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Is an MBA a plus or a minus?

TechCrunch posed the question: Is an MBA a Plus or a Minus in the Startup World?.

The post centered around a debate with Guy Kawasaki, who argues that MBAs are not needed in the startup world; in fact, he says, these provide negative value. Kawasaki summarized his stance in a Forbes article a few years ago:

Forbes: “What is the value of an MBA these days for young college graduates who want to start their own company?”

Kawasaki: “Probably about a negative $250,000. (I have an MBA, and I was once a young college graduate.) I don’t think an MBA matters very much for starting a company. A much better educational background is an engineering degree. You can always hire MBAs, but if you don’t have the ability to conceptualize and deliver a product, you’ve got nothing.”

Anyone who says an MBA is a negative — for any size business – is just trying to stir controversy.

Home School vs.  The Classroom

Along with being a manager for ESPN, I’m in startup mode as the owner of an S Corp, Gunner Technology.

I also happened to just get my MBA from the University of Florida.

The education I got from earning my MBA has proved invaluable in both situations.

For example, someone recently approached me about becoming a partner at Gunner Technology. I turned to a long-time entrepreneur for advice, and had I not gotten my MBA, I wouldn’t have understood a third of what he was talking about. For Instance,

  • Shareholder agreements
  • Grantor agreements
  • Board of directors
  • Debt vs equity
  • Valuation
  • Bankruptcy
  • S Corp vs LLC
  • Balance Sheets

In an hour conversation, these are some topics that my informal advisor told me I had to consider when taking on a partner.

As a manager and social media strategist for ESPN, I need to understand what a PL statement is. The difference between B2B marketing and B2C marketing.

I’ve learned how to measure Customer Lifetime Value. I now know why ESPN’s brand is invaluable. I know how advertising affects price elasticity.

Some of these things I deal with directly at ESPN. Others tangentially through discussions with other groups.

Either way, in either setting, an MBA already has proven invaluable.

As for an engineering degree, I turned myself into a web and software developer after graduating with a BS in Journalism and an MA in Communication. It was a hobby.Self-teaching was easy because I quickly found out what I didn’t know.

I took one engineering class (Advanced C++) and quickly dropped it because I wasn’t got to learn anything and learned what I needed to know about engineering from books and online tutorials. I wanted to build an application that did “x,” so I read blogs and online tutorials until I could figure it out.

Business is different. You simply don’t know what you don’t know.

One of my classmates said it best when asked what he wanted out of the MBA program.

“To be able to read and understand the Wall Street Journal,” he said.

And that’s what an MBA does. It teaches you what you don’t know and how to figure it out. You learn about doing business.

I would encourage any student to pursue an MBA at some point in their professional career.

Get a job first, though. This has two benefits.

  1. You get real world experience that you can use as a basis for examples while going through the program
  2. There is a good chance your employeer will pay for part or all of the program

Trust me. It’s worth it.

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2 Responses to “Is an MBA a plus or a minus?”

  1. avatar kim says:

    Depends on one’s perspecitive or training. I already understood a lot of those things and have not had an MBA. I do have product development and design background.

    I’ve helped to launch several start ups doing the marketing and strategic planning and helping with the product to match the market’s demand. In most instances we worked with accountants or operations managers or internal staff for related P&L issues. Now I’m trying to launch my own manufacturing company and I have the knowledge, experience and exposure to make the kinds of decisions and choices necessary for this to be successful. I would consider hiring an MBA at some point or outsourcing to a CFO for some things,.

    If I wanted to go higher up in an organization though it’s almost a given that people have MBA”s to get there. But large corporations are not necessarily the most innovative. And I certainly don’t agree that those in advertising get an MBA unless there is a route that can more support a creative initiative as opposed to an operations one.

    Engineering used to be the de facto career direction for those seeking positions going up the corporate ladder. I don’t think so any longer and I don’t think that is a good thing for American corporations. We’ve given far too much of our capabilities over to China including our engineers and this is why we are where we are.

    So I agree with Guy. It’s not necessary to have an MBA if you want to start up a company……

    And I agree with you that one needs to work at least 5 years before getting an MBA so it has more meaning in the workplace. But undergraduate degrees on their own seem to be worth less and less these days (and I don’t agree with that either).

  2. avatar Cody Swann says:

    Thanks for the comment Kim.

    I agree with you that an MBA is not NECESSARY to start up a company. But what Guy says is that it is a NEGATIVE.

    That’s just FUD.

    Your comment about shipping engineering is interesting and makes MBAs even more important.

    We can now ship the “how” oversees, allowing us to focus more on the “what,” which helps us build more creative leaders.

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