The MBA remains the most popular and lucrative degree in the world. Over the years, it has successfully evolved to respond to emerging business needs, market trends, and student demand. It has become associated with premier business development and management skills.
Big Tech, management consultancies, and investment banks are the most active recruiters of MBA graduates. They go out of their way to conduct multi-stage interviews and campus visits to identify and retain the best talent.
Large and established companies and banks are not the only ones interested in attracting MBAs. Numerous recruitment surveys show that startups are not too far behind.
In the last decade, there has been a steady year-on-year increase in demand for MBAs among startups. A recent study reveals that more than 60 percent of startups plan to hire MBAs this year.
The chips may be down for the tech industry right now, with fears of recession looming large. But going by the economic cycles we witnessed earlier, we know that the tide will change. When that happens, we can expect the more nimble-footed startups to get back to hiring faster than the Big Tech companies.
So we thought it would be beneficial to write this article to help you understand whether working for startups is an option.
What to expect in startup MBA jobs & internships
Top industries that hire MBA grads
According to TransparencyCareer, among the top five startup industries that hire MBA grads for jobs and internships, the tech industry (technology, internet & e-commerce) leads at 66%, leaving the other sectors far behind.
The other leading industries include:
- Pharmaceuticals, medical devices & biotech at 6%
- Food, beverage & tobacco at 4%
- Diversified financial services at 4%
- Education is at 3%
Keep this distribution in mind when you are planning your target list of startups. It would give you an idea of how big (or small) the pie really is.
Startup MBA jobs & roles
Here are some of the popular roles MBA grads in startups are likely to land – technical jobs including analytics & data science, product management and engineering software constitute 30% of startup MBA positions, followed by business development at 15% while marketing and operations are at 12% each.
But it’s also true that in startups, employees have to don many hats and have to go beyond the role that they’re hired for. This can translate into a richer learning experience, compared to working in an established company where the demarcation between roles is more rigid.
Startup MBA salaries
MBA graduates working for a startup can earn on an average $109,082 per year, with a bonus of $12,462. Other miscellaneous components amount to $11,889 whereas stock compensation would be $9,592.
This is lesser than the total average their peers earn in large, established companies, however, 60 percent of MBA graduates are rewarded equity in startups as a performance-based incentive. This stock option alone can translate into a sizeable fortune over time, if (and big IF) the startup takes off.
MBA interns at startups can expect an average compensation of $65,461 to $85,000.
Why do startups employ MBA grads?
What skills are they looking for
The reason why established, cash-rich blue-chip companies recruit MBA graduates is easier to guess. The more successful and wealthier they get, the more they want to attract top-notch business managers to maintain or accelerate their growth trajectory. And when they’re at that stage, they can certainly afford it.
But why would a fledgling startup do it?
MBA grads are not cheap. So, why would a startup add a relatively expensive line item to its balance sheet? Why do we see a consistent increase in the number of startups planning to recruit MBAs?
Here are the top reasons why startups hire MBA grads.
- Balancing the talent mix
- Introducing risk assessment, mitigation and management
- Encouraging critical thinking and analysis
- Adopting operational excellence
- Promoting leadership and networking
- Enabling coaching and mentoring
Let’s look at each in more detail, so you get a better idea of what skills you need to develop to gain their interest, and ultimately a foot in the door.
1. Balancing the talent mix
“Time is money,” as the saying goes. It surely rings true for startups because they do not have the luxury of making too many mistakes in the early stages of growth. In fact, every mistake has the potential to kill the startup.
When it comes to hiring MBAs, it would be more appropriate to say that “timing is money” because it is the nascent stage of their business development when they probably need the expertise of MBA graduates most.
Startup founders are usually ‘disruptors’ who’ve used their strong technical skills to create a superior product or service. But they generally lack the managerial skills to scale up operations.
More often than not, startups (including those with the most innovative ideas or groundbreaking business models) enter a congested and hyper-competitive field with multiple players.
To claim their spot under the sun, startups need top-class managers who know when to push things through and when to let go. MBA graduates, with their multi-disciplinary view of business management, can help startups get off to a good start.
2. Introducing risk assessment, mitigation and management
No business is immune to risks. Startups are more vulnerable to inevitable crises by virtue of their limited experience, size and resources.
A detailed, sound, and realistic risk assessment is key to their success. Startups need a robust risk mitigation and management plan as an insurance policy against current or potential threats.
Usually, MBA degree holders are adept at identifying and analyzing risks, challenges, and opportunities. If startups can afford to engage them early on, they position themselves well to weather the storm of imminent crises.
Hiring MBAs can be expensive, and not all startups can afford them. Those who manage to hire them do so because they see considerable returns on the investment, translating into reduced risks and higher profits.
3. Encouraging critical thinking and analysis
MBA graduates have a proven track record in applying their superb critical thinking skills to business planning and management. Startups need internal challengers to deal with external challenges.
Creating an environment conducive to open communication about constraints, the pros and cons of proposed actions, and data gaps is a prerequisite for success. When analyses are a mile wide and an inch deep, results can be too thin to lead to workable solutions.
Startups hire MBAs because they can, inter alia, facilitate such discussions as smart executives as well as effective communicators. When an honest debate is crucial to the functioning of the business, you don’t want to leave any stone unturned.
Careful scrutiny of data and results becomes a must. It should be managed subtly to avoid unnecessary misunderstanding while leading to result-oriented course correction.
Good leaders are also good visionaries. When it comes to developing new ideas, thinking outside the box, and exploring uncharted territories, MBA graduates can lead the way.
They help startups stay ahead of the curve and put up with the competition by drawing on the strength of unconventional, non-traditional approaches.
4. Adopting operational excellence
Domain expertise, technical knowledge, innovation and disruption are among the top few traits that the founders of a start-up bring to the table, but for this venture to be successful and take it to the next level, operational experience become an essential requirement.
Strategic thinking, a broader understanding of the various functions within an industry, efficiency in managing business processes, management systems, cost and inventory management are crucial for a business to thrive.
MBA grads with their knowledge and hands-on experience in a wide variety of functions and industries can be a good choice to help a company grow and maintain smooth operations.
5. Promoting leadership and networking
Startups need strong leadership to help them find their way through the muddy waters of cutthroat competition and never-ending challenges. In today’s fast-developing world, where change is the only constant, no enterprise can pull it off without strong leaders at the helm.
What’s more, strong leadership is not only about judicious management and strategic thinking. It is also about inspiring and motivating people to do more and to do better.
The definition of leadership has evolved. These days, strong leaders are better known for their emotional intelligence than their technical skills or subject-matter expertise.
MBA degree programs have also evolved to develop students’ leadership potential so that they act as inspiring role models, dependable mentors, and self-aware team players rather than just savvy managers.
6. Enabling coaching and mentoring
Another benefit of hiring MBAs is that startups can use them as coaches and mentors to help other employees hone their technical and leadership skills.
Having access to honest, evidence-based, well-meaning feedback on your performance is a proven method of improving your effectiveness in the workplace.
Startups draw on the qualifications of their MBA-weilding staff as mentors for other employees who might not have had an opportunity to take higher education programs.
This turns out to be a cost-effective approach to fostering iterative learning and on-the-job training, as less experienced employees get a chance to benefit from job shadowing.
How top business schools prepare students for startup jobs
For insights into how business schools support their MBA students, we spoke to Eric Young, assistant dean of the MBA Career Center at Georgetown McDonough.
MCB: What are the popular roles that MBA students get recruited for?
Eric: Startups are often looking for MBA talent to fill generalist roles as problem solvers and decision makers who keep things going and get things done in an ambiguous and fluid environment.
They are also looking for marketing/sales roles as the new venture needs evangelism about their products and services to attract customers and potential investors.
As the startup grows, more structure and formalized processes are needed where MBAs can plug into operational and more specialized roles including finance and product management.
MCB: How does the Georgetown McDonough MBA help students interested in getting into the start-up world by joining an existing startup (as opposed to launching their own)?
Eric: Georgetown McDonough takes a broad view of entrepreneurship in supporting MBA students. While we support those who have an innovative idea and want to launch their own venture, many prefer joining a business that is already underway – at a startup or high growth company, or even at a well-established corporation looking for intrapreneurs.
Georgetown McDonough connects MBA students to the Georgetown Venture Lab located near Capitol Hill which is the home base for alumni launching and running startups for possible internships and volunteer opportunities.
Georgetown Entrepreneurship is a university-wide program that fosters connections among undergraduates and graduate students across schools including business, law, medicine, public policy, foreign service, and more.
Georgetown Entrepreneurship, housed in the McDonough School of Business, has more than two dozen Entrepreneurs in Residence – experienced founders, business operators, venture capitalists, alumni, and friends of the university. They are available for conversations, networking, and coaching on finding startups and high growth businesses that might be a good fit for MBA student interests.
The Georgetown MBA Entrepreneurship and Venture Capital Club is a student-run organization that hosts various events – from career days and career treks to networking sessions and happy hours – to connect with alumni, incubators, accelerators, and the broader startup ecosystem.
The McDonough Career Center, with a career advisor dedicated to entrepreneurship and venture capital, offers a career curriculum and career coaching for MBA students to help students identify their career aspirations, develop a recruitment strategy, apply to opportunities, network with alumni, and negotiate compensation.
The center’s job board receives postings from startups and alumni founders eager to hire MBAs seeking alternatives to the more traditional MBA destinations of investment banking and consulting.
Joining a startup: Pros and cons for MBA grads
MBA grads can expect a lot of exposure and learning in a fast-paced startup environment and have a lot on their plate in terms of responsibilities, handling multiple roles, managing challenges, driving the growth.
The corporate hierarchy is non-prevalent, and many startups follow a flat structure. So you will have more flexibility in your work schedule and more freedom in terms of decision-making. You may get a chance to work closely and learn a lot from the founders or the top brass.
The compensation may be slightly lower, that’s why stock options are usually offered to make it attractive. These stock options have the reputation of making people millionaires (Facebook, Microsoft, Google) if the company goes public.
There are some disadvantages associated with startups which include long working hours, lack of structure and resources, and uncertainty in terms of venture success.
Also read: 8 things to watch out for in Startup jobs
Key Takeaways
When startups are launched, they need robust, motivated, and skilled people to drive the venture towards their ambitious goals.
MBA graduates offer startups a combination of subject-matter expertise, technical skills, and leadership skills that help them navigate the maze of exogenous and endogenous risks.
While they can be expensive to some startups, the benefits of hiring top-class professionals are quite substantial. And so is the return on investment in the long run.
No wonder startups are so bullish on MBA hiring. There’s one big step before you can join as a fast growing startup as an MBA grad. And that is…getting an MBA!
Here’s a list of the best MBA programs for startups.
MBA Crystal Ball admission consultants can help you get there. Send us a note with your details if you think we can work together: info [at] mbacrystalball [dot] com
