An MBA: The founder’s recipe for failure

So you think an MBA arms you with the skills needed to launch a successful company?

Think again. The degree might actually make you risk averse and cripple your ability to innovate.

In a recent article for Quartz, I wrote about how MBA programs are not designed to help students become better entrepreneurs. However, when MBA graduates decide to go out on their own, I found that they have the same failure rate as non-MBAs. I talked to professors, angel investors and venture capitalists, and none sees a correlation between a startup’s success and the founders having an MBA. Collectively, they have dealt with more than 300 such companies over the last 20 years.

While there have been recent MBA startup successes like BirchBox (Harvard) and Warby Parker (Wharton), the founders of these companies were already high-achieving individuals who got into top programs and probably could have succeeded without their MBAs. In an article by Reuters, career services departments at major MBA programs reported that in 2011, nearly 5% of the graduating class started a company right after graduation. Taking just Harvard and Wharton, which each graduate 800 MBAs every year, that means about 80 startups were founded in 2011, from which only one of two have become standout companies (i.e. the BirchBoxes and Warby Parkers). The overall failure rate is about 90% for all startups. (In venture capital terms, a failure is when the startup fails to produce a positive return on investment for the fund.)
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“I’m not sure it is the MBA degree that matters positively or negatively for startup success. But I do think the expectation of what that degree should bring is what creates a lot of cultural and performance problems with MBA’s and startups,” says David Stern, a prominent VC at Clearstone Ventures. One of the common concerns voiced by startups who have MBA founders is that they are book smart and detailed, but lack the ability to change and adjust quickly in a fluid market.
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Innovation is hard. Yet, it’s the only thing that will allow you to create a truly unique company that can have staying power. Looking at the past for innovation is a mistake. Yet, MBA schools and large corporations tell us to do this all the time. There are hundreds of startups that had great teams, huge funding, but could not identify the right product to build because they did not move fast enough in terms of identifying the right innovation for their particular market. Maybe they should have skipped the MBA and gotten right to work.

http://qz.com/53303/an-mba-the-founders-recipe-for-failure