A lot has been said about MBA programs’ lack of preparation for entrepreneurial work. I’m even going as far as to say that these programs can unintentionally mislead students by rewarding the wrong things. (I’m allowed to make these comments because I have an MBA and ran a startup.)
Here are a few examples from MBA students I interacted with recently and how I thought they were misled.
Misled into requiring a grand vision to be interesting.
One student I met during a business plan competition had a grand vision for a new fashion company based on cool designs and incorporating the idea of giving a piece of clothing away to someone in a developing country for every piece purchased. Millions of people would bond and communicate through this social exchange.
When I asked the founder what she thought she needed to do first she responded “I need to find a CTO.” Confused, I wondered why a CTO was needed so early for a new fashion company. The response floored me: “because our website will have to be really sophisticated in order to match people around the world in the clothing gifting and communications game.” And no, there was no previous experience working in the fashion industry.
I started to flip out. Calming myself down and asking some more questions about whether she had made any pieces to show potential buyers. No. How about just showing them designs? No… And now you want to hire a CTO? Yes, and also start production. Have you worked in the fashion industry before or can you produce the clothes yourself? No, we’re going to outsource that….
Still bewildered, I suggested this. Go home now and set up an online store. Put a few of your designs up and see if you can get a few people to try to buy them. If yes, then you may be on to something and can decide if you want to continue. If no, then at least you save yourself from spending tens of thousands of dollars too soon. Forget about the social entrepreneurship angle until you figure out if you even have a desirable product.
But the response came back. Well, I can’t do that because setting up an e-commerce store takes a lot of time and also, won’t I destroy my brand if people can’t really buy the things I post?
Serenely, I said this. Spend two hours tonight setting up a Shopify account with your designs and writing the copy. It won’t take you more than that. As for destroying your non-existent brand, use a different name if you want. But do this today so you can have the experience of trying to sell a piece of clothing.
I wonder what happened to her.
Misled into thinking of 5-year projections as fact.
I talked to a team of students working on an education service. They of course had a 5-year plan showing their growth.
“Where do these numbers come from,” I asked?
“These are industry projections for online education.”
“But you haven’t even had one person use your new service. Will these projections hold true for you?”
“According to everything that’s known about this market, yes.”
“But, you don’t know anything about the market yet. You haven’t even spoken to a single user. Why should these industry numbers, which are just forecasts by the way, apply to your service?”
“Well, we kind of need to show this growth in order to make a case for funding.”
Thank you for the honesty. Now the healing can begin.
I heard an entrepreneur talk about getting questions on where the numbers for his 5-year projections came from and then asking the VC about his own experience running a company.
“Where do my numbers come from… When you ran a company did you have your own projections you showed investors?”
“Well, my numbers come from the same place yours came from.”
Misled into thinking that you don’t need to talk to real people and can buy success.
One MBA was working on a game that let people play finance games.
His plan: outsource all development (already priced out at $60K), sell it to corporate clients, get a ton of students to sign up and use it.
My counter plan: Do no development yet, put together a basic version of this game now that you can run manually, get 20 classmates to try it out and talk to them and look at the results. Then decide if you want to start to talk to potential corporate subscribers.
His resistance: I can’t do any of that without first developing the full game. And there’s no way I can get 20 people to do this.
My thought: There’s money to be made as a developer, designer or “focus group” leader preying on the market of MBAs spending their student loan money.
Then again, I’m critical because I have a high standard for MBAs. The problems above are not that unique to their background — I see that behavior in a lot of places. I just hope for better from the students and their programs.