Do Indian entrepreneurs need an international MBA degree?

A key driver of growth in many economies, entrepreneurship is definitely the flavor of business right now. This second wave is built on the lessons of the first – the dotcom boom – when tech start-ups dominated the entrepreneurial landscape at the turn of the century.

Now hordes of young men and women, each one driven by the belief that theirs is the ‘next big idea’ to change the world, are kicking up new businesses across domains.

There’s a virtual outpouring of inventive as well as disruptive ideas powered by an explosion in technology and billions of dollars lavished by venture capitalists on these creative, young minds.

However, this post is not questioning the validity of entrepreneurship.

We are asking: while creative thinking, passion, an appetite for risk, optimism and persistence are clearly enough to launch a new business idea, are they enough to stay the course?

Can an MBA degree increase the chances of success for a start-up? In other words, will an MBA benefit an entrepreneur, who is a very different (read wilder, more rebellious) animal than the others who populate the business landscape?

The jury is still out on this one. But while they were debating the pros and cons, a former Wharton graduate cheekily slipped in a googly. Or was it a hint about the changing dynamics of startup education?

 

Full-time MBA vs Short Entrepreneurship Courses

 
MBA for EntrepreneursJake Schwartz (pictured) co-founded a start-up called General Assembly, a start-up boot camp. Launched in 2011, General Assembly was among the first of many such institutes that have since sprung up, offering short-term courses in the basics of business and technology.

Thousands of entrepreneurs-in-the-making are enrolling in academies such as General Assembly, Startup Institute and Starter School, which teach stripped-down versions of MBA modules.

For only a few weeks and a few thousand dollars, these youngsters are learning business skills, financial modelling, market analysis, web development and coding, while customising permutations of these modules to suit their business ideas and needs.

They figure, why invest close to six figures or more in an MBA when you can attend a boot camp in business education?

Even though these courses are not accredited, the number of 20-somethings opting for them is rising, suggesting that these would-be entrepreneurs are interested in picking up only the tools rather than investing time and money to do the Full Monty.

Besides, the sheer financial investment in a full-time MBA is so much that it is enough to put a damper on even the best out-of-the-box ideas! Imagine an already debt-ridden entrepreneur trying to muster the enthusiasm to launch a start-up.

Bolstering the belief that an ‘MBA’ and ‘entrepreneurship’ are like chalk and cheese are those who point out that being an entrepreneur is hardwired into those who, well, are entrepreneurs.

It’s an attitude that cannot be taught by even the best business school. Read this related post on whether entrepreneurs are born or made.

You don’t need a degree to tell you that you need to work 24×7, give presentation after presentation to angel investors and push through the pain of actually getting your project off the ground, despite the humongous odds.

Here’s a thought for the young and the restless brimming with business ideas. Many full-time MBA programs, like Columbia Business School, run start-up incubators, which offer aspiring entrepreneurs a virtual launch pad for their ventures. While hand-holding, mentoring and funding is pretty much guaranteed, you also receive legal, technical and accounting support from sponsors.

An MBA program also offers fantastic networking opportunities. Since such a class typically comprises professionals with a few years’ experience from diverse domains, an entrepreneur can easily expand his or her network and even leverage opportunities to collaborate.

But let’s say you had the genius and the fortitude to launch your venture minus an MBA degree. Would the degree help you a couple of years down the line, when you are ready to take your start-up to the next level?

Sure, say some experts, who point out that the degree may not help at the discovery stage of a business venture but it sure does at the execution stage. Every entrepreneur hopes that his or her business will turn into at least a small or medium venture, and business school will teach you how to run and operate an established business. Isn’t that what the degree is all about?

So, when your confectionery start-up, which you once ran out of the boot of your car, turns into a neighbourhood bestseller and you’re planning to open a chain of outlets as well as have an e-commerce division, how could you not benefit from courses on the principles of diversification, financial controls, inventory controls, business law, venture capital funding, scaling up and acquiring new customers?

Those in favour of an MBA for entrepreneurs thus point out that attending business school compresses the learning curve and improves the probability of success as it helps you understand business better and avoid pitfalls you would have encountered had you not put yourself through the MBA paces.

When talking about business and, inevitably marketing, can business schools pass up a business opportunity when one is staring them in the face?

Responding to the rush of interest in entrepreneurship in recent years, some schools are strengthening their entrepreneurial education. But that may be a futile exercise, given how quickly the entrepreneurial landscape keeps changing.

There’s another reason they should perhaps stop catering to market demand and stick to teaching what they teach best – how to manage established businesses.

Now that we’ve got a global context in place, what about the big question we raised in the title of this article.
 

Do Indian entrepreneurs need an international MBA?

Let’s consider two different types of entrepreneurs.

The first-generation entrepreneur

Many first generation entrepreneurs who work with us on MBA applications are folks who’d like to move into a corporate role, rather than get back to their startups.

Some do it because they don’t see much upside in their pre-MBA ventures. Others have failed to keep their startups afloat and are looking at a stint in an established firm to learn the lessons and hopefully start another venture in a few years.

These cases are very different from the one we are referring to.

When you are going for an MBA in the hope of coming back and growing your startup, the cost of capital is very high, but the returns aren’t. The risk-reward relationship isn’t balanced.

You may want to take a step back and re-evaluate why you need an MBA, how much of a financial buffer do you have to tackle the MBA loan as well as business investments.

The family business inheritor

You are more likely to be in better position vis-a-vis our first generation entrepreneur friend who is still struggling with the basics of managing stability, profits and growth.

There’s a lesser risk for you for many reasons. The business was launched before you joined it, there are systems, capital and resources in place to manage the show when you are away.

The depressing reality is that 80-90 per cent of start-ups fail. This brings up a question for educators – “Is it right to nudge your students (bogged down by huge student loans) down a path destined for probable failure?”

And then when you are lost in those thoughts, you come across a bunch of success stories of startups that were incubated in business school, got VC funding and went public. The hope and optimism to strike big lives on. We’ll cover more on such success stories in another article.

Before leaving, read these related articles:
Why Stanford is cautioning MBA students against entrepreneurship
Why most MBA students don’t launch a startup.
 
Image source: Jake Schwartz (cropped)


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Sameer Kamat //
Sameer Kamat

Founder of MBA Crystal Ball. Author of Beyond The MBA Hype & Business Doctors. Here’s more about me. Connect with me on Google+ | Twitter | Facebook | Linkedin

5 Comments

  1. Akash Rathore says:

    54%class 10th
    Failed class 12th
    Second attempt 52%
    Sem back while Mech Engg from RGTU

    Than changed my self 70.02% in engineering
    2 years as R&D Enginner
    1 Year as Field Evulater
    Career drop due to Family issues
    Currently Working as Service Enginner in a MNC

    With this change and experience will I be eligible for isb my current GMAT score is 630 and it was my first attempt if its not worthy I don’t want to waste time practicing please suggest me

  2. mohit agarwal says:

    hi , i am mohit agarwal
    age 27 ,
    work ex- 1 yr honda, 2yr-hi tech turning, 1 yr family business
    my option imt ghaziabad(xat-97) – 2 yr prog or 1yr great lakes or later on 1 yr mba at iim’s/isb??

  3. Nita says:

    Hello,
    I am very frustrated Btech. civil Engineer.I was topper in my schooling &college also. I think that I have chosen wrong carrer because I am fed up with my job. Sometimes i think i would have become teacher, inteiror designer, air hostess.So many careers that i see in movies i think that to be mine. I like singing, dancing.. But i am not proffessional. at this stage it is not possible to make it as a proffesion. It is important to do job for my family. Please suggest what shouls i do? Please help me out.

  4. Sameer Kamat says:

    @Akash: Seems like it’ll be a tough target, since ISB gets so many exception candidates who are good in all respects – academics, career, GMAT score. But you’ll never know till you apply. So rather than relying on others’ opinions, you could give it a try.

    @Mohit: 3 transitions in 4 years is generally a red flag for many top bschools. If you’ve now decided to focus on the family business and entrepreneurship, it’ll be better if you work for a few more years in your current role and then consider a 1 year MBA from any of the top programs in India or Europe or Asia.

    @Nita: It’s never to late to change. The guy answering your query has changed 4 careers so far and the current one (entrepreneurship) has been the most rewarding. However, don’t get carried away with what you see in movies. Plan the transition well and be aware of the risks and hurdles that’ll come up. Apart from the timing, the financial status is also important.

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