We found it extremely hard to compile the list of Billionaire Entrepreneurs with MBA. Several of them in the Forbes Richest list are Bachelors & Master’s Degree holders with many of them earning PHDs before venturing out on their own. The need for an MBA program or knowledge of management best practices were not featured in the must have qualities for Entrepreneurs.
In this article, we will evaluate five factors that have turned the tide against MBA Students pursuing Entrepreneurship.
1) Cost vs. Return
Most top MBA Programs cost around $85000 to $90000 (includes personal expenses) per year. For Entrepreneurial MBA students, the post-MBA goal is to fund their startup and release products/services to the market at the earliest. The weighted salary post-MBA of top schools is in the $150,000 to $190,000 range. This is a relief, as the 5% to 7.5% interest rates on loans are manageable. Still it will take 1-2 years to recover the cost of an MBA even if you have completed an MBA from a top Business School (Read MBA ROI Using Net Present Value where we compare MIT vs. Stanford)
For a regular MBA Student, this is a reasonable proposition but for Entrepreneurs, 2-3 years is the time that they would require to establish their brand with several pivoting, and iterations that are part of a company’s journey from start-up to small or scalable Business.
2) Analysis Heavy – Not a Virtue
MBA courses are analysis heavy. The program teaches students to analyze historical data, find patterns, and with enough information make decisions that would take the company forward. But if you have seen the trends in recent history especially in technology sector, no one would have predicted the rise of Facebook, when the market already had several social networking sites, including the dominant MySpace. Case Study Method, a popular teaching methodology encourages thinking according to scenarios that have been already faced by companies around the world. Unfortunately, successful Entrepreneurs don’t think logically for the most part of it. They would prefer testing out new, ‘crazy’ ideas and pivot several times before finding an optimum market.
3) Experiential Learning vs. Real Experience
Business Schools have incorporated Experiential Learning to offer a similar experience that an Entrepreneur might face. However, it is not the same. Experiential learning has a high margin of safety for errors committed in decision-making. In fact, professors encourage students to think big, and take on risks that in real-life, students would never take. As a start-up, certain decisions would mean the end of their Business. Understanding Context in which decisions are made is more important that risk taking itself. The Leadership Development programs are commendable but the leadership challenges that a start-up Entrepreneur face are completely different from the Field Exercises that MBAs are exposed.
4) Myth of Brand Name
The primary reason why Entrepreneurial students pursue MBA is due to the brand name. Although it is true that Business Schools opens up wide networking opportunities with the Alumni Network and top Employers, for a start-up, the product defines the company. For initial meetings with VCs, an MBA might be a turn-off in several cases, as Silicon Valley and VC community are known to have certain level of disdain for Entrepreneurial MBA students. They might be more critical about the idea, and might just reject the idea, just to make a point.
5) Peer Pressure
The challenges that a start-up faces are huge. When a start-up is part of a Business School community, the Entrepreneurship Centers can be effective if the student spends more time with other Entrepreneurial students and less time with regular MBAs. This is not feasible. Several Entrepreneurial students realize that they have spent endless hours, preparing the presentation deck, doing field studies, collecting market research data, developing products and completing the MBA Courses with reasonably good grades to earn $100k Round 1 funding and large student loan debts, while their colleagues have received $150,000 job offer with half the effort. It is an added distraction, and peer pressure leads some of the best Entrepreneurs off-track.
2020 MBA Research Guide - Choose your MBA
F1GMAT's Comprehensive MBA Research Guide will teach you how to select MBA programs through a bottom-up approach.
Articulating your Post-MBA Goals and Career Path is the FIRST step. Which program will give you that hike in Salary, Switch in Career, Change in Location or Job Satisfaction?
We cover them all through our extensive analysis.
+ How to Choose the Best MBA Program: Factors to Consider
Define Post-MBA Goals
Pick your Path: Generalize or Specialize
Use Moral Algebra Method
Use Multi-Attribute Utility Theory
Understand the Top 5 Risks
Measure MBA Career Service Team's Effectiveness
Use Bookending to Calculate MBA Admission Chance
Use Net Present Value to Calculate MBA Return on Investment
Don't Fall for the Mere Exposure Effect
Best Practices to find the truth in MBA Information Session or MBA Tour
Comprehensive MBA Research Guide: Includes Top MBA Programs by 19 Specializations:
+ General Management
+ Operations Management
+ Supply Chain Management
+ Luxury Management
+ Information Systems
+ Hospitality Management
+ Leadership Development
+ Military &
+ Top MBA Program Ranking
Top 20 MBA Programs - Tuition Fee
Top 31 MBA Programs in United States – Total Cost & Salary
Top 60 MBA – GMAT and GPA (Average & Median)
Top 20 European MBA Programs - Tuition Fee, Total Cost & Salary
Top 20 European MBA Programs (Based on Actual Salary Increase)
Top 20 European MBA Programs (Short-term return on investment)
Top 20 Affordable European MBA Programs
Top 10 MBA in UK – Salary & Fee
Top MBA Destinations Based on Happiness Index
Top MBA Destinations based on Innovation Index
Top 10 MBA Job Markets based on Cost of living and Purchasing Power
Top MBA Destination: By Economy
+Comparisons - Top MBA Programs
Wharton vs. Columbia MBA
MIT vs. Stanford MBA
Haas vs. Ross MBA
Kellogg vs Ross MBA
Booth vs Wharton MBA
MIT Sloan vs Tuck MBA
IMD vs. INSEAD MBA
IIMA vs. ISB
+ MBA in France (2018)
Top Industries in France
Top MBA Programs in France
+ MBA in the UK (2018)
Top Industries in the UK
Top MBA Programs in the UK
Scholarships in the UK
- IoT and IIOT
- Management Consulting
- Post-MBA industries (German Top Schools)