Do Entrepreneurs Need an MBA?

Summary

In this 'MBA Monday' episode, Angela Guido discusses the relevance of an MBA for aspiring entrepreneurs. She differentiates between traditional entrepreneurship and high-level 'highfalutin' entrepreneurship, noting that an MBA is more suited for the latter. Guido emphasizes that while an MBA can provide networking opportunities and credibility for venture-funded startups, it may not be as beneficial for those looking to start businesses from scratch. She advises prospective MBA students to consider their entrepreneurial goals and the type of skills they need to achieve them before deciding on an MBA.

Takeaways

• 🎓 The MBA was initially designed for middle managers, not necessarily for those looking to start businesses from scratch.
• 🚀 Entrepreneurship can be grassroots or 'highfalutin', with the latter often involving significant capital and team building, which may align more closely with MBA training.
• 🤔 If you're a 'doer' with a clear business idea, an MBA might not be necessary as the practical skills for immediate startup are different from those taught in business school.
• 💼 MBA programs are increasingly aware of the trend towards entrepreneurship among students, offering courses and resources to support this interest.
• 💡 The MBA can provide a network and credibility that may be beneficial for those seeking venture capital and partnerships to scale their business.
• 💭 It's important to consider the type of entrepreneurial path you want to pursue before deciding how an MBA might assist you.
• 📈 Many MBA graduates eventually become entrepreneurs, but this often happens later in their careers, not immediately after graduation.
• 💰 The cost of an MBA can be a barrier to starting a business immediately after graduation, influencing the decision to delay entrepreneurship.
• 🤝 The MBA's greatest asset for aspiring entrepreneurs might be the network and connections made, which can be invaluable for future business endeavors.
• 📚 For those certain about their entrepreneurial path, taking MBA courses focused on entrepreneurship can provide valuable insights and skills.

Q & A

What is the original purpose of an MBA degree?

The MBA was originally conceived to be a degree for middle managers, designed to help people who were in the middle, taking pressure from the top and managing down below, to do that job better.

Why might an MBA not be necessary for some entrepreneurs?

An MBA might not be necessary for entrepreneurs who are 'doers' and already have an idea they want to execute immediately, as the MBA teaches skills more suited for middle management rather than starting a business from scratch.

What is the difference between entrepreneurship and 'highfalutin' entrepreneurship?

Entrepreneurship refers to the act of starting a business, which can range from a small local business to a franchise. 'Highfalutin' entrepreneurship typically involves raising capital, building a team, and aiming to scale the business to a larger size, often with the intention of attracting venture funding.

How does the MBA help in the context of 'highfalutin' entrepreneurship?

The MBA can be helpful for 'highfalutin' entrepreneurship by providing a network of potential collaborators, co-founders, and investors, as well as credibility in venture circles, which can be beneficial for raising funds and building a business at a larger scale.

What kind of skills does the MBA teach that may not be useful for starting a business from the ground up?

The MBA teaches skills more suited for middle management and does not necessarily provide training for the 'guerrilla warfare' of building a business from the ground up, such as skills for immediate, grassroots entrepreneurship.

Why might an MBA be beneficial even if it doesn't teach specific entrepreneurial skills?

An MBA can provide confidence and the knowledge that one can figure out how to run a business, even if the specific skills required for starting a business from scratch are not taught.

What percentage of MBA graduates eventually become entrepreneurs?

It's suggested that a significant percentage of MBA graduates eventually become entrepreneurs, but the exact number is not provided in the script. It's mentioned that according to some articles, 80% of MBAs want to go into entrepreneurship, but this is considered a trend and not necessarily reflective of the long-term career paths of MBA graduates.

How does the MBA curriculum cater to aspiring entrepreneurs?

Many MBA programs offer courses and experiential learning opportunities focused on entrepreneurship, especially the 'highfalutin' style, which includes learning how to create pitch decks, court investors, and structure founder agreements.

What are the three core skill sets required of a successful entrepreneur according to the book 'The One Page Marketing Plan' by Alan Dibb?

The three core skill sets are ideation (the ability to envision a new reality and a problem being solved), actualization (the ability to make the business real from the idea), and managerial (the ability to use systems, people, and structures to move the business forward and serve customers).

Why is the MBA's network considered valuable for entrepreneurs?

The MBA's network, which includes friendships and professional connections, can provide potential collaborators, investors, and other individuals crucial for building a company, either immediately after the MBA or in the long term.

What advice does Angela Guido give to those considering an MBA for entrepreneurial purposes?

Angela Guido advises that one should carefully consider the type of entrepreneurship they want to pursue and whether an MBA provides the necessary skills and network for that path. She also encourages taking advantage of the MBA's resources and curriculum to learn about the challenges and skills entrepreneurs face.

Outlines

00:00

🎓 The MBA for Entrepreneurs: Fit and Purpose

Angela Guido, founder of Career Protocol, discusses the relevance of an MBA for entrepreneurs. She differentiates between traditional entrepreneurship and high-level 'highfalutin' entrepreneurship, emphasizing that an MBA is more geared towards the latter. Guido points out that the MBA was initially designed for middle managers, a role not typically found in startups. She suggests that for those who are eager to start a business immediately, an MBA might not be necessary, as it teaches skills more applicable to established businesses rather than startups. However, for those seeking venture funding and a team-based approach to business growth, an MBA can be beneficial for networking and credibility.

05:03

🚀 Entrepreneurship Trends Among MBAs

Angela explores the trend of MBA graduates moving into entrepreneurship, noting that while many express interest in starting their own businesses, the actual number who do so immediately after graduation is relatively low. She shares her personal experience, stating that much of what she learned in business school was not directly applicable to her entrepreneurial journey, which required learning many things from scratch. Guido emphasizes the importance of understanding one's entrepreneurial goals and the type of business one wants to build before considering how an MBA might aid in that process. She also advises that the skills needed to grow a business from the ground up are different from those needed to scale an existing business.

10:04

🤔 Framing Entrepreneurship in MBA Applications

Guido discusses how aspiring entrepreneurs should approach their MBA applications, especially when it comes to expressing their entrepreneurial ambitions. She suggests that the decision to include entrepreneurship in one's application should be based on personal background, school prospects, and post-MBA job opportunities. Angela also recommends that those interested in entrepreneurship should take advantage of the courses and resources available during their MBA to prepare for the challenges they will face as business leaders. She highlights the importance of the MBA network, which can be invaluable for finding collaborators and investors.

15:06

🌟 Encouragement and Final Thoughts

In the final part of the script, Angela encourages those with entrepreneurial aspirations to consider whether an MBA aligns with their goals and the type of business they wish to build. She acknowledges that for many, the MBA may not provide all the necessary skills for immediate entrepreneurial success but can be a valuable asset in the long term. Guido also recommends the book 'The One Page Marketing Plan' by Alan Dibb for those considering entrepreneurship, as it offers practical insights into business launch strategies. She concludes by expressing her support for bold dreamers and risk-takers and invites viewers to return for more advice on future MBA Mondays.

Keywords

💡MBA

MBA stands for Master of Business Administration, a postgraduate degree that focuses on leadership and general management skills. In the video, the MBA is discussed as a potential stepping stone for individuals interested in entrepreneurship. The speaker, Angela Guido, suggests that while an MBA can provide a network and credibility, it is not a prerequisite for success in starting a business.

💡Entrepreneurship

Entrepreneurship refers to the process of designing, launching, and running a new business, which starts as a startup company offering a product, process, or service. The video distinguishes between everyday entrepreneurship, like running a local dry cleaner, and 'highfalutin' entrepreneurship, which involves raising capital and building a team to scale a business idea. The speaker emphasizes that not all forms of entrepreneurship require an MBA.

💡Middle Management

Middle management refers to a level of management between the top executives and the front-line supervisors. The video script explains that the MBA was originally designed for middle managers, teaching skills to manage teams and operations effectively. This is contrasted with the needs of an entrepreneur starting a business from scratch, where such skills may not be as immediately applicable.

💡Venture Capital

Venture capital is financial capital provided to early-stage, high-potential businesses in exchange for equity or a stake in the company. In the context of the video, venture capital is mentioned as a potential source of funding for 'highfalutin' entrepreneurs, where an MBA can be beneficial for networking with investors and understanding the fundraising process.

💡Business School

Business school refers to an educational institution that specializes in teaching business disciplines, such as management, finance, and entrepreneurship. The video discusses the role of business schools in preparing individuals for entrepreneurial careers, suggesting that while they may not teach the practical skills needed to start a business, they can provide confidence and a network that can be valuable later on.

💡Ideation

Ideation is the process of generating, developing, and finalizing ideas for new products, services, or processes. In the video, ideation is one of the three core skills required for entrepreneurship, as identified in 'The One Page Marketing Plan' by Alan Dibb. It is the initial step in the entrepreneurial journey, where an individual conceives a new business concept.

💡Actualization

Actualization, as used in the video, refers to the process of turning an idea into a tangible reality. It is the second of the three core skills for entrepreneurs mentioned in the script. The speaker uses the example of Steve Wozniak, who took the ideas of Steve Jobs and actualized them into the Apple product and company.

💡Managerial Skills

Managerial skills are the abilities needed to oversee the operations and resources of a business effectively. The video suggests that managerial skills are essential for the long-term growth and success of a business. MBA programs are often seen as a way to develop these skills, which can be crucial for entrepreneurs looking to scale their businesses.

💡Network

In the context of the video, a network refers to the collection of professional contacts and relationships that an individual builds, particularly through business school. The speaker emphasizes the importance of the network developed during an MBA for entrepreneurs, as it can lead to connections with potential collaborators, co-founders, and investors.

💡Highfalutin Entrepreneurship

This term, coined by the speaker, refers to a type of entrepreneurship that involves a higher level of complexity, such as raising significant capital, building a large team, and aiming for substantial growth. It contrasts with more traditional or smaller-scale entrepreneurship and is the type that is often associated with MBA-educated individuals.

💡Grassroots Entrepreneurship

Grassroots entrepreneurship implies starting a business from the ground up, often with limited resources and a focus on immediate, hands-on operations. The video suggests that MBA programs may not be as effective in teaching the skills needed for this type of entrepreneurship, which is more about practical implementation and less about strategic planning.

Highlights

The MBA was originally designed for middle managers, not for the entrepreneurial roles often sought by MBA graduates.

Entrepreneurship can be distinguished into two types: everyday entrepreneurship and highfalutin entrepreneurship, which involves scaling businesses with significant capital.

The speaker, Angela Guido, suggests that if you have a clear business idea, you might not need an MBA and should consider starting your venture immediately.

MBA programs are not primarily designed to teach the skills required for starting a business from scratch.

For those seeking venture funding and a team-based startup approach, an MBA can be beneficial due to the network and credibility it provides.

The MBA can provide confidence and the belief that one can figure out how to run a business successfully.

Many MBA graduates eventually become entrepreneurs, but this is not always their immediate post-MBA goal.

The skills required to grow a business from zero to one hundred are different from those needed to scale an existing business.

MBA programs offer courses and resources for aspiring entrepreneurs, which can be valuable even if one does not immediately pursue entrepreneurship.

The decision to frame entrepreneurship in one's MBA application essays should be carefully considered based on individual circumstances.

The MBA can be a great platform for finding collaborators, investors, and building a network essential for entrepreneurial success.

The book 'One Page Marketing Plan' by Alan Dibb is recommended for those considering entrepreneurship, as it provides practical insights beyond what an MBA might offer.

The three core skill sets required for a successful entrepreneur are ideation, actualization, and managerial skills, and it's rare for one person to excel in all three.

The MBA can be particularly useful for the managerial aspect of entrepreneurship, helping to find the right people to complement one's own skill set.

The speaker encourages prospective entrepreneurs to think critically about whether an MBA aligns with their desired business trajectory and timeline.

The network and friendships formed during an MBA program can be invaluable assets throughout one's career, especially for those aiming to be entrepreneurs.

Transcripts

The MBA was originally conceived to be a degree for middle managers.

Guess what job doesn't exist in a startup

until many, many years in middle management.

Hello, everyone.

Welcome back to MBA Monday.

I am Angela Guido,

the founder of Career Protocol and your MBA guardian angel,

helping you apply to business school, be successful,

have more fun in the process, all while being true to your bad self.

That's what we're doing here on this channel.

And today I'm talking about MBAs for entrepreneurs.

It's our third and fourth most requested topic on this channel.

And so as an entrepreneur and as an MBA, I'm going to talk to you about how the MBA

helps and doesn't help you become an entrepreneur post MBA.

All right, to have this conversation, we have to draw two sets of distinctions.

The first is the distinction between

entrepreneurship and highfalutin entrepreneurship.

That's what I'm going to call it.

And the second is the distinction between

what you do immediately post MBA and what you do in the long term.

So first distinction is entrepreneurship

versus we'll call it highfalut entrepreneurship.

Look, entrepreneurship is an organic human trait.

The guy who runs the dry cleaner on the corner is an entrepreneur.

The 711 franchise, that's entrepreneurship.

The woman who runs clothing mending

business out of her garage, that's entrepreneurship.

When we think about entrepreneurship

in the MBA context, we're mostly talking about the highfalutin kind.

The kind where you don't necessarily build

a business, like, from the ground up, but you get a bunch of capital,

you raise funds, maybe you bring people together, you build a team,

and then you build something at a slightly large scale.

This is the kind of entrepreneurship

that most people mean when they talk about it in the context of business school.

But the thing to understand that anyone who starts a business is an entrepreneur.

And there are a vast array of legitimate

ways to be an entrepreneur that do not require raising venture capital.

So the first thing you need to understand is, are you a doer?

Are you someone who just has an idea

and you want to put it together and make it happen in the world?

If that's the case, then frankly, you may not need an MBA.

And talking about doing that in your MBA

applications might make you seem a little bit foolish, because if you have an idea

and you know what you want to start, you can just go do it.

Now, the MBA

isn't required neither for permission nor for success criteria,

because the MBA is mostly teaching you skills to be a middle manager.

I've talked about this before in my videos.

The MBA was originally conceived to be a degree for middle managers,

to be a degree to help people who were in the middle taking pressure from the top

and managing down below to do that job better.

Guess what job doesn't exist in a startup

until many, many years in middle management.

So most of what you're learning

in business school, even if you're taking the entrepreneurship classes,

it's not necessarily training you for the guerrilla warfare that is building

a business from scratch from the ground up.

So if that's the experience you want,

if you're that kind of a person, then just go out and start something.

Now, on the other hand,

what you want to do is the kind of entrepreneurship that is going

to require venture funding and lots of partners and a whole team if you're

going to grow something before you even launch it.

The MBA will be quite helpful

for that type of entrepreneurship because it will introduce you to a network,

potentially collaborators, co founders, potentially investors.

The MBA will give you a certain era of credibility in venture circles

and in people who might want to give you money to launch a business.

But it's really, really important that you

think carefully about exactly the kind of mark that you

want to leave on the world as an entrepreneur first before you look

to the NBA to give you the skills to do that.

Because if you're going to go

the highfalutin route, that's one set of skills.

It's really things more about how do you

put together a pitch deck, how do you court investors,

how do you bring on board collaborators and structure a founder agreement.

It's things that are a bit more strategic and high level.

And if you really just want to get in there and start something, then

the MBA is actually not going to teach you that much on that front.

And the classes that you would choose will be quite different.

Most MBA programs are sensitive to the fact that now,

according to some articles, 80% of MBAs want to go into entrepreneurship.

It's a very trendy topic, and in fact,

I don't know what the actual percentage is.

There's not any recent data on this.

And even if there were recent data, I'm not sure I would trust it,

because you'd have to take a really longitudinal look at MBAs.

You have to look and see,

what do people end up doing in the 30 years of their career post MBA?

And I bet if you looked at that information,

you'd find that a huge percentage of MBAs end up in entrepreneurship.

They end up starting their own company or

cofounding something or launching something.

And that's just natural because if you GRE a business leader, if you're driven,

if you have ideas, at some point some idea is going to call to you so much

that you're no longer going to be happy working in someone else's system.

You're going to want to go out on your own

and make something happen on your own terms.

That's a feature of the type of person

who's drawn to business school, not a quality inherent in the MBA itself.

So while it's true that many MBA do eventually go on to start their own

companies, that isn't necessarily where they started.

It isn't necessarily what they plan to do post MBA, and it isn't necessarily

the case that anything they learned in their MBA helped them.

I'm very much in that category.

When I finally launched my own enterprise,

very little of what I learned in business school was actually useful to me.

And I had to learn everything from scratch.

I had to figure out my market,

I had to figure out my marketing, I had to figure out my team strategy,

my values, and how I was going to structure the company.

I had to figure out all that all of that out on my own.

And the thing I will say is that the MBA

gave me the confidence to know that I could figure it out.

That's one very valuable service that the NBA provided is that I knew,

given what I had learned, that I would be able to figure it out.

If you are just someone who wants to dig in and build something, do it now.

Don't wait.

You might also do it while you're in business school.

But consider that the skills you need

to grow something from zero to 100 are very different from the skills you need

to take something from ten to 100 or 100 to 100.

And when most people think about entrepreneurship, their Visa, Visa, MBA,

they're mostly talking about that latter skill set.

Okay, the second distinction you need is

your post MBA goal versus your eventual goal.

And I've already talked about this.

A lot of MBAs eventually become entrepreneurs.

They start a search fund and buy a business, buy a turnaround.

They found their own company.

They spin off from a division that they're

in and grow something outside of an existing company.

It's just natural to want to lead

in that way in the long term for many people who go to business school.

But starting a company during or after your MBA is a very different proposition.

It's still something that very, very few MBAs do.

And again, I don't have any recent statistics on this.

I was googling around trying to find what

percentage of MBA start their companies during their MBA or immediately after.

The only date I have is quite old, but it's something like, at most,

10% or so of students are doing this and that's coming out of Stanford.

And at most programs, the percentage is more like two, three,

5% of alums who are going right into their own startups.

And there are a lot of reasons for this.

The MBA is expensive.

So the best time to start a business is

not when you're in $200,000 worth of debt, which is the case for many MBAs.

It's also because of what I said about

what the MBA teaches you versus what it doesn't.

So the skills required to get something really off the ground are not the most

obvious skills that are being taught in most MBA classes.

So even the startup incubators the launch programs.

Most MBA programs are going to have some

kind of experiential learning course focused on entrepreneurship, but again,

it's frequently the highfalutin style of entrepreneurship.

It's not the kind of grassroots, like, get in there and build something right away.

So again, you really need to figure out

which style of entrepreneurship is right for you.

And that will depend on your skill set, your appetite for the kinds of tasks

that you want to do, and the idea, of course, itself.

But if you are interested

in entrepreneurship of any kind and you know that about yourself,

then I definitely encourage you to take as many courses as you can during your MBA

focused on the skills and challenges that entrepreneurs face.

You can write about that in your essays,

and I strongly encourage you to take advantage of those resources while you're

on campus, because even if you don't end up in entrepreneurship,

you're going to learn a lot of interesting things in those courses.

And again, most MBA programs have

extensive offerings for aspiring entrepreneurs because they know how

popular a choice that is among applicants and among their students.

How to think about framing

entrepreneurship in your personal statement as you're applying to business

school is a very different thing, and it may or may not be the right

decision for you based on your background, based on the schools you're applying to,

and based on the prospects for recruitment afterwards.

We have other videos that cover this topic.

Please check them out because this video

is not really about what's writing your essays.

It's really about how to think about

the MBA as the launching pad for your entrepreneurial career.

And so if you see from the distinctions I've drawn, the MBA could be really great

for you to move your career into entrepreneurship,

either immediately post MBA, and if not, then definitely in the long term.

However, for the most part,

what you're going to need to do as an entrepreneur is going to require skills

and abilities that the MBA will not give you.

So you have to be prepared to just roll up your sleeves and use the Internet

and friends and extra MBA paid courses to figure out what you need to know to get

your enterprise off the ground in a successful and integral way.

And I want to leave you with one really

useful distinction that I learned many years post MBA reading a book that sort

of pretends or claims to be in some ways, a substitute for an MBA.

And that's called the One Page Marketing Plan by Alan Dibb.

I actually really love this book.

I should probably get it out, right?

I have it right here because I talked about it in other videos.

I really love this book.

If you think you want to be an entrepreneur, read this book first.

It will teach you

really a lot of things that you need to know to launch your own business.

But Alex draws a really interesting

distinction between the three core skill sets required of the founder juggernaut.

And he draws this distinction because it's

uncommon for one person to really be able to embody all three skills.

The first skill is ideation.

You need an idea,

you need to be able to envision a new reality and a problem that's being solved.

The second category is actualization.

I don't think I'm using his exact words, but this is what he says.

The person who makes the business real from the idea.

And if you think about the typical founder dyads you've got was the ideator.

Steve Wozniak was the actualiser.

He was the person who took all this

brilliance and channeled it into an actual product and actual company.

And then the third skill set is the managerial.

Once you've conceived of an idea,

once you've brought it into existence, then you need systems and people

and structures to move the business forward, serve customers and grow it.

And it's highly unlikely that you,

as an entrepreneur will have all three of those abilities.

You may have only one of them, and at most, you're going to have two of them.

And that means that you're likely going

to need a co founder, advisors, a board and staff.

You're going to need other people who are going to bring your idea or whose idea

you're going to bring into existence in the form of a company.

And what a lot of our clients say is

that the MBA is really, really great for that,

for finding collaborators, investors, people that you're going to work

with to build a company either post MBA or in the long term.

One of the greatest benefits you will get out of business school is the network.

And by network, I mean friendships.

The people who will be a part of your

career from that moment until the time you retire.

So if you want to be an entrepreneur,

think very carefully about whether the MBA actually gives you what you want to build,

the kind of business that you want on the timeline that you want.

In many cases, the answer will be no.

But if the answer is yes, hopefully.

This video has covered all or not all,

but many of the things that you can expect to gain from the MBA and how you want

to be thinking about approaching your business school curriculum, school choice,

and even to some extent, the application itself so that you can use it.

You can use the MBA to propel your career

forward in the direction that you want, even if that means you're going it's solo

and you're going to find your own company in the near future.

If you're going to do that, I really wish you all the best.

We love bold dreamers.

We love people who stand for something.

We love people who are willing to take

risks to pursue solutions to problems that they find important.

So I'm wishing you all the best on your

entrepreneurial journey and on your MBA journey.

Come back here next week for more advice on MBA Monday.

I'll see you real soon.

So wow.

That was really a ramble.

Where was I going with that?

I was saying that.