBA because you want the "pedigree" that it brings in situations you just described? We all know it's true; the adcom knows it's true, but it's like the 500-lb gorilla in the room... no one wants to talk about it...


Obviously, you wouldn't want to say that the MBA is merely a validation of your abilities. Schools hate it when we say that the MBA will provide us only the pedigree. I will obviously write a more acceptable reason...after I figure one out.
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 [#permalink] New post 11 Aug 2007, 00:53
haha, yeah... the hardest part about these essays is how to say things that everyone knows is true in a very pc way...
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 [#permalink] New post 11 Aug 2007, 11:45
I think in some cases, people with good ideas want to get an extra - confidence boost (in the form of an MBA) before jumping into the more challenging job of being an entrepreneur.

L.
  [#permalink] 11 Aug 2007, 11:45
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