I was browsing Facebook last Sunday and realized it has been just about one year since I graduated from London Business School. In October 2010, after a three-month summer vacation I began work on PingPigeon. While this is so far the most rewarding work I have ever done, it has been extremely tough going, especially before getting funded by Startup Chile. In fact, the year since LBS has been one of the toughest of my career to date.
Thinking about how I could have been more efficient, or what I could have done better over my career to lead to this entrepreneurial opportunity was spurred by some other fellow entrepreneurs on the program. There are some teams from other top MBA programs (HBS, Wharton, Anderson) who are spending their summer vacation down here building companies, ostensibly instead of taking a summer internship. It occurred to me this is what I should have done in the summer of 2009.
Seeing these teams made me consider the MBA process in general and how those two years can help in executing a startup. While schools positioning their MBA program as a bridge to entrepreneurship is well established, unfortunately like most MBA-admissions marketing much of what is said is basically fluff such as: “the MBA will teach you to analyze entrepreneurial opportunities,” “you’ll gain the business skill-set needed to succeed,” or “you’ll get the network you need to raise money.” Yes, all of these are true, but what about the nuts and bolts of building a company during B-school? I think one of the reasons there is so much MBA-bashing in Silicon Valley is due to the fact that MBAs and B-schools abstract things too much; sometimes to the point where we ourselves can’t differentiate between concept and reality. Hopefully this post will spur some thoughts on a few more real-world, unconventional ways business school can help you start a company.
1) Take advantage of the time
You have two years to basically work on whatever you want. Yes there is schoolwork, but if you think B-school academics are challenging, odds are you don’t have the intellectual or emotional intelligence required to be an entrepreneur. Start as fast as you can building your ideas, and fail/validate as fast as you can. You’ve got time for several iterations.
Take the time to network the right way. If you are doing a technology startup, it may be challenging to find the core competencies (engineering, design) you need to build a company. There will likely be people in your program with these skills: first, try to convince them to work with you. If this does not work out- likely because they came to B-school in order to be more of a “business guy” instead of an engineer- get them to introduce you to people they used to work with. Go to meetups, get online and contribute to some communities. As you can see, much of the important networking happens off-campus. However, the basic way networking works is that you add value for other people and they reciprocate. How do you add value in this context? You have a unique ability to bridge the business school and outside communities and this position will help immensely with networking.
Don’t network the wrong way. Don’t go to events and networking sessions just because “everyone else is going/making a big deal about it.” Don’t go to too many “exploratory” events far removed from your interests. Focus on quality over quantity (this can be harder than it sounds at B-school).
And use your summer vacation correctly. The line of thinking/indoctrination in B-school goes something like “get an internship in the industry you are interested in and then ‘leverage’ that to get a full-time offer in that industry.” Unfortunately there are several caveats to this which are hard to discover: 1) Unless you do banking or consulting, getting a full-time offer from the same company is often a long and involved process 2) unless you work in both the industry AND the functional area you are interested in, you won’t learn anything that will help you as an entrepreneur. If you want to do a consumer internet startup and you spend your summer working in finance or sales at Google, you will likely learn nothing of value to your goal. If you somehow get to spend the summer as a product manager, that may be a different story. 3) you make a lot of money during the summer internship: only true for banking or consulting
What is the solution? Spend the summer working on your own startup (duh). Many B-schools have programs that help with this; LBS has an “entrepreneurship summer school” which I’ve heard good things about. Even better is something like Startup Chile, where seed funding is part of the package. Actually getting a company off the ground is a much deeper educational experience- in both entrepreneurship and general management- than being a temporary spreadsheet/powerpoint jockey at a well-known firm.
2) Take advantage of the Money
This advice is especially applicable to Americans, but there is likely some insight for other nationalities as well. There is also a bit of a grey area here, so let me make it clear from the beginning that I’m not advocating any specific financial plan, only commenting on the possibilities.
Many students will likely take out loans to finance the MBA. These loans can get quite big- to the tune of over $100,000. B-school tuition is expensive, and depending on location, cost of living can he high as well. However, there is ample opportunity to use a portion of student loans as seed funding for a startup. This is especially applicable in internet businesses where the capital requirements and initial running costs are extremely low.
There are two ways to go about this: borrow the exact amount you need for school only, and then live extremely frugally, or simply borrow enough for school + a bit of seed funding. There is an extreme amount of leeway in budgeting and applying for student loans so either of these scenarios are realistic. Additionally, if you have good credit, interest rates are low and most importantly, repayment terms (in the US) are very generous.
The obvious issue is that you are not officially allowed to do this. Student loans are not supposed to be used to fund activities outside of studying and living while being a student. So while this is an individual decision, if you do some thinking on your own, you will likely see that this is more of a personal ethical issue and not an actual legal risk.
3) Know before you go
So, you have money, you have time, and you have a good platform to access people. What else do you need to start a company? Well, there is the question of the entrepreneurial idea itself and effectively managing yourself during school. I can’t help you with the first part, but let me close with a short list of miscellaneous advice for doing your startup/MBA:
- Unless you are dead set on changing to a full time job in another industry, the importance of the summer internship is drastically overblown.
- There is a lot of “noise” during business school. There is a lot of peer pressure and group-think. Be sure to actively separate the signal from the noise; this will likely be harder to do than you think.
- Grades, reputation, academic honors and such are of no importance, especially if your goal is to do a startup. Many schools don’t even allow you to disclose grades to potential employers. If you are pining after the deans list simply to be on it, you are not an entrepreneur; you are just insecure.
- If you mess up your startup during B-school, you have a built-in exit plan: get a job with the help of career services. So relax, and commit yourself to getting your company off the ground!