To MBA or Not to MBA: That Is The Question
By Codie Sanchez Baker
Do you know as Millennials we are the most educated generation? There are about 75 million of us, and 63% have a Bachelor's degree.* That's 47 million people with college degrees. That means in the US we have more millennials with college degrees, than we do people below the poverty line (43 million in US live below that line). Pretty cool progress, huh? Contrast that with this stat, 51% of Millennials say they want to own a business in the next 5 years. Sooo a cool 38 million more business owners coming our way. Are you one of those?
If you are, you may be asking what my friend Reza asked me. He is a successful OR doctor and wants to open up an Urgent Care and provide better healthcare in Hawaii. He's just one of the good guys. But he was pretty honest in saying he'd never studied business. So his question, "Should I go get an MBA to learn business before launching?" My initial response was pretty intense and immediate, but then I held back and I said to myself, let's take a poll. Little experiment, shall we? So I sent this text out to my most respected business owners, major titans in their industries, successful leaders, Private Equity managers, and Venture Capital professionals. My bottom-line entry point was I only asked people who have multi-million revenue businesses or make over a million a year. I know everyone has an opinion but I'm only interested in the ones that have killed it.
Here's what the killers have to say:
Out of the business people I asked, want to be blown away on one stat in particular? Only one of them said they think business school is worth it, instead of getting the experience through actually building businesses. (Now I caveat that with I have multiple friends who said business school is a a yes too via a Facebook post here so see the flip side of the coin).
Ryan Egan - founder & clothing Entrepreneur
President & Co-Founder of SLC Activewear a wholesale clothing distribution business she co-founded in 2012.
Rene Rodriguez - Online Education guru
René has been an entrepreneur for nearly two decades, having built three multi-million dollar businesses. He's an investor, CEO of a media company and an investment fund, speaker, writer, philanthropist, and cancer survivor.
Patrick Barnhill - InC 5000 Fastest growing Biz Founder
Patrick Barnhill is the founder and co-owner of Specialist ID, Inc, a leading brand/distributor of photo ID badge accessories. Specialist ID was named the #8 fastest growing company in Miami and #1,686 on the INC 5000 in 2015.
Wendee Saunders - Telecom, energy & Franchise maven
Wendee has her hands in multiple pots, she's part of the opening up of telecom in Mexico, has real estate holdings, runs franchises in the sweets department and helps other entrepreneurs achieve financial freedom through business.
Brian Gallary - International investment business builder
Heads Business Consulting Group at First Trust, Formerly ran and built some of the largest asset managers domestic and international businesses.
Nely Galan - Former President of Telemundo, Media Tycoon, Former Trump Apprentice
Patrick Daniel - Harvard grad, author, tech entrepreneur
A Serial Entrepreneur who graduated from Harvard, and LSE, has a blog, written a book, created an online community called Junto, studied method acting, and is one of those beautiful brains I love to run ideas by.
David Bocchi - Head of Investment Bank before 30
Head of Aegis Investment Banking Division.
IF YOU ARE SAYING BUT COME ON, I WANT AN MBA:
OK HERE'S HOW I WOULD DO IT.
But first... Do you know that if you dropped in a human from a hundred years ago to today, they would not recognize just about anything we do. From transportation, to communication, to infrastructure, it has all evolved at lightspeed pace. BUT, place that same person in a classroom today and in a classroom 100 years ago and guess what? Sh*t looks just about the same. Teacher lecturing up at the front, some sort of screen to write or project on, and students sitting like children around the campfire in front of said teacher. That model is just BEGGING to be turned on it's head. So ya, I'm with the doubters. I'm with the renegades who say if you are going to educate us Universities you better have teachers that have actually built something besides a research paper none of us want to read. I've been lucky to go to one I found huge value in (Georgetown) and partner with another SMU, who both have entrepreneurs as a major part of the equation but most schools, well they just don't.
Now before you start yelling at me as a hypocritical blasphemer of education... think about the actual cost of an MBA. "$80,000 for tuition, $40,000 boarding and books, $20,000 peripheral expenditures brings the total MBA cost to around $140,000, while the lost income brings the tab to a whopping $260,000." according to Investopedia.
That isn't any chump change. Considering only about 8-10% of individuals in the US make over $100k a year. That's about 32 million people. So you need to be in the top 10% to even start making up for the cost of an MBA.
here's what you need to ask yourself before packing your backpack:
Why are you doing it?
If you are doing it to build a better business, I'd say you are doing it wrong. It's not that I don't believe in the power of an MBA or advanced degree, I LOVE to learn. I love being around people who are learning. I LOVE college campuses. I think if you can afford it and you are going in order to pursue learning, engage with interesting humans and say that you have a degree from XYZ on your resume than you should absolutely go to school. However, people, hermanos, amigos, do you think if you had $260,000.00 to spend on your startup and learning how to build a business by doing it, you might learn more than if you spent $260,000.00 learning business theory? People learn best by doing, not reading about doing. Think about if you read a million books on basketball, would you be Michael Jordan when you eventually picked up the basketball? Nah, sorry. You'd know all the technicalities of playing basketball while you shot airballs just like yours truly.
Can you offset the costs with money from your employer or the government?
If you can go for almost nothing through grants, scholarships, your corporation paying for it while you work (as I did), then I think it's a no brainer. The time, in my opinion, to go to business school is while you are working a 9 to 5. You can learn, on your company's dime, still make money and give back to your company by applying those theories. They benefit because you stay longer and you benefit by learning. Want to hear more about getting it for free?... Get my guide here.
Does your industry necessitate it?
If you are in an industry like mine, finance, where your degree is a door opener and almost a requisite, then an MBA may be a no brainer. If you plan on working in the corporate realm, it's also probably worth it. MBA's have the highest earning potential on average of any group and the lowest unemployment.*** However let me be crystal clear, if you are an entrepreneur, it's not only not necessary, it's you listening to your ego. You want to be able to say I went here and thus I am smart, educated, and worth it. I get it, I want that too. But here's the rub, that won't help your business succeed. #toughlove
Can you get into an Ivy League?
If you can get into an Ivy or a near Ivy, your network and your resume will make it worth it. Having Yale, Harvard, Stanford, Georgetown, Columbia, etc just open doors. Whether it opens VC doors, funding doors, networking doors, that in of itself will make life easier for you, just as being born with a trust fund does. Not fair, and doesn't necessarily mean you are going to succeed, it's just an instant respect factor.
Who are your teachers?
Less than where your school sits on the ranking list, ask them who is going to be teaching you. What are their backgrounds? Are they all academic? Have they built anything before? Which graduates of theirs have built businesses and can you speak to them? Interview these schools just like you would a new hire.
Because in fact for $260,000 you are hiring perhaps your most expensive new hire to date.