Don't do that MBA

Last week, I met with this kid straight out of college. High energy, articulate and smart. For a couple of years, while still at college, he had been working part time at his friend’s startup. Now that he had finished college, he had decided to join his friend as a co-founder in their direct-to-customer apparel company.?

He had decided that he wanted to do an MBA from ISB and wanted my advice on how to get in. What started as an introduction to each other ended up being a multi-threaded conversation - his role at the startup, content marketing, CAC & LTV of the business, repeat order rates, shipping costs, branding, differentiation, design, founder equity, fundraising etc.

I really enjoyed this conversation because every question was either met with a “I don’t know. I am trying to figure it out” OR a reasonable answer built from first principles. I could clearly see that whatever knowledge this person had gained was from doing. More importantly, he seemed to enjoy what he was doing.

So, to summarize, here’s someone who is building a company, learning a lot in the process, and enjoying themselves while doing so. So, I really couldn’t understand his motivation for shifting gears and going for an MBA.

Upon further questioning, he revealed that he was really frustrated with himself. He felt that he did not have good frameworks for decision making. More often than not, his job as a founder meant that he had to pick between a bunch of not-so-great choices. Over-indexing on customer satisfaction meant a dent on the P&L. Pricing higher meant lower volumes. Being on Amazon meant not owning the customer. Not being on Amazon meant an extremely high CAC. He was really frustrated that there was no method to the madness. Every decision seemed to come with multiple trade-offs.

In essence, he was encountering the truth that every entrepreneur discovers? - there are no perfect choices, no easy answers. Over time, you learn to choose. More importantly, you learn to deal with the consequences of those choices.

That’s when it hit me - what he needed wasn’t an education. He simply needed more experience. An evolutionary feedback loop of more scenarios, more decisions, better frameworks leading to better better future decisions. He needed time to develop the capacity to isolate signal from noise. He needed to develop his own philosophy of company building. He needed a mentor who could guide him. To use a recently popular meme - He needed more time in the arena.

Therein lies the rub. An MBA is not it. Here’s the part where I am going to get a lot of flak from people who might end up reading this. In spite of having an MBA myself, over the last 10 years, I have developed this conviction that an MBA is a non-essential degree for someone with entrepreneurial ambitions. In fact, it is a deterrent.

Don’t get me wrong - there are many valid reasons for doing an MBA. However, entrepreneurship is a journey of evolution OR apprenticeship. You start building, stumble, get up, learn, and develop your own frameworks for problem solving - how to sell, how to hire, how to cut costs, how to manage output, how to incentivise, how to rebuke, how to motivate, how to compete, how to compromise etc. Another way to learn, a little quicker, is to go work for someone who is building a company and learn by proximity and osmosis.?

Assuming one wanted lessons on entrepreneurship, they are definitely not being taught in a B-school. Even if they were, one could get this knowledge for free on the internet - Charlie Munger’s speeches, Jeff Bezos’ shareholder letters, Paul Graham’s essays, Peter Thiel’s classes from Stanford, YCombinator’s videos on starting up. Also, there are hundreds of people who have taken this journey as founders or as employees at early stage startups. Most of these people are surprisingly generous with their time and advice. There is a real opportunity to watch, listen, do and learn.

Yes, there are some useful frameworks that are taught in an MBA. To that, Matt Damon had a beautiful line in Good Will Hunting - "You dropped a hundred and fifty grand on a f----n' education you coulda' got for a dollar fifty in late charges at the public library". Side note: If you haven’t watched the movie, drop everything else and watch it this weekend.

Broadly speaking, an MBA is for folks who want to become managers. Nothing wrong with that. However, building and managing are not the same. Building does involve managing, but the reverse is not always true.?

So, if your heart is set on building, go build. Don’t do that MBA.