Because not every business is composed of four hackers around a kitchen table?

Of course not. But how is the MBA helping them?

In my experience, an MBA or equivalent (meaning someone with experience building/running a business) adds value mostly through pattern recognition. In a startup, it is easy to get lost in the noise and go down many wrong paths. An MBA should be able to use their experience and knowledge to guide the company to better paths more cheaply, quickly, and efficiently. And of course, later on, grow the fledging organization (e.g. hiring, scaling the organization, etc.).

I meet and advise many entrepreneurs and most of the time they fall into common traps stemming from lack of understanding of market dynamics, how companies make decisions, what companies worry about, what matters, etc. A common example: thinking about cost and not value when it comes to selling a(n enterprise) product. Or forgetting about risk management for their new cloud-based solution.

For tech startups, there is no question that everyone on the early team needs to understand, live, and breathe technology. A lot of folks are attracted to the Facebook-size wealth generation (including MBAs) and end up destroying value because they don't understand technology.

Full disclosure: I have an MBA. I also have been programming since I was 9 and have built and sold two companies. I fully believe that a lot of MBAs don't add value when it comes to startups in particular (see Steve Blank's recent posts explaining why) and many times in mature companies as well. Of course, that is true for people in general - i.e. there are many engineers, designers, marketing folks, etc. who are just not very good at their jobs. It all comes down to looking for the exceptional gems!

I am willing to bet that you are confusing abilities you already had with abilities the MBA gave you.

Most people with MBA aren't like you and thus won't reap the benefits of perspective.

Could be. After all, MBA is meant to train managers, not entrepreneurs. That's what has always surprised me about the common sentiment towards MBAs: why does everyone expect all MBAs to be amazing entrepreneurs out of the box? We don't have a similar expectation for anyone else. It might have something to do with the attitude (especially during the last boom) - but that's a story for a different time.

Believe it or not, they actually do teach useful skills in B School. And more often than not the grads jump into a career in big business at a significantly higher level than they were at before they got an MBA.

The doors that open up are numerous - like being able to credibly get in front of the right private equity firm interested in doing a wireless roll-up.

There's no magic here. It's just work and education.

That is simply because large organisations have decided that's the way up.

It speaks nothing of whether one become better at doing business what so ever.

I have worked with my share of MBAs they are as diverse as any other group but none of them owe it to their MBA.

It's just a degree. No more no less. My engineering degree helped me to be a better engineer. My MBA helped me to be better at business. Education is good.

There is a very big difference between engineering and business and I am kind of surprised that you would make an argument to the contrary.

Your engineering degree help you become better at engineering because you can more or less predict the outcome of how things behave. The theories are seldomly proven wrong.

If the matter you control in engineering were made of "business matter" life would be much more dangerous than it already is. Humans don't follow the laws of physics the same way.

You seem to be confusing doing good inside larger organizations with being good at business. There is little to no correlation.

Being good at business is more like being good at music. Education is no guarantee for success. Feel free to prove me wrong.

I only have my own experience. And the MBA was as valuable to me, if not more valuable, than my engineering degree. I'm not saying you need an MBA (or that I need one). I am saying that there is value in an MBA, and it goes beyond a rubber stamp demanded by big business.

There is real, honest value in bringing a bunch of smart people from a wide range of backgrounds together for two years to study the way people behave while engaging in commerce. That the nature of business is poorly described by physical laws makes it no less worthy of study. There are good and bad ways to do accounting, finance, operations - even marketing. Why not learn about it? And if you do learn about it, how can that be a bad thing?

Education is about learning how to think. My engineering profs and peers taught me a lot about one way to approach problems. My business school professors and peers taught me an equally useful, and almost completely orthogonal outlook on life.

Accounting, finance and operations have nothing to do with "doing business" in any meaningful way.

They are necessary yes, so is cleaning, your systemadministration etc.

You are not learning how to run a business successfully by learning that.

But the big difference is that to be good at business you have to do business. You can't look it up in a book. With engineering your more or less can.

So unless you are a hired gun working inside a proven industry for a company the MBA is pretty much worthless. The engineer on the other hand seldom is.

In my 10 person company, stuff like finance / cash management, distribution, statistics, operations, marketing, and sales are pretty crucial.

Probably more so than the cleaning of the office (which is handled by the building).

Maybe we are an outlier though.

I'll agree to disagree. I don't believe engineering is any more easily learned from a book than business is. Different skills, for sure. But you won't find the hard part of either in a book. That doesn't make formal study of either subject "worthless".

I didn't say it was more easily learned. What I said was that what you learn in engineering you can apply in one to one relationship and it will work.

When you deal with business you deal with humans not immaterial matter.

That's thee difference here. And for that no amount of education is going to make you more successful. Again feel free to prove me wrong.

How are you going to convince folks in their 60s and 70s to invest hundreds of millions of dollars in something completely unproven if, at the very least, you haven't studied corporate finance and corporate strategy at HBS or Wharton or wherever? Once you get to a certain level just being able to impress Paul Graham or Dave McClure isn't going to cut it anymore.

> How are you going to convince folks in their 60s and 70s to invest hundreds of millions of dollars in something completely unproven if, at the very least, you haven't studied corporate finance and corporate strategy at HBS or Wharton or wherever?

That doesn't make any sense at all. For something completely unproven, corporate finance doesn't even come into picture. I don't know how your wireless example relate to this, since wireless isn't completely unproven - more like "it works and we have a lot of base to build onto.

Let's say we are talking about self-driving cars, as an example of something completely unproven which is well served by millions of dollars. Corporate finance and strategy aren't going to drive that car for sure.

I think folks will be more comfortable handing over vast sums into a business if the people at the helm have significant knowledge of responsibly handling vast sums of money.

The MBA is one indication that a person is responsible handling* vast sums of money. Having some actual experience handling vast sums of money is even better. Without that experience though, the MBA is the next best thing.

* By responsible handling of money, I mean things like having made concious decisions about the debt structure of the business, hedging risks (eg. use of forward contracts to hedge currency risks), care between capital and revenue expenditure for tax purposes. To say nothing of the other areas of the MBA to understand how the different functions of the business work together. And if you're building a large business you're going to have different functions of the business so folks feel more comfortable knowing that the guy in charge knows about these different functions and how they operate.

I know a few people in the asset and treasury management areas and none of them are MBAs - they mostly qualified as accountants or actuaries early in their career (often on top of higher maths degrees) and then go on to become hyper specialized.

I know several MBAs who have no experience handling large sums of money. The whole argument have no basis in reality.

Huh?

So they don't look at whether I have a sound business but whether I have an MBA when they are in their 60s and 70s???

Care to give some examples?

Are you really arguing what I think you are arguing?

Wireless companies are completely unproven? We've been doing them for nearly a century now...

No, but four hackers around a kitchen table can start a wireless company.

Do people actually come straight out of an MBA program and start a company that requires hundreds of millions of dollars in funding?

I feel I would be skeptical of anyone who wasn't already sitting around a kitchen table with hackers at some point in their life and, more importantly, have shown they have some ability to run a successful business that didn't require the massive funding.