While I don't disagree with what he's saying, there is a nuance that isn't coming across that is pretty important:
It's not just about entrepreneurship - every real business is steeped in stuff that just can't (or shouldn't be) taught in school. Business school theory is meant to be general, and sometimes painfully high-level in its focus.
BUT! That doesn't make the knowledge and experience of business school worthless or something that has to be "unlearned". A broad knowledge of business practice and theory is not a substitute for practical domain experience and knowledge. It is a great compliment, however.
It seems trendy to dismiss MBA's (the degrees, not the people) as worthless, or even worse, apologize for having one. The truth is far less sensational: It's a degree - nothing more, nothing less. As long as you keep an open mind, all knowledge is good.
There's this presumption that MBAs are robots. I can tell you from experience (although mine predates the explosion of the WWW) that more than half of the people in MBA programs are robots. Having said that, isn't that true for any other degree? In the end, it's not the degree that matters, but the person.
Funny thing is that when I did my MBA, the professors were saying that MBAs in Canada (where I'm from) were nothing like the US. MBA's in Canada were taught to be middle managers, while MBAs in the US were taught to be more entrepreneurial (there's no "American dream" in Canada). When you read about the US tech gurus mocking MBAs you get the impression that's clearly not the case.
I don't think it's necessarily fair to judge people by the degree, but on the person as a whole - personality, geek level, work experience, etc.
"Having said that, isn't that true for any other degree? In the end, it's not the degree that matters, but the person."
Yes, definitely -- there are a lot of cultures that place more value on the degree than on anything else, and these are cultures that emphasize rote learning and memorization.
Rote learning and memorization are worthless in the long run, since the avoid training you to think for yourself and actually USE the information you've crammed into your head, but it's also a lot easier to teach by telling your students to memorize things than to think.
I ran into exactly the same thing in biology, and a close friend of mine ran into it in medical school. He told me about some of the explanations that his med school compatriots offered up -- they demonstrated a glaring lack of understanding of basic physics and chemistry (we're talking high school stuff, not even college level knowledge here).
While I have a lot of criticisms of the MBA program I was in, I was lucky to get a few important lessons that I think are useful:
1 - From my small business professor: Don't think about it, just do it. If you overanalyze your idea, you'll never start your business.
2 - Guest speaker in advertising: The customer always gets what they deserve.
3 - Economics professor: Most of the experts out there just read a couple more articles more than the next guy.
4 - Same economics professor: If you want to be rich, sail and ski. You'll make your best connections. (I don't do either, but I don't disagree with his assessment)
5 - Strategy classes: Focus on what you're good at
6 - Final Strategy Study: Learning how to work with people you want to fire but can't
Of course, everyone gets different stuff out of their program - it seemed like everyone in my cohort wanted to be a product manager at Proctor and Gamble, but that's another story.
Idle thought: after taking on that much debt to get a degree, doesn't a "sure bet" way of paying it off look more attractive than striking out on your own and hoping for the best?
You get an MBA for the long term. I am currently at Notre Dame and the stats here say that most pay off their loans within 2 to 3 years. I am constantly thinking of new ideas while getting my MBA, but at the same time am looking for a job that will help me pay back the loans that I can work for, for 3 to 5 years and then start my own business. Most MBAs switch jobs after 2 to 3 years anyway.
Remember most MBAs are there to climb the corporate ladder not start businesses. So looking for the sure bet was their thought all along. Mine is that now was the best chance to get a degree, so that down the road if I ever want I can teach. I wanted higher level training and a degree and knew if I didn't do it now I would never do it.
Not related to your comment, but I have already learned so much that will help me in the future. Next semester I am taking a Venture Capital class where I will get to evaluate companies all semester long with actual VCs, and they grade my valuation. It will be immensely valuable to me in the future to have had this experience. And that is just one example of what you can learn in business school.
I think a lot of the problem comes down to MBA students who have zero critical thinking or problem solving ability. I see it all the time in my program - students take everything they learn verbatim and act like it is gospel. In reality, they should always be questioning what they are learning, thinking about how it might apply in the real world, and what the benefits/consequences are. For example, my Entrepreneurship class is making us write a business plan with the sole intention of gaining funding. That's nice - but at the same time I'm using it as an exercise to also see what the plan would look like as a lifestyle or small (37signals-ish) business.
Secondly, MBA programs are just now beginning to (somewhat) teach that pure profit maximization is not the only goal of a business. It will take a while for this to catch on, and not all MBA students are going to adopt this way of thinking, but there are some of us out there who do. This is happening with both social ventures and sustainability-focused businesses.
Let us not forget that MBA programs are one of the biggest, and quickest growing, forms of graduate education in the country. They're also one of the most expensive, offer few scholarships compared to other para-professional training, and cost very little to operate. And questionable online-only programs are sprouting up, and not just from bullshit schools.
Training high-paying MBA students is a huge financial gain for the school doing the teaching. Yet, there are few standards and core concepts to ensure quality education, leaving a huge spread in the quality of graduates.
Your MBA, oftentimes, pays off more for the school more than for you.
Around the time I was finishing up mine (1994), the prices skyrocketed. I think my fees were just over $2K CDN/semester x 4 semesters (back when the US dollar was super strong), and then universities started introducing accelerated "executive MBAs" that cost well over $20K for 6 months.
I got my ROI a long time ago, but if I had to do it again today, I wouldn't bother. You have access to so much information these days (BBS's were how you communicated back then, not the www, and the idea of youtube was just c-r-a-z-y) that it's hard to justify the high costs of tuition.
I hadn't seen it before, I apologize and I really hate when that happens. I had been off HN for a while today and didn't realize this made the front page, if I saw this comment earlier I would have taken it down.
Most schools do a terrible job at teaching entrepreneurs and future small business owners. MBA programs are meant to prepare students for mid-level positions in big companies that already have a set plan.
If you want to run a startup, you definitely need to unlearn your MBA.
That's a bit of a falsehood. It's arguable that any degree gives you any real practical skills. I hear a lot of techies like Joel Spolsky on podcasts saying that CS degrees don't necessarily yield great programmers. But should people with CS degrees unlearn everything from school? No.
Your degree is like a tool in your back pocket. An MBA can provide you with particular set of knowledge (depending on your area of study), some of which are useful to teach you how to -run- a business. I don't see why there is any need to unlearn that stuff. Revenue recognition rules, economics, financial modeling, business law, corporate taxation, how to write a business plan... all of those have some use in the real world, regardless of the size or type of business you run.
That they are overpriced today for what you get is a totally different story.
I have an undergraduate business degree from the University of Washington in Seattle and I think it was very helpful. I'm sort of a "business geek" and I really enjoyed learning some things that I wouldn't have been able to learn on my own. Basically, I know I can teach myself a new programming language, but I can't really teach myself finance or marketing. I did take a handful of CS courses, just enough to realize that CS isn't really about writing software.
A few months ago, I went to an informational seminar for the UW Technical Management MBA and I realized that MBA, in that context, stands for Microsoft, Boeing, Amazon. Something like 76% of the students came from those three local companies. I see the value in networking, but if I wanted to meet a bunch of Microsofties, I would go work at Microsoft. (Not that I have anything against Microsoft, but I know it's not the right culture for me)
And while I don't doubt the quality of the education (some of the professors were the same ones I had in my undergrad and they were awesome) the whole thing was pitched not as "look at all the cool stuff you'll learn" it was pitched as a way to break through into a better job/better salary at your current big company, which felt a little discouraging. I felt a sense that actually writing code was somehow distasteful to some of the audience, and they were willing to pay around $80K to not have to do it anymore.
If the lack of paper diploma is really holding you back, then I guess it's a good thing. If you really just want the education, there are plenty of better learning experiences to be had for that kind of money.
It wasn't an MBA setting, it was a BBA, but here's an off-the cuff top 5 things that a programmer got out of business school.
1. Strategic Management: SWOT Analysis. Strengths, Weaknesses, Opportunities, Threats. It's simple, but applicable almost everywhere.
2. Accounting... Feeling comfortable with the basic jargon and rules of business. Revenues, expenses, assets, liabilities, etc.
3. Marketing. Marketing is more than just advertising. Everything is marketing. A lot of marketing can be handled by running through checklists to make sure you haven't overlooked something stupid. Much in the same way that pilots always run through checklists before taking off.
4. Judging people based on shallow stereotypes is, well, shallow. I remember a cute-as-a-button sorority girl who surprised me by being really, really good at relational algebra. That prejudice is really embarrassing to me, because I always thought I was really enlightened.
5. Microsoft Excel is an amazing piece of software, in that it's simple to use, but has incredible depth of capability for solving very sophisticated problems.
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And as a free bonus, the things that weren't of value.
1. The "software systems" class was total waterfall indoctrination. Complete waste of time.
2. Networking (with humans). I'm an introvert, I made a handful of friends, but I was a self-employed non-traditional student with a wife and a child, and everyone else was around 19 or 20 years old.
3. Networking (with software). The professor teaching the computer networking class didn't really know his stuff. He was recruited into the position at the last minute, and got a bunch of basics wrong. Right now, there are dozens of Business School graduates who don't really understand how DNS MX records work, which I guess isn't a huge tragedy.
4. Business Ethics. I remember being horrified by the rationalizations that some of my peers were willing to make in our hypothetical scenarios. Many of them were willing to put workers in unnecessary mortal peril because they didn't feel they had any risk of legal liabilities. I'm sorry, but even really good lawyers can't bring people back from the dead.
5. The support staff and advisors were never very helpful or encouraging. The first advisor insisted that there was no way I could ever get into the (competitive) program with my substandard GPA. Ha! I showed her.
This directly addresses an internal struggle I have been having as of late. Pursue an MBA or not?
The way I see it is that business is a fluid process and while learning the basic framework of it is beneficial, it in no way corresponds to success. Any of the classes in an MBA can be learned through books. What you are paying for is the experience and the network that you can gain at a low risk, while firmly rooting a foundation of fundamentals.
2. Internet businesses operate at large scale (if they are successful), and understanding large scale businesses operations requires quantitative analysis. Working for a YC startup myself, I can attest that what I learned in business school is incredibly useful. My school (Wharton), focused on quantitative analysis, and I came out of it with a set of tools that I use everyday. These include statistical analysis, quantitative model building, quant marketing tools, and financial analysis. Of course you can learn these tools on your own, but you risk not knowing what tools are available to address the problems you face.
3. In addition to tools, a good MBA program will teach a general problem solving technique to systematically break down, analyze, and solve business problems. And it will teach you to effectively communicate your solutions to others (you boss, a client, a VC, whoever). Some people are naturally good at this and don't need an MBA to do it. But many need to be taught how to think in this manner.
4. As another commenter pointed out, a lot of value from getting an MBA comes from networking. However if you get an MBA in one country (Denmark) and then move to another continent, that network will be less useful.
5. Many of DHH's lessons about building a successful startup - including charging for your product, picking a competitor, and rejecting conventional thinking about starting a tech company - are exactly the type of things you learn while getting an MBA. In fact, rather than learn specific lessons like these, you learn a framework for evaluating your business and market, and formulating the right way to structure your company.
DHH does make a few good points, both explicit and implied:
1. Strategy frameworks like the Porter's 5 Forces (he incorrectly describes it as a management theory) aren't particularly useful for starting companies. Although these frameworks can help to gut check if a startup is entering a good or bad market, they won't be at all useful in the day-to-day running of a company.
2. Based on my small sample set (of 1 school), I don't think business school is useful for learning how to build a product or be entrepreneurial. Granted, some schools specialize in this and mine did not, so other schools may be useful in this regard (Stanford GSB is known for entrepreneurship).
Actually, Paul Graham's explicit statement re: success is that you should sell out before you are operating at large scale (else you might start growing pointy hair).
As it turns out I'm poking about Wharton these days myself and, although already a semi-successful tech entrepreneur, I am fascinated by the lack of concern for scaling that seems to permeate the startup world (inclusive of HN). An addendum is that probably most people who read this will instantly think of purely technological scaling (servers, etc.) while within an HR context there are large number of other issues that you will not be particularly well placed to address merely by being tech saavy. Apropos to this I thought was Andy Grove's recent article in Bloomberg (http://www.bloomberg.com/news/2010-07-01/how-to-make-an-amer...), which is likely to go unheeded.
which is likely to go unheeded.: I suspect you are right there, and it would not be the first thoughtful thing he has said that goes unheeded ("If you are concerned about dependence on foreign energy, support electric energy. That is stuck to the continent.).
So I wonder if his book "High Output Management" is on any of the top school's MBA reading lists?
It's not just about entrepreneurship - every real business is steeped in stuff that just can't (or shouldn't be) taught in school. Business school theory is meant to be general, and sometimes painfully high-level in its focus.
BUT! That doesn't make the knowledge and experience of business school worthless or something that has to be "unlearned". A broad knowledge of business practice and theory is not a substitute for practical domain experience and knowledge. It is a great compliment, however.
It seems trendy to dismiss MBA's (the degrees, not the people) as worthless, or even worse, apologize for having one. The truth is far less sensational: It's a degree - nothing more, nothing less. As long as you keep an open mind, all knowledge is good.