Should You Hire MBAs at Your Startup?

June 7, 2011

June 7, 2011



Three of the FeeFighters have MBAs.  Four of us spent time as management consultants and another guy was a banker in a past life. Everyone seems to hate MBAs / Bankers / Consultants in the startup world… so why do we like them? First – what do the “experts” say about MBA’s? Mark Suster says the […]

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Three of the FeeFighters have MBAs.  Four of us spent time as management consultants and another guy was a banker in a past life. Everyone seems to hate MBAs / Bankers / Consultants in the startup world… so why do we like them?

First – what do the “experts” say about MBA’s?
Mark Suster says the ideal 6 person company “has 5 engineers and one CEO who doubles as head of project management.”

Guy Kawasaki says he values startups at $100,000 per MBA and $1,000,000 per engineer. We’ve got 3 MBA’s and 3 engineers (our CTO is both – double credit!!!), so he values us at $3.3mm. Our investors must be idiots because they just valued us a lot higher! Also, sorry Stella and Marc, apparently you add no value.

Why qualities could an MBA possibly possess to make them valuable to your startup? MBA’s are…
1) Driven / Ambitious – This is not to say that others aren’t… but MBAs are generally a particularly driven bunch. Some people think the opposite, but I think it actually takes balls to quit your existing job, take a couple of years off, move to a new city (usually) and go into debt for a piece of paper.

2) Extroverted / Outgoing – Yes, there are lots of counter-examples… but on the whole, the MBA folks are going to be more outgoing than the techies… and like it or not, you need some extroverts in your company. There are a bunch of d-bags at bschool too, though.

3) Well Networked – On the bizdev/sales/fundraising/marketing side of things, knowing people helps, and aside from possessing #2 above, we generally have fantastic networks to tap into, and aren’t afraid of tapping into them. One advantage is that we have networks not just in the startup bubble that we live in, but also the “normal” world that we need to partner with and/or eventually take over/dominate.

4) More Polished – MBA’s are really sometimes just finishing school for nerds. They teach you how to speak, negotiate, and write emails. If you were terrible at those things before, you won’t be amazing after, but you probably will have improved.

5) Highly Analytical – We have a different approach than some other people. In bschool, you’re constantly analyzing cases to see how other companies have succeeded or failed and making a recommendation based on all that you’ve learned. Some say it doesn’t apply to startups, but I’d beg to differ. I’m constantly thinking of cases I studied in school when making decisions at FeeFighters.

Now the downsides of Hiring MBA’s…

1) We <3 strategy – to a fault! We tend to have a lot of meetings where we discuss broad strategy. They are awesome and very fun… to some of us. The tech people always want to get back to work. Honestly, we have a lot of these that don’t actually lead to anything new. I wish it were different.

2) Arrogance There are a lot of d-bags in the bschool world. Fortunately, none of them work at FeeFighters, so I don’t work with them (anymore). PS – some schools have more than others…

3) We can’t code for s&*# This one isn’t always true! Our CTO can code up a storm. Sean can, but we usually don’t let him. I used to, but I hated it so I stopped. But seriously you DON’T want to work with an MBA that posts “Code Monkey wanted – will give 2% equity” on your bulletin board. He thinks his idea is worth 98% of the company… but he suffers from #2 above so hopefully you filtered him out anyway. Seriously though, if you’re doing a tech-intense thing, you don’t want a software n00b… All of us have some technical ability, and it’s useful – whether it’s editing crap in our CMS or editing graphics for the newsletter.

4) We want some $$$ upfront and ramen doesn’t always cut it – Many of us spent a couple hundred thousand dollars for our degrees, and some of us are in significant amounts of debt. Furthermore, we’re generally older and some of us have families.


A couple of revelations

Not all startups require coding.
We have MBA friends that have startups in Insulation, Solar power, clothing exchange, etc. Sure, they need a website and some technical skills. Like theirs, our company isn’t all about technology – there is a big finance, sales, and marketing component as well. Why should the founders only come from the technology side of things?

Not all MBAs are created equal
For the sake of this discussion, there are 2 types of MBAs. Startup-friendly MBAs, and non-startup friendly MBAs. There are many people in this world better suited towards the steady paycheck and certainty that a corporate environment provides. Those folks shouldn’t join a startup. When looking for an MBA at your startup, you need someone who can execute and is comfortable with a startups pace, culture, and ambiguity. Someone who knows that a startup isn’t just a smaller version of a large company. Someone who’s going to experiment and deviate from the frameworks they learned in bschool.

Make sure you hire the right kind. Your company depends on it. The wrong kind is the guy who’s advertising for code monkeys, or advertising themselves as an MBA (sometimes even in their email signature LOL!). The right guy is someone you all get along with, understands some of the technical stuff, and is very humble.

MBA’s can (and do) add a lot of value to startups… if you hire/partner with the right ones. An MBA doesn’t guarantee anything, but it also shouldn’t be perceived as a negative… After all,there are lot ofcompanies started by MBA’s. BTW – random stat – 174/500 Fortune 500 CEO’s have MBA’s (source)… so you don’t need an MBA to run one of those either, contrary to the literature you might read pre-bschool!


What makes us qualified to talk about this?
FeeFighters was started while Josh and Sean were in Bschool at the University of Chicago Sean was pissed off that he got ripped off on credit card processing in an earlier business, and decided to do something about it. Stella joined a bit later and will probably get an MBA in the future. I came still later, having spent time at BCG where Sean was working to pay FeeFighters bills in the early days. I have an MBA from Michigan. Tisho, Jared, and Marc don’t have MBA’s, but they are all awesome ninja’s, which is a pre-requisite to joining the team anyway.

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