But Steve Jobs Didn’t Go to B-School…

 

In the past few weeks, I’ve had several conversations in which a prospective applicant said something like this:

“Are business schools really worth it? Mark Zuckerberg (Facebook), Steve Jobs (Apple), Bill Gates (Microsoft), Sergey Brin/Larry Page (Google) didn’t go to business school. If you want to start a company just do it! B-school turns you into a big corporate type and deadens the entrepreneurial spirit. Just hang out in Silicon Valley or one of the other rich entrepreneurial ecosystems and learn how to start companies there. Who ever heard of a company being started in B-school?”

And so on. Perhaps you’ve said or heard some of the same things—often at a lunch table or beer bash, loudly enough to gather a number of listeners. The combination of selective facts and romantic brio seem to make this an irresistible argument. But what is not acknowledged offers a compelling argument to go to business school if you want to start and grow a company.

The applicant’s first error is to lump all b-schools together. A task force that I recently chaired reported that some 12,600 institutions in the world award degrees in business. Ninety percent of these are unaccredited and largely unknown. Of the ten percent, a subset is selective, meaning that they admit less than half of the applicants. The accredited and selective schools tend to be better endowed, to have stronger alumni networks, more prominent faculty, and attract stronger students. And then within this subset are schools that have strong resources for entrepreneurs. For instance, Darden has one of the strongest centers for entrepreneurship and innovation—the Batten Institute—which operates a small business incubator, arranges venture internships, supports a range of courses, hosts conferences and competitions, and is the nexus of a network of entrepreneurs and venture investors. Our incubator has started some 60 companies and counting. Just this week, Princeton Review and Entrepreneurship Magazine ranked Darden #3 among the top 50 graduate entrepreneurship programs in the U.S. Schools like ours serve entrepreneurs very well. To paint all b-schools with the same brush is to deal in stereotypes. Don’t make that mistake.

The applicant’s second error is to generalize from a small sample of special cases. It is fun to summon up the names of a few famous and successful entrepreneurs, but are these representative of the whole population? For each case, it is possible to offer a counterexample of entrepreneurs with MBA degrees. Frank Batten founded the Weather Channel; Phil Knight co-founded Nike; Scott McNealy co-founded Sun Microsystems; Henri Termeer grew Genzyme from fledgling to major biotech firm; Meg Whitman grew eBay from a tiny startup to an online behemoth; Warren Buffett grew Berkshire Hathaway from a small failed textile manufacturer into a major conglomerate.

Plainly, one should not assume that entrepreneurship is only associated with founding a company. We know that many of the same qualities are associated with growing a company. Why should we expect entrepreneurs to toil only in fledging startups? Large companies, seeking to rejuvenate their cultures, want to hire people with entrepreneurial spirit. At Darden and its peers, most MBA graduates are hired by mature firms, but this does not mean that they are not entrepreneurs in fact or spirit.

Yet another error is to imply that once you work for a big company, you’ll always do so. In my MBA graduating class, about 95% of the students went to work for the S&P500 firms or equivalent upon graduation; by our 20th reunion, only a small fraction remained there. Among Darden alumni, I observe that by the 10th or 15th year after graduating, many alums will have made the leap to a small startup, a family-held firm, a firm they have bought, or a small professional services firm—these alums usually wind up in senior leadership positions, which affirms Darden’s strength in producing general managers. And they are also entrepreneurs.

Most of all, I challenge the applicant’s suggestion that “hanging out” or “just doing it” are always and everywhere more developing than a business education. Such arguments are variations on the virtues of the “school of hard knocks.” Mind you, I have enormous respect for experience as a teacher. But the school of hard knocks is loaded with, well, really hard knocks. The failure rate of small business startups is quite high. Census data suggest that about half of all startups are still alive after three years, and only 29% after 10 years. In that time, you can burn through a great deal of effort, relationships, and money (usually gained from family and friends). For every knockout success like Steve Jobs, there are hundreds of thousands of small business failures each year.

A great B-school education won’t guarantee success, but should improve the odds. It will accelerate your growth, compressing years of hard knocks insights into a short time. It will build your business acumen and help you understand the pitfalls and risks on which other businesses have foundered. It will leaven your romanticism about entrepreneurship with a very practical grasp of what it takes to succeed in business. Perhaps most importantly, a business education will disabuse you of the notion that entrepreneurial success is a matter of the great lone individual, the genius, the maverick like Jobs/Gates/Brin or whoever else you idolize. Instead, b-school will teach you that entrepreneurial success is substantially about teamwork, networks, and business relationships; success is not about opportunism but about living into a purpose for your life with intentionality and integrity.

Philippe Sommer, Darden’s Director of Entrepreneurship Programs says,

“If you know you want to be an entrepreneur you are already in a different place than many who come to business school. Entrepreneurs come from families that are entrepreneurial! Is it in the genes? No, it is the observation of the experience. These folks have seen the pros and cons of being an entrepreneur and understand that the failure of the venture is not the failure of the entrepreneur. If this is not your background, then it is incredibly scary to think about being an entrepreneur. Many of the students in our MBA program did not understand what are the real benefits and risks of being entrepreneurial. That is one of the things an entrepreneurship program like ours will teach you. You may find you love being entrepreneurial and now have an option in life you might not otherwise have had. I often say I don’t teach “entrepreneurship,” I teach “self knowledge.” We have many students who come to our program having started a business and sometime succeeded quite well and other times failed. What they all realize is if they had known more about how to run a business they would have avoided many of the mistakes they made. That’s a pretty good reason to get an MBA. After all if Mark Zuckerberg had started his business in business school he might have avoided the stupid things he did to his partners and not spent the rest of his career litigating with them and in the end paying them to correct his mistakes.”

Should you go to b-school or head off into the entrepreneurial ecosystem? I’ll let you decide, but you should consider some questions first. Do you have a clear business idea, including clarity about the product/service, the customer, the suppliers, and the investors? Do you have the grubstake of cash to sustain you through a long spell? Are you so impatient to get going that you can’t bear the thought of organized learning? If the answers to these questions are “yes,” then get going and good luck. But for most twenty-somethings I encounter, the answers are pretty hedged. They are eager to learn and glad to have the help of teachers and mentors. They hanker for more than they’ve been doing and want to have an impact with their lives. But they are still searching for the spark, the big idea, the project into which they can channel their energies. For them, B-school makes good sense. You decide.

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15 Responses to But Steve Jobs Didn’t Go to B-School…

  1. Jeff Smidt says:

    Brilliant! This is precisely why I came to Darden.

  2. DardenFirstYear says:

    Nice post by Dean. Of all the B-school deans, I think our Dean works the hardest. :-)

    There is a common theme in the companies that applicant in question is making. Mark Zuckerberg (Facebook), Steve Jobs (Apple), Bill Gates (Microsoft), Sergey Brin/Larry Page (Google) – All these companies are tech companies. There is less correlation about B-school(or any school) and success in Silicon Valley.

  3. Andrien Zanier says:

    The best explanation about what “entrepreneurship” really is!

  4. the starr says:

    I 100% agree that the title of an “entrepreneur” should not be given only to people who start their own company.

    To develop a new business, to motivate people to work in your team are no less qualities of an entrepreneur that people working in organizations possess, and they have every right to call themselves entrepreneurs.

  5. John Munford says:

    Wow! So many great observations…after having run my own business for fifteen years, my Darden education continues to influence me. I completely agree with Dean Bruner that my great Darden education increased my odds of success. Congrats on the #3 ranking!

  6. Lynn Garnett says:

    A better explanation for “why b-school” there simply is not. Dean Bruner beautifully articulated what many in “the business of business school” have not. In the 14 years I have been in the admissions business, the most successful candidates interested in entrepreneurship are those who understand the importance of managing and taking responsibility for themselves and their actions. This is of premier importance in order to lead and manage a company with any great success. Oftentimes, it is the candidate who is the “bootstrapper” who has had to lead and manage himself and/or siblings from an early age who truly possesses the necessary fire-in-the-belly to get through the tough times often experienced in a startup. What I believe the Darden education offers above all others is the ability to ask the right questions to get to the end result. The #3 ranking is not at all a surprise. Congratulations.

  7. Bill Tonetti says:

    I liked your article and found many parallels to my own career. I am, as of today, a 2-time successful entrepreneur and there is no doubt in my mind that Darden has helped me to tip the scales with both ventures. Like many Darden grads and entrepreneurs, my first job was for a large, mature, even somewhat stodgy company. Frankly, I don’t think I could have gotten the job at that company without my Darden MBA, and I certainly wouldn’t have been able to perform to the same level without it. And most importantly, that first post-MBA job helped me to develop as a businessperson and manager and exposed me to what would eventually become my first successful venture.

    That said, everyone is not born to be an entrepreneur, and few realize just how much financial and personal capital they’re really putting at stake over the life of a new venture. So much is at stake, in fact, that I was very, very happy and equally blessed to have a good business education in my arsenal.

  8. Steve Milford D '81 says:

    There is, I think, the perception that there is some secret, magic, piece of wisdom that is imparted by b-schools that enables graduates to succeed (if only that were true!). But smarts, drive, perceptiveness, and to a large extent luck (ok market analysis, timing, whatever) are not the solely endowed to business school students. B-schools enhance the tools available and provide a familiarity with organizational models and contexts that can be a benefit as the Dean points out.

    B-schooling does help you get a better grasp on whether, as an entrepreneur, you were primarily lucky or primarily good. I can tell you from personal experience that there are far more one-trick pony entrepreneurs (who succeeded due to fortunate circumstances initially, and have repeatedly failed at subsequent businesses) some who have driven their initial successes into the ground because they confused being lucky with being smart. Alternatively, the recruiting success that b-schools provide can also make it economically unattractive for graduates to take the risks that lower salaries might encourage. Comfort encourages stability; discomfort foments change.

    I’ve seen a truck driver become a billionaire (Mike DeGroot – Laidlaw) and walk away from his business wealthy; a UPS driver develop a household name product (John Sortino – Vermont Teddy Bear) only to be stripped of all connection and wealth from the business he started; an industrial engineer develop a series of conglomerates that made and lost him millions (Bob Gow – Stratford of Texas/ Zappata Offshore / Enterprise Technologies)and a tool and die maker create a business and political dynasty (Frank Stronach – Magna International) despite massive upheavals. I wish I could give a simple insight that distinguishes them, but as Michael Porter often said, I’m not sure that any explanatory analysis will be predictive.

    I think there is a ‘meta’ level above all the educational content in a b-school that hasn’t been directly addressed yet, and that is the process of improving one’s ability to learn, to absorb information, to spot trends, and build mental models. That, more than any course content, is what I value from Darden. Well, that, and John Colley’s cash sustainable growth rate formula.

  9. Vipin says:

    Very well articulated Dean. It would be great to have a “share” button on top to make it easy for us to spread the message to the rest of our online social network

  10. Villi Iltchev says:

    I agree with everything, though having been in Silicon Valley for a while I can comfortably say that tech is a bit of an exception. In fact, my job is to buy companies and I think the old saying that a tech startup is worth $1M per engineer, subtracting $1M for each MBA definitely holds true. An MBA can only help, but a technical background is a prerequisite in the valley. Many of the incubators that have propped up (YCombinator, TechStars, etc.) will not accept an non-technical team.

    I have talked to many kids who have dropped out of college to start a company. One 19-year old Com Sci Berkeley student who dropped out recently told me “I can stay in school and learn about this stuff, or I can just go do it.” I wrote him a check. Peter Thiel is giving college dropouts $100K, which I am not sure is a good thing. But, maybe it makes sense for engineers as doing is probably the best way to learn, which is Darden’s philosophy as well.

    I am not sure if anybody at Darden is studying what is going on at YCombinator, but if not, somebody should definitely take a look. They are turning the startup world on its head.

  11. Mike Ganey says:

    Aren’t we all called upon to be entrepreneurs in our corporate jobs these days? I would venture (no pun intended) the convergence between the skill set required for startups and established firms will continue.

  12. Viniet Eldho says:

    I love reading posts by Dean Bruner. They are always informative and thought provoking.

  13. Dean Bruner:

    I agree with your analysis, particularly regarding the idea that Steve Jobs and others are special cases. As you probably know, Peter Drucker writes about innovation and entrepreneurship and makes a compelling argument that one can follow structured processes in both cases. And I’ll add my own experience to the argument. I could not have succeeded in building DecisionPath Consulting into a business intelligence and business analytics consultancy that serves Fortune 1000 clients without having had the Darden experience.

    Separately, congratulations on leading Darden to greater recognition in the various rankings!

    Regards,

    Steve Williams

  14. Vibha Kagzi says:

    Dean Bruner,

    Was terrific meeting you in Bombay! We both have an MBA from the same institution and I have started my own entrepreneurial venture here in India and could not agree more with your comments above. There is a definite benefit to B-school for those looking to steer clear of corporate jobs as well. Well said!

  15. Pingback: Why MBA? | Dad With MBA

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