Do entrepreneurs need an MBA?
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In the second of an occasional series featuring two experts debating a hot topic for students, entrepreneurs Brent Hoberman and Jeroen Kemperman share their views on the value of an MBA for starting a business.
Mr Kemperman also features in a live Q&A with Mr Hoberman’s colleague Frank Meehan. Read the full debate between the experts and FT readers.
Brent Hoberman, chairman of Founders Forum, Made.com and Smartup.io
Before explaining why I think business school is wrong for today’s entrepreneurs, I must start with a confession: I almost went to business school.
It was 1997 and I had left a job in strategy consulting because I wanted to start my own business. I knew I needed more experience and would benefit from meeting mentors, potential business partners and like-minded peers. But the world was changing fast and the internet was taking off. In the event, I decided I did not have the time and opted instead for intensive on-the-job learning. Within 10 months, I was ready to co-found my first internet business, the travel booking website lastminute.com.
If I had studied for an MBA, I would have had to spend two years in the classroom while I felt an urgency to get started. With hindsight, the naivety, optimism and ignorance about the challenges ahead may have served me well.
Traditional business school education teaches students how to manage big companies not how to found start-ups. Some programmes do now try to teach entrepreneurial skills but most are struggling to adapt fast enough to meet changing circumstances and demand. Even devising an academic programme to produce entrepreneurs would be virtually impossible. Some of the most important qualities in an entrepreneur are tenacity, determination and an ability to embrace uncertainty and risk. Business schools can’t teach that.
Then there is the time and expense. Two years is a long time to spend in full-time education when you are young, full of ideas and already have a degree. Entrepreneurs must have an appetite for risk, but debt-laden students may understandably find theirs is diminished. Many will be inclined to seek corporate jobs where their ability to repay debt is more certain.
I have no doubt that opportunities for entrepreneurial learning will continue to evolve in interesting ways and that business schools will be part of the conversation. But they will have to adapt much faster to the needs of students.
I spent some time the other day being pitched by two impressive 14-year-old entrepreneurs. Unlike me when I was setting out, they had no thoughts of going to business school.
Jeroen Kemperman, founder of Treeveo and MBA graduate of Iese Business School in Spain
In my view, there are few better launch pads for a start-up than an MBA programme. The idea for my start-up Treeveo, a web-based platform that helps companies execute large projects, came to me when I started work. I felt I had the technical skills for this but lacked the business knowledge , so I applied for the two-year MBA programme at Iese. During the first year, I effectively designed the Treeveo app in PowerPoint and met some investors who motivated me to move ahead. Over the summer, I took an internship and taught myself how to code. Then in the second year, I launched the prototype, ran the first pilot and obtained financing from Telefonica’s start-up accelerator Wayra.
The MBA supported me in several ways. First, the school accepted my work on Treeveo as an “independent learning project” giving me a full course credit. The skills I then learnt gave me the confidence to work through the financials and identify risks, and I still use most of them today. Marketing was helpful in deciding the first price levels of Treeveo and strategy and IT skills helped me define the direction of the company and apply platform theory.
Another reason to study for an MBA is the network it provides. Your classmates, for example, have at least a few years of work experience against which you can directly test your idea and your professors can offer advice.
The brand of your business school can also help. Early investors and clients will be interested in you as a person, so a reputable school gives you a mark of approval. Furthermore, good schools have investors swarming around them. I met investors who invited me to pitch through a shark tank and a student trip to Silicon Valley gave me invaluable connections, such as former Apple employee Guy Kawasaki and Starbucks investor Neal Dempsey.
An MBA has been described as the world’s most expensive piece of paper. However, it could also be said that a person’s financial position will never be in better shape for starting a company than when they have gone through the necessary hardships of paying for an MBA. It means you will have become used to controlling your spending and living without some of the luxuries you previously took for granted. And with regards to repaying student loans, you have options — you could renegotiate the terms and get a break, for example.
My character was shaped so much through my two years of study that I am a 10 times better entrepreneur now than what I would have been before my MBA.