How to succeed in business without really studying
Iloved university so much I did it twice. But now there’s lots of talk about whether, in these fast-paced times, it’s worth getting a degree that’s going to take you three years or more to finish when you could be already working at the coal face.
It made me wonder if starting a business is a better way of gaining an education – specifically, doing a master of business administration (MBA) degree – than sitting through lectures.
I put this question to venture capitalist Jamie Pride, who has worked in the corporate world and is also a startup guru, having founded six of them. He also has an MBA.
‘‘A startup is not the new MBA, and an MBA won’t prepare you for a startup. The skills you learn in a traditional MBA don’t apply to the startup world,’’ he argues.
A traditional MBA is about critical thinking and has been geared for a corporate environment.
‘‘Corporate businesses know who their customers are and their product and they’re looking to sell more of their existing product to their existing customer base.
‘‘In contrast, a startup is in search of a scalable, repeatable business model.
‘‘Most startups don’t know who their customers are and have yet to find a business model.
‘‘The skill you need in a startup is experimentation, which is different to the skills needed in the corporate world.’’
I put it to Pride that surely he must have gained some skills in his MBA he can apply to startups.
‘‘Almost everything you learn in an MBA is going to be wrong for a startup. It’s a high-failure environment, and most startups are trying to find a business model from a problem they’re looking to solve,’’ he says.
‘‘So, the core skill in a startup is customer development. You need to understand the problem you’re solving, who you’re solving it for and how you are solving it in a different way. Because most have already gone past that part of their lifecycle, those skills aren’t exercised or encouraged in the corporate world, and hence in an MBA.’’
Pride says he learnt how to run startups through trial and error. But he points to programmes such as the lean startup movement as an avenue for aspiring entrepreneurs who want to learn how to start a startup.
This method encourages founders to develop a ‘‘minimum viable product’’ – a working prototype – and go straight to market.
Pride says if he had his time again he wouldn’t do an MBA. ‘‘I would swap my MBA for a psychology degree. Understanding customer behaviour, why people make decisions and their spoken and unspoken needs far outweighs your ability to read a balance sheet. I’m not saying those skills aren’t important and, as a business gets larger, entrepreneurs need to develop those skills. But they are not important in a startup.’’
Nick Wailes, director of the Australian Graduate School of Management’s Business School, has a different perspective. AGSM runs Australia’s top MBA.
‘‘Over the last few years we’ve developed students’ startup capabilities so they get the best of both worlds with our degree. We don’t see a startup and an MBA as an either/or situation,’’ he says.
‘‘An MBA is a great way to build a real business from an opportunity.’’
An MBA teaches people about running a business, marketing, financing growth and hiring. ‘‘If you make a really bad hiring decision or your financial controls are bad you can fail. But if you have the right skills, you can learn from success, not failure.’’
He says angel investors tell him that often they come across a good business idea, but the team doesn’t have the right foundations in place to attract investors.
‘‘In my view, an MBA is about how to take a startup and scale it to be an effective business.’’
Realistically, there are lots of ways to build a startup and some successful founders will come via an MBA and others won’t.
But as Pride says, unless you have genuine resilience, running a startup will be tough.
‘‘You’re only going to survive if you’re happy to be punched in the face pretty much every day of your life, for years and years until you have success.’’ Euphemistically, of course. –Sydney Morning Herald