Why Working at a Startup is Better Than Getting an MBA
By
Paddy Padmanabhan
What kind of “degree” are you working on?At a certain point in my career, I spent nine months working in an undercapitalized tech startup business trying to build a widget and acquire paying customers. I had to forego a lot of immediate financial rewards (such as a monthly salary) for deferred gratification: to go do something I enjoyed, and build something that would make a difference. It didn’t work and I decided to move on.
So was it all a waste of time—a lost year that I will never get back?
The answer is clearly a NO. What I gave up in earnings through a steady salary, I more than made up for given the experience I had: working with limited resources, building a platform, winning the first few clients (even though they didn’t pay much), pitching investors (unsuccessfully), having theological debates with the co-founder (won some / lost some), and eventually deciding to go back to a corporate job.
So: Nine months of learning about business, foregoing a steady salary, and moving on to a corporate job. What does that sound like? You guessed it: an MBA.
I do have an MBA—the formal kind, where everyone sits in classrooms and discusses case studies about buggy whips and transportation; where “learning” means being at the receiving end of an outdated 20th century pedagogical tool (classroom lectures); and where graduating is the objective. That, and getting a coveted McKinsey consultant job.The degree I earned working at my startup was unique: it was a one-of-a-kind, custom-built program that I alone could experience. How many of you think of your startup experiences this way?
A lot of entrepreneurs go straight from school to a startup. Others give up a job to pursue their dreams. Some become very successful at what they set out to do, others don’t. Regardless, they earn a post-graduate degree, especially if they apply themselves sincerely to building the business. Here are some courses you attend (whether you know it or not) as a “university” student in a startup:
- Finance: A successful business earns more than it spends. Nothing else matters.
- Economics: There is an opportunity cost for everything. Your friend from grad school drives a fancy new car and just took his girlfriend on a Caribbean cruise. Your former colleague got promoted to VP and just took an Italian vacation with his wife and three kids. You are eating Ramen noodles and testing bugs in code late at night.
- Marketing: Making people want what you have. It’s hard to get people to care, sadly—even the ones you manage to reach with your message.
- Sales: Converting mild interest to a signed contract to use your product. In the unlikely event that you do get someone to agree to use your product, try convincing them to pay you for your product. Oh, and your sales rep quit after two weeks, so you’re the company’s bag-carrying rep for the foreseeable future.
- Supply chain management: Staffing and resourcing your project. You need product out on the street in six weeks, and your only Python expert just quit to launch her own startup.
I could go on.The point is that working on your own startup is nothing short of a compressed MBA from a top-tier university (there are a lot of questions about what a top-tier MBA—or any other degree from a top-tier university—is really worth today, but that’s a whole different discussion). It requires (painful) financial sacrifice, long hours, project management, discipline, and all the other things that MBA students generally go through. I picked an MBA as the example degree, but it could be anything—like a Ph.D. in some subject that’s at the core of what your offering is about.
Graduation Day comes around when:
- A customer agrees to pay a fair price for your product.
- A VC decides to back you with an $8M round.
- An established company will hire you despite (or more likely because of) your startup experience, even if it was a failure. There’s no telling when, or even if, you will graduate.
I got into a startup after many years of corporate experience and gave up a well-paying job, title, and perks, because I wanted to create something very badly. My personal business model, in hindsight, was wrong as it turns out. I had no business going all-or-nothing on the startup. I moved on and received a well-paying job (which turned out to be just as entrepreneurial in nature as my startup), only this time it was well funded. I know that without the scar tissue I gathered during my nine-month startup venture, I would not have found the job I eventually did. My new employers respected what I had gone through, and gave me the job for that more than anything else.My story is about my own personal university degree—my special, one-of-a-kind MBA. I wouldn’t be able to find a comparable one anywhere in the world, for any amount of money. It was priceless (though it left me nearly penniless).
So, what kind of “degree” are you working on?
Paddy Padmanabhan is a keen observer of technology-led business model innovation. During the week, he runs a healthcare analytics business. During the weekends, he plays guitar and sings in a classic rock and blues band. You can find him on LinkedIn or follow him @paddypadmanabha.
