Should startup founders get an MBA?
If you are planning to work in consulting, or dream of a corporate job, there are many advantages to studying for an MBA. For one thing, it will definitely help you to get your foot in the door.
It is also true many co-founders meet each other during their MBA. The opportunity to network is an important draw for those considering MBA programs. However, it is less clear that an MBA will equip founders with the basic tools and skill sets they need to thrive as entrepreneurs, in the challenging world of startups.
When I started my MBA, I’d already launched my first two startup companies. Studying and working on projects in teams was interesting, but I felt straight away that most of the strategies I was being taught were mainly geared towards working for large, already well-established organizations, such as multinational companies or corporations. As such, they didn’t really apply to startup founders of (at least initially) new or small businesses.
I remember spending long hours studying competitors rather than studying potential users. Likewise, the focus of our projects was analyzing, planning, and forecasting, rather than executing, launching, and learning. In the classroom we would look at case studies and debate mergers and acquisitions, international expansions, and vertical integrations… These are all important strategies for market leaders, but in the context it is very unrealistic, if not useless, to speak of such strategies.
Launching and running a small startup requires a different approach, and a different skill set.
Small Startups: the Brutal Statistics
According to the U.S. Small Business Administration, 89.6 percent of companies are not large corporations, but small businesses (classified as employing fewer than 20 people): that is, most companies in the US are, or once have been, small startup companies. What’s more, they account for more than half of the country’s total workforce.
But crucially, while over 627,000 new companies – startups – open their doors each year, more than 50 percent do not reach past the five-year mark. Yes: more than one out of two of all startup companies will fail within five years.
Looking at that steep failure rate indicates that as far as new ventures are concerned, there is a clear gap in educating founders on specific strategies designed for startup companies.
Obviously, starting a new venture will always entail a high systematic risk. However, trying to apply strategies designed for large or established companies to startups is a sure recipe for a loss of focus, if not a death sentence in business terms.
I believe the startups default ratio could decrease if founders could have a specific road map of strategies that takes into account the size, stage and market of their company..
The Art of Startups
When I coach startup companies, the two most common mistakes I see are almost invariably that:
Founders spread their initiatives and resources too wide, and therefore too thinly (e.g. money, time, manpower, geography, products/service, target users). In an ideal world, with no competition, it would of course make sense for startups to keep their spectrum broad, and to try to serve as large a market as possible. But in the real world concentrating all your resources on one spot is the only way to beat the odds for startups.
Founders corner themselves to the role of followers by copying the strategies of already successful companies. Instead, they should innovate: this allows startups to avoid direct competition from the incumbent companies. Also, it’s the only way for startups to find untapped user niches. It’s virtually impossible for startups to offer something better to their users if they keep shadowing leaders.
But these points are just the beginning.
In my new book, The Art of Startups (April 2020, Anthem Press), I have drawn on my experience as a serial entrepreneur and startup coach to create a startup-focused guide for unlocking innovation and building new businesses against the odds.
No, it’s not another fast track MBA; we already have plenty of those online courses. Rather, I aim to address the real problem: the failure rate of startup companies, arising from applying the wrong strategy and innovating ineffectively.
Through an innovative graphic novel format including real case studies and groundbreaking evidence, The Art of Startups, which has already garnered attention from the Financial Times and McKinsey & Co., will guide entrepreneurs how to eschew the common pitfalls and challenges associated with the early days of running a startup.
The engaging visuals are designed to be memorable and accessible, recreating in the graphic-novel form common situations almost every startup faces in an immersive way.
If you want to turn around the fate of your startup, it’s time to focus, and to learn The Art of Startups.
Edoardo Maggini is a serial entrepreneur and inventor who has co-founded three successful startup companies within the last decade alone, including Fenix Technologies, where he currently works. He holds an MBA from Pace University as well as an executive degree in business strategy from Harvard Business School.
The Art of Startups is his first book. It has already been nominated for the Financial Times / McKinsey & Co Bracken Bower Award – Best Business Book of the Year. Joe Gebbia, Co-Founder of AirBnB, has written the Foreword.