Why MBAs are choosing to work at India's vibrant startups – and loving it

After graduating from IIM Lucknow in 2017, Shivani Nayaka started out in business development at Oxford University Press. That stint lasted 10 months.?

Cut to October 2021 and she has risen through the ranks to become General Manager, Content Strategy and Ops at social media platform ShareChat, a LinkedIn Top Startup 2021. This role gives her the elbow room to experiment, fail and quickly pivot, the autonomy to make decisions and, above all, a chance to apply management skills practically, she tells me.?

“It goes without saying that there is some level of added pressure at startups as you are constantly innovating and improvising,” Nayaka adds, but it’s a choice she will make again in a heartbeat, I sense.??

For ISB alumnus Vishnu Acharya, people, company culture and nature of work were the key factors driving his choice of employer. Acharya, who had dabbled in a finance job and co-founded a subscription tiffin service earlier, found his calling at fintech Razorpay (another LinkedIn Top Startup 2021), where he is currently Associate Director - Corporate Development and Strategy.

The execution speed, growth mindset, and constant 0-1 challenges offer a great environment to get multi-functional exposure and fast-track learnings, he says.

Nayaka and Acharya are not exceptions. Their career choices reflect a discernible change in how management graduates in India are approaching their careers.?

A change emblematic of a wider trend?

Till a few years ago, an MBA degree meant a successful – but largely predictable – career path. Attending a top-tier business school helped one get a foot in the door at a consulting giant or a bulge-bracket investment bank, setting one up nicely for career advancement and growth opportunities.

Enter India’s fast-growing startups – and MBA holders have another lucrative option to choose from.

And they are choosing this option.

In India, 25% of employees working at companies featured on the LinkedIn Top Startups 2021 list hold an MBA as their highest degree, according to data from LinkedIn Economic Graph. That’s the highest percentage of people with an MBA as their top degree across the 27 countries for which LinkedIn has released its Top Startups list.

To put that into perspective, the number is 12.8% for the US, 9.5% for the UK, 13% for Germany, 6.4% for China and 14.4% for Israel.?

Why are startups becoming a hot destination for MBAs? To answer this, let’s take a look at what’s happening in the ecosystem.

Who (doesn’t) want to be a millionaire!

Salaries have always been competitive at venture-backed startups and the allure of employee stock options is no doubt a draw, but a flurry of ESOP buybacks over the last couple of years has made people realise the tremendous wealth-creation potential that startups offer.

In the first half of this year, more than a dozen companies — including many on the LinkedIn Top Startups list 2021 — announced ESOP buybacks worth $100 million, media reports indicate.?

From foodtech unicorn Zomato to SaaS startup Freshworks, stories of employees turning millionaires overnight is no longer a phenomenon limited to Silicon Valley.?

“A lot of people have crossed that threshold where they're working for a living, where they are looking to put food on the table… people realise that [a high] salary can change their status to some extent, but it doesn't create a jump in social status versus long-term wealth creation with something like ESOPs,” Harshil Mathur, CEO and co-founder of Razorpay, told me recently.?

The fintech unicorn announced its third ESOP buyback programme worth $10 million for all existing and former employees in March this year.?

Ankush Sachdeva, co-founder and CEO of social media platform ShareChat, echoes this view. Salaries were always table stakes but things such as the quality of peers and long-term wealth-creation potential are becoming way more important, he says. “When we were starting up five years ago, we rarely found a person negotiating for ESOPs… today, most of our employee negotiations get stuck at ESOPs, not the cash component,” Sachdeva explains.

Watch the full conversation in the video below.

The chance to make an impact?

But not all of this can be put down to financial glory — startups also offer people a chance to create an impact and accumulate enriching experiences along the way.

As digitisation catches on and more and more people come online, opportunities abound for those looking to make a difference, whether it’s empowering small businesses or helping content creators monetise their skills.

Meesho’s chief executive and co-founder Vidit Aatrey recounts incidents where job seekers found the company’s mission statement — democratise internet commerce for everyone — relatable.?

“When I read about the problem you are looking to solve, I got reminded about someone in my family. Like my mother or my sister… and I felt that I have seen her struggle with the same issue. And if I can be part of a company that is solving for millions of such people…” Aatrey reminisces.?

About 80% of resellers on Meesho are women. The social commerce unicorn aims to help women entrepreneurs start a business without the need for capital.

Steep growth and learning curve

For young MBA grads raring to go and those with a few years of experience under their belt, the chance to solve complex, hitherto-unsolved problems is a big attraction. Startups provide a high degree of ownership, accelerated learning and, most importantly, early responsibilities and quick recognition if you demonstrate the right attitude and ability.

You don’t have to wait for a decade to get a seat at the table.?

And neither do you have to contend with the labyrinthine rules and slow decision-making observed at legacy organisations.

“MBAs feel that collaboration is greater and there’s comfort in working with like-minded people and sans the bureaucracy that is associated with corporations. Yes, you lose out on the brag quotient of working for a big banner, but that is getting traded for feeling they would make an impact,” says SV Nathan, partner and chief talent officer at Deloitte India.?

Human resource veteran Prabir Jha, founder and CEO at Prabir Jha People Advisory, agrees. While the potential financial upside is very alluring, he feels it’s got a lot to do with a growing spirit of risk and adventure. “Many young MBA grads are coming from more self-assured backgrounds than a generation earlier. They are more comfortable looking at opportunities beyond job security. They also want more freedom than what large corporations typically offer.”

The best part? Even if the startup comes unstuck — yes, nine in 10 Indian startups still fail within five years of inception — you’d have accumulated wisdom and hands-on experience worth years.?

“MBA graduates believe that even if they fail, the startup experience would have taught them a lot and early in their careers. And the resume will still read well for future jobs. So the downsides are not that fatal, but the upsides are very promising,” Jha elaborates.?

Razorpay’s Acharya calls this the compounding effect, not only on business but also on personal growth.?

Startups have a lot to gain, too

PayPal co-founder Peter Thiel once quipped: “Never hire an MBA; they will ruin your company.

Tesla’s Elon Musk was even harsher: “MBA programs don't teach people how to create companies ... our position is that we hire someone in spite of an MBA, not because of one."

Without getting into that debate, the truth is, startups are growing increasingly fond of MBAs as the focus shifts from bringing a new idea to market to execution and optimisation.?

“Late-stage startups like ours are more growth-oriented and focused on profitability. So it is imperative for us to hire MBAs who bring extensive field knowledge, and versatile management, business and analytical skills that make them a perfect fit for product, marketing and strategy roles,” according to Sudhir Nair, VP of talent acquisition at ShareChat.?

Whether it’s marketing, growth, market research or financial planning, formal training helps with running complex models and campaigns, designing strategic processes and defining best practices, experts say.

Besides, the MBA curriculum has kept pace with the changing times. Most management courses now have hard skills like data science and business analytics baked in, which allows MBA hires to hit the ground running at tech startups.

Methodology: The highest degree earned data is taken from profile data by members who are currently employed at Top Startups and is aggregated up to each country.

Data source: LinkedIn Economic Graph?