Should You Go to Business School?

Depends who “you” are, of course.  If you’re a nerd, an entrepreneur, or a wanna-be entrepreneur, no.  A reader of Brad Feld’s blog asked Brad a question about the value of an MBA and part of Brad’s answer is:

“If you want a two year break from life, go to business school.  If you want to meet a bunch of new, generally smart, and always interesting people, go to business school.  If you are a techie but like the business side of things, want to get an intellectual (and functional grounding) in business stuff, want a two year break from life, and want to meet interesting people, go to business school. …

“Recognize this will cost you $100k plus two years of opportunity cost, so make sure it’s worth it to you.  There are many careers where you generally (but not always) need the MBA badge to advance to the next level.  If you are an investment banker or a management consultant, it’ll help.  If you are looking to be a VC, it might help, but it probably won’t, as the population of people being recruited into the VC business continues to be very small.  Don’t be misguided by the idea that doors will now fly open to you since you are a newly minted MBA…”

I’ve always found that physicists and college dropouts are the best programmers.  Microsoft was crawling with both when I was there.  I’ve never hired a skilled nerd with an MBA although I do know that Dan Bricklin went to B school.  It’s where he got the idea for VisiCalc.  But that’s because he was bored in class, I think.

When we were running Solutions together, Mary always wanted to get an MBA.  Never had time, though.  At ITXC we did hire product management and bizdev people with MBAs. Some were excellent but I think of that as despite rather than because of their degrees. Turned out Mary’d learned not only more about running a business by doing it than she would have in school but also that she learned different lessons.  Now that we have time, she’s taking a Master Gardener’s Class but we’re through running businesses.

BTW, none of this is to deny that we had lots to learn about running businesses.  A lot we learned by doing, which meant we had to make lots of mistakes along the way.  Other stuff we learned by observing what others did right and wrong – even from the people we hired.  But, in general, the stuff we needed to know is not the stuff the MBAs seemed to come with (a couple of exceptions below).

To some extent, we had to help our MBAs unlearn what they’d learnt in business school.  The biggest problem usually was that business schools seemed to inculcate their graduates with the myth that data used for making decisions comes in neat and complete packages.  This is what the fictional Larry Lazard from my novel hackoff.com has to say:

“You think this is a case study? Neat little binder says ‘Decisions made at hackoff.com’; has all the relevant facts nicely laid out; we study it; we role play; we do a fucking regression analysis on all this nice data we just happen to have; we have lots of meetings; then we make a scientific decision and we get an A in the course unless our spreadsheets aren’t pretty enough.

“The real world doesn’t work that way. We’re in this meeting here now with all the data we have and none of the data we don’t have. We don’t know what’s relevant and what’s not…”.

Larry, in fact (or rather fiction), did go to Harvard B School (see, he’s not a sock puppet for me).  His point is that they have to make a decision based on what information they have; no one labels relevant information for you in the real world; it’s never complete; and NOT making a decision – even delaying a decision – IS a decision.

If Mary and/or I had gone to business school, we probably would have avoided some mistakes we made in not being imaginative about the use or sources of capital, not using debt, and not hiring a CFO early enough.  We would have had a better vocabulary for presenting to people who had been to business school.  Probably we could have learned all this if we read the right books.  Josh Kaufman has put together such a list at his Personal MBA site but I haven’t read most of them so can’t vouch for the list. BusinessWeek just ran an interesting article about the Personal MBA here.

Pravesh, a commenter on Brad’s post, explains the role of the MBA admissions officer as a gatekeeper doing the job of lazy HR executives in some countries and some industries:

“Most important reason why people pursue MBA (atleast here in India) is because either they want to change their field of work ( from Telecom to Banking for e.g) or get into the marketing/sales/finance etc of their own company.

Thus MBA is only a way which will open the doors to companies who want people for above roles. I dont think either the students pursuing MBA or the companies recruiting them would actually care if the person learnt anything from the B-School education. The only impact the degree has is that you can apply to various different positions. For e.g I have a BS and an MS degree in computer science. But if I also have a MBA I can apply to so many more places. That is the reason in my opinion.”

In some industries in the US – investment banking in particular - an MBA maybe necessary or you won’t get a job.  Also may be true in product management and business development  in large companies.  Maybe this says something about investment banking…

Other commenters point out that business school is a great place to build a network of business acquaintances.  Networking IS valuable.  I should’ve done more of it in my career.  Don’t think doing this in B-school is worth two years for a nerd or an entrepreneur, though.  You build network in every real job you have and the people you’ve been through battles with are very good network indeed.

For a credible partly-contrary POV see the five things Fred Wilson learned at Wharton.  Of course, if you read Fred’s blog regularly, you already know these five things:-}