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Do You Need an MBA for Startup Success?

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In , an MBA will only get you so far.


One of my co-founders recently told me that now that he has his MBA, he knows how to run a once it’s up and running, but he has no clue how to start one from scratch. So in other words, he can execute a , but he isn’t equipped to turn an idea into an actual functioning business -- the core activity of an early-stage startup and one that requires a fundamentally different mindset and set of skills than execution.

It turns out that there are two stages in entrepreneurship: discovery and execution. And the fact that all three of my company's co-founders -- including me -- were MBA students doesn’t bode very well for our startup. We took a course on how to write a business plan, of course. But even the professor teaching the class repeatedly admitted that the business plan, as a document, is pretty much outdated as soon as it’s finished.

The problem is that should be drafted and executed in relatively predictable environments. The environment surrounding our startup wasn't at all predictable. In fact, it was highly unpredictable.

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In its earliest stage, our had so many unproven assumptions -- our customers, prices they'd pay, level of demand for our products/service -- that it was hard to verify our market size. By the time our 31-page business plan rolled off the presses, it was a house of cards that I knew would get a good grade, but probably wouldn’t work in the real world.

Frustratingly, I didn't know how to go about finding a business model that would work. The rest of my MBA education was teaching me how to execute an existing business model (cost accounting, strategy, marketing, economics), but where was I supposed to learn how to search for the business model at the first stages of a startup's life cycle? I wasn’t finding the answers in my MBA courses.

I was finally enlightened by reading books like ’s The Startup Owner's Manual, The Lean Startup, Alexander Osterwalder’s Business Model Generation, and Leonard Schlesinger’s Action Trumps Everything.

To my MBA program’s credit, it has allowed me to create an independent study course on business model discovery and development based around many of the materials mentioned above. This semester, I have been able to learn and implement methodologies appropriate for the discovery stage.

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We’ve now explored and tested several . Our current plan has totally changed from what it was eight months ago, and, as a result, our business is in a much healthier place. Every day, more and more of my business model transforms from assumptions to facts, and I get closer to the execution stage where I can really start to scale and flex those MBA muscles.

If you’re considering pursuing an MBA before starting up, here are three important things to remember:

  1. Startups are not the same thing as existing or established businesses. They require a much different approach. So think creatively.

  2. Standard business skills and education are extremely important for the execution stage of business.  Yet, they are of limited use in the discovery stage of startups.

  3. For early-stage ventures, ask yourself: “What is the right business model and how can I prove it?”

Do you think an MBA is helpful when launching a business? Share your thoughts in the comments section below.


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