Is Start-Up Culture Derailing the MBA?
“I don’t think any of my CEOs have MBAs.”
That’s what I said at first, about all the teams we had brought in under the Science umbrella. When we ran the numbers, I was surprised to find that I was wrong.
By now, most in the startup community are well aware of the pervasive opinion that it’s best for wannabe tech entrepreneurs to bypass the MBA — not to mention years of climbing the corporate ladder — to get their hands dirty right away. After all, the thinking goes, the sooner you fail, the sooner you can start to succeed. Building a startup from scratch, winding it up and letting it go is the new MBA. Business school, meanwhile, has been relegated to the second tier, a place where math-oriented overachievers who don’t know what to do with their lives go to put off the real world.
It’s true that some startup founders find themselves more and more averse to hiring employees with a B-school background. Some argue that MBAs act entitled and lack company loyalty, but more commonly, the question seems to be one of speed: It’s hard to build a team primed to “move fast and break things” when you’ve got employees weighed down by hundreds of thousands in loans (and expecting to earn, on average, $153,000 a year).
Most startups enjoy the glamour of a public perception that considers them fresh, new, creative and diverse — nothing like the stodgy old boys’ club that B-school calls to mind. It doesn’t help that Marc Andreessen once famously called business school graduates’ attraction to a sector the leading indicator of a bubble. The most damnable evidence against MBAs may be the success of those who don’t have them — WhatsApp, Box, Snapchat, Tumblr, Facebook and Twitter are all among the most popular and successful startups online today, with nary an advanced business degree among their original ranks.
And yet — to make this argument stick, the anti-MBA faction has to turn a blind eye to a pile of highly convincing evidence in support of the other side.
When we ran the numbers at Science, I learned that more than 25 percent — five of our current class of 18 founders — actually have MBAs.
Popular startups founded by MBAs include Kiva.org, Match.com, Kayak, Yelp, Rent the Runway, Zynga, Warby Parker, Birchbox, Stitch Fix, 42Floors, Relay Rides, WildFire and many more. And while Mark Zuckerberg may not have an MBA, his COO, Sheryl Sandberg, certainly does. A study dedicated to startups founded since 2003 and now worth one billion dollars or more found that 82 percent have at least one founding member or top-level executive with an advanced business degree.
Top schools whose reputations (and coffers) depend on attracting the highest-caliber applicants know they must adapt to survive. As of 2014, nearly all reputable B-schools offer courses in entrepreneurship. Harvard Business School now offers courses on launching technology ventures. MIT just launched a new course designed to connect students to the VC world, and Stanford’s MBA has a long and storied history of placing its alumni in top-level startup positions. Dartmouth also offers its students a foothold in the tech world, through its Entrepreneurship Initiative. MBAs who make it into advanced programs like these are an atypically bright and ambitious bunch — it’s risky for employers to discount them simply because they may choose to wear suits and pencil skirts instead of hoodies and sneakers.
Which brings us to what may be this argument’s most salient point. Despite popular perception, it turns out, when it comes to mega-successful startups — members of what Aileen Lee of Cowboy Ventures terms the Unicorn Club — the hoodie-wearing college-dropout CEO comes as a freak occurrence. Most of the companies to top this list were highly pedigreed thirtysomethings who worked in pairs with partners they knew from school or work. Our inaccurate perception of what a startup billionaire actually looks like may have something to do with the fact that, while it’s true that the average age of founders of highly visible, audience-focused startups like Tumblr and Snapchat is 20, other, less sexy (but equally successful) ventures like LinkedIn, Evernote and Workday skewed, on the whole, significantly older.
What the data demonstrates is that we may be looking at the wrong variables. The issue at hand here may not be MBAs versus non-MBAs, or even twentysomethings versus thirtysomethings. Rather, it appears that success is primarily a question of a) background, and b) previous startup attempts. The overwhelming majority of successful startup founders attended selective universities for undergrad, graduate school or both. More than two-thirds of the billionaire startup founder list attended a Top 10 school. And all worked with a partner with whom they had either attended school before or held a job. The vast majority had founded a company before.
That is to say, the most financially successful startup founders had the strongest social networks and the most experience. It may have been these elements, and not their degrees or lack thereof, that laid the groundwork for their billion-dollar valuations. Top MBA programs offer a multitude of opportunities to build connections, form partnerships and even — for the most industrious — to start companies. For business-oriented individuals who don’t pick up these experiences in college — or even for those who’d like to expand their opportunities — it’s possible that B-school isn’t such a bad gamble after all.
And yet, while this data deepens the MBA/non-MBA question, it doesn’t address a different, more cataclysmic issue: How to keep startup culture from calcifying in the same way many believe the B-school community has. After all, it’s not such a far cry from the standard cultural perception of the corporate CEO (white, male, wealthy) to that of the be-hoodied startup founder (often white, almost always male, wealthy).
According to Cowboy Ventures’ finding, only two startups valued at $1 billion or more had female co-founders — none had female founding CEOs — and ethnic diversity at all of these companies did not reflect the diversity of the potential applicant pool. Without diversity, industry can’t grow. When everyone thinks alike, businesses close themselves off from unconventional opportunities and risk attacking all the same old problems, rather than looking forward, toward innovative sources of revenue.
The issue at hand here may be less one of straightforward discrimination — several initiatives exist to increase the number of women and people of color who code — and more a question of something slightly more insidious called “pattern recognition,” or investors choosing to fund projects created by people who look like themselves and/or like Mark Zuckerberg.
After all, it’s not as if successful executives of color are completely absent from the scene — top companies like Google and Facebook have historically included people of color among their highest ranks. And yet, these numbers fall far, far below the population of women and individuals of color with the skill set to succeed, particularly when it comes to founders.
The question of diversifying startups is a complicated one that deserves a significant investment of research, thought, time and effort. But one thing is abundantly clear: If startup culture doesn’t soon expand its conception of what a successful founder looks like, it risks becoming — and remaining — just as bland, homogenous and stuck as the B-school community many of its members disdain.
Sarah LaBrie of Hippo Reads contributed to this essay.
A long-time entrepreneur and the former CEO of Myspace, Mike Jones now serves as the CEO of Science Inc., a Los Angeles-based company builder that nurtures successful digital businesses by bringing together the best ideas, talent, resources and financing through a centralized platform. Reach him @mjones.