Why More Entrepreneurs Than Ever Are Going To Business School
In the HBO series "Silicon Valley," for example, business school grad Jared completely lacks personality and serves as the caregiver of the quirky entrepreneurs, who initially have no idea how to draw up a business plan.
The idea of foregoing a formal education to pursue an entrepreneurial venture is furthered by tech leaders like billionaire investor Peter Thiel, who has a $100,000 fellowship for students who drop out of college to start a business.
Today, however, more entrepreneurs than ever are going to business school to acquire a hard business background and test ideas before going out on their own.
And a recent study conducted by the University of Pennsylvania found that more than 7% of its 2013 Wharton b-school grads started their own companies right after school - five times as many as in 2007.
With a post-recession distaste for Wall St. and increasing interest in Silicon Valley - nearly a quarter of Harvard Business School's 2014 grads moved to San Francisco after graduating - many MBA candidates at top b-schools are looking to gain an education in how to start and, more importantly, grow a company.
While Zoller doesn't recommend that aspiring entrepreneurs go for an MBA if they have a business idea they want to launch now, he says it is valuable for those who want to scale a business. "An early stage startup doesn't need an MBA skillset, but when a company gets to scale, that's when it becomes necessary."
The startup fever may come, in part, from the growing group of MBAs leading young, hip companies. Warby Parker, Yelp, Rent the Runway, Zynga, OKCupid, GrubHub, and BirchBox were all started by entrepreneurs with MBAs.
"The entrepreneurial spirit is everywhere here," says Wharton second-year MBA candidate Isabelle Park.
Park was in tech consulting and worked at a startup before coming to Wharton. "It's such a closed ecosystem," she says, referring to the way that entrepreneurs at top b-schools have access to very intelligent students with a multitude of abilities, as well as the school's resources. Some professors even invest in students' companies. "People overlook that [business school] is a great source of innovation."
As with any elite graduate school degree, a prestigious MBA also comes with a network of talented people and some name recognition. For example, Park says, when she approaches a venture capitalist, mentioning that she got an MBA from Wharton communicates that she has business training from one of the best schools in the world.
And beyond being something nice to put on a résumé, the degree can become useful when a company is scaling and the board wants to ensure that they get a return on their investment. Entrepreneurs with formal business training have a shot at remaining CEO when the board is ready to take the company beyond the structure of a startup.
Elite universities have responded to the interest from students by developing entrepreneurship programs that give them real-world training, providing apprenticeships and practice with situations like pitching an investor.
According to the Princeton Review's new list of the Top 25 Colleges for Entrepreneurship, Harvard Business School is the best bet for entrepreneurs seeking an MBA. HBS offers 33 classes on entrepreneurship, and over the last five years its alumni have started 182 companies and raised $1.2 million in funding.
Schools like HBS and Kenan-Flagler have business plan competitions that offer hundreds of thousands of dollars in funding for prizes.
In August, the University of Michigan Ross School of Business even used a startup competition as its orientation for first-year students.
Over four days, all 450 students split among six groups developed business proposals for businesses that would become profitable and serve a social need in underprivileged Detroit neighborhoods. The winner, Mo'Tech, won $50,000 to start a discount computer business.
"Top b-schools need to meet the needs of founders," Zoller says.
Park tells us that not every b-school student enrolling with an entrepreneurial concentration imagines having a career as a serial entrepreneur, but in an age when "it's not sexy to work at a bank anymore," as she says, it's easier than ever to get a startup under your belt for the management experience.
She's developing a social media app, but says that not every entrepreneur going to school is looking to enter the tech world. She has a friend who started a vineyard and others who opened a sandwich shop.
Alex Dea, a second-year Kenan-Flagler student who serves as VP of his school's MBA Student Association, spent some time last year interviewing Kenan-Flagler alumni who had gone on to found their own companies. He found that nearly all of them mentioned that pursuing an MBA was right for their path, while acknowledging that it is not for every entrepreneur.
"Business school gave many of them two years to dedicate themselves fully to testing ideas, customer research, entering competitions, meeting fellow entrepreneurs, VCs, etc.," Dea says. They considered the time and money a worthy investment because he says "they gained valuable experiences and contacts in the process that they've relied upon long after graduating."