Does An Entrepreneur Need An M.B.A.?
When evaluating entrepreneurs for potential investments, Rick Burnes, founder of the VC firm Charles River Ventures, shared in the book The VC Way “it helps to look at the educational level a person has attained and the institutions he or she attended. It takes some determination to get through a demanding university.”
I began researching MBA programs shortly after completing my bachelors a little over 10 years ago. I knew I wanted to attend a demanding program if I got the opportunity because of the opinions held by many investors like Burnes. These opinions weren’t new to me because while raising capital for a previous start-up, I had been told by several investors that my lack of an MBA was a negative.
Last month was a big month for me because I successfully completed that demanding MBA: Eller MBA at The University of Arizona. On top of that huge milestone, I was also fortunate to be a member of the team that won the Grand Prize in The University of Arizona McGuire Entrepreneurship’s 2010 New Venture Competition. Eller MBA and the McGuire Entrepreneurship Program was also where my latest venture TruckItNow originated (click here to follow TruckItNow on Facebook, click here to learn more about the McGuire Experience and click here to learn more about Eller MBA).
My MBA research showed that the McGuire Entrepreneurship Program at The University of Arizona was ranked in the top 3 in the US and #1 among all public universities. Other pluses for The University of Arizona was its top ranked Master of Information Systems program and a top 20 research university allowing it to keep company with schools like Carnegie Mellon and MIT.
Yet, my entrepreneur hero and role model Guy Kawasaki recommended that entrepreneurs just like me not seek an MBA. Guy Kawasaki wrote in a 2004 Forbes article “I’ve come to believe that an MBA is a hindrance to entrepreneurship.”
Who is Guy Kawasaki? Guy helped launch the Apple Macintosh computer in the 1980s and is now founder and CEO of Garage Technology Ventures where he became a renowned venture capitalist. You would think Guy must not have an MBA based on his negative views but you would be surprised. Guy actually completed his MBA studies at UCLA with a concentration in Marketing. In the same article, Guy shares that he felt an MBA for entrepreneurs was actually more than worthless saying it had a negative $250,000 value. This article by one of my role models and someone as knowledgeable and experienced as Guy had a great impact on me and almost led me to abandon my dream of an MBA. (click here to read the article.)
Yet in the book The VC Way, several venture capitalists take a position opposite to Guy Kawasaki on the value of an MBA for entrepreneurs. Several successful venture capitalists such as Rick Burnes and my investors as mentioned earlier, feel an MBA increases an entrepreneur’s value greatly. Several VC’s in the book even went as far to require their entrepreneurs have an MBA before making an investment. Those VC’s feel a business education is much more efficient and less expensive when compared to learning on the job (put another way: learning on the VC’s dime.) As stated in the book, VC’s often seek entrepreneurs who have invested time and money in themselves through the formal business education process.
So how could an MBA help me? Over the years, I have been in business dealings where I didn’t necessarily have the right information, knowledge, education or experience but fortunately my work ethic, some talent and a little luck were good enough to get me in the deal. My business attorney once said during a complicated deal “based on your education and experience, you should not be in this deal. But since you are, we should try to make the most of it.” (The truth hurts!)
During my application interview with The University of Arizona Eller MBA, Cynthi Knight asked me “why would someone like yourself who already owns a company want an MBA now?” I replied “if you added up just some of my business mistakes and their related costs over my short entrepreneurial career (I can think of a couple in the $100,000’s range), I could have already paid for several MBA’s. I decided to get my real MBA this time instead of making my next on the job mistake:)”
I can understand why my choosing to get an MBA after already starting my career in entrepreneurship leaves people like Cynthi confused. But compare that to the questions I ask myself. As an example, I often ask “what opportunities am I failing to recognize?” I felt that having an MBA would help me become better able to see opportunities that would have previously escaped me. “If investors value an MBA education, then why not me?” was another question that came to me often. If experience and education help improve a person’s instincts (as illustrated in the book Blink), then an MBA should help an entrepreneur improve their “business management” instincts. While an MBA is not the only solution, I felt it to be a great tool that when combined with experience can greatly increase an entrepreneur’s opportunity for success.
There are thousands of entrepreneurs who don’t have an MBA who are extremely successful and for anyone to say they all need an MBA would be unrealistic and careless. The same could equally be said for Guy’s statement that entrepreneurs will not benefit from an MBA and would actually lose money is just as extreme. It’s not surprising that I disagree with Guy’s evaluation on MBA’s for Entrepreneurs. I am excited and happy to now be in a position to evaluate Guy’s statement firsthand with my newly minted MBA and the congratulations and well wishes I have received from previous investors, future investors and business partners. I am still a huge Guy Kawasaki fan but this was one recommendation I am happy I disregarded.