Entreprenurship vs traditional MBA paths  

Posted by Dino Gane-Palmer né Ganesarajah in , ,

My plan for paying off my MBA loan. Well, sort of. (c).

I've had someone write in and ask a question so important, I just had to share it on this blog:

I am aiming for a Top MBA program as well and plan to start a venture afterwards, but I am concerned that if I go to a top program by taking loans, most likely I will end up taking a high paying job after b school and hence the entrepreneurship plans might get delayed even further. Would love to hear your thoughts on that.

My view is this:
  • Make the option of starting a business so compelling, you'd be a fool to not do it. What would you need to do so that by the time you graduate, the potential for your business, particularly in paying off that loan and then some, is so great - you can not resist doing it? I'm developing a personalized plan for myself to create that compelling option.
  • Mitigate against failure. Some people will say forget MBA recruitment all together and keep on the startup trek - show your 100% commitment! The project manager instinct in me says this would be daft. You need to mitigate the risk of your venture failing. I plan to intertwine my startup plans with MBA recruitment.

Make it compelling
What will help you get to that dilemma at graduation that makes starting a business irresistible? I believe the key is making life as easy as possible for myself: what forces exist across the MBA, university and my life to date that will help drive my business to be as successful as it can be? I'm not getting hung up an any particular business idea. Instead, I am trying to figure out the business idea that works optimally to the resources that I bring as well as those the MBA will provide. Specifically, I am asking myself questions such as

  • What are the resources that I already have access to (e.g. friends, previous employers)?
  • What resources are there across the university to help me get a product or service built?
  • What resources are there through the MBA program to help me obtain customers?
I am then using the answers to these to iterate and develop my plan. For example, at Northwestern (where Kellogg is based) there is quite a bit of interest in media, because the Medill school is there. This works quite well with my media technology employment background. Consequently, there are pools of media technology innovation around the university, such as News At Seven and NewsMixer. There are also a bunch of other things, such as Northwestern's dedicated cross-discipline course for commercializing medical innovation and Kellogg's own offerings. Some of these don't quite fit or help me, but some of it does. The real challenge will be winning the support of the holders of these various resources and then weaving together these resources to build my business. If I can do this, then starting a successful business won't be the huge financial risk that people perceive it to be.

Mitigate against failure
Secondly, I plan to use the traditional MBA path of going into Venture Capital as a way of gaining funding for my venture, while still keeping open the possibility of working for a VC firm.

When I was conceiving my career goal, I wanted to make it as realistic as possible. So I plotted out a path that is something like this:

  • Spend a year or so leading up to the MBA in a job that has some similarities to Venture Capital.
  • Focus the MBA and internship on Entrepreneurship and Entrepreneurial Finance.
  • After the MBA, go into Venture Capital: learn about building startups by working with the portfolio companies at the VC firm; build relationships with investors.
  • Some years later: start a company, capitalizing on resources and relationships built earlier.
This is pretty much what I wrote in my applications, except for the MIT application - for which I said I would attempt to start a company straight from business school. Over the last few months, my grand plan has become more of a 'Plan B'. This is because I've become much, much more motivated in starting a company.

As a traditional post-MBA career, Venture Capital is itself a very, very difficult field to get into. For every person a VC hires, this is another person the VC will have to split their investment returns with. For them, the question is this: will hiring you mean that they will earn more money than they would otherwise?

Getting funding from a VC firm is a different story: it is just as difficult, but I am positioning myself as someone who could make them more money than they have thus far. In the meanwhile, I will be networking and building relationships with VCs, possibly demonstrating intelligence and flair that they might like to hire if things go pear shaped for my own venture.

So, I plan to use the traditional VC job hunt to pitch my business to them as well as build relationships that may help me get hired if things go wrong. Some of the other MBA career paths may also be conducive to this kind of twinning (though I've not looked into them as much):
  • Large consumer goods companies that hire MBAs are potential customers of your venture.
  • Some consulting firms that hire MBAs may be willing to provide your venture with services and a network of contacts, in return for an equity stake.
  • Some companies that hire MBAs may invest in your company if they think your company's goods will increase purchases of their products.
Unlike VCs, the recruiters may not necessarily be the same people as those who could help your venture. However, the relationships you develop are still likely to help or earn a good referral.

To sum up, my plan is to make the option of starting a company as compelling as possible, by figuring out the business that will optimally utilize the resources I bring as well as those which the MBA offers. I plan to mitigate against failure by keeping open the option of working at a VC, using this traditional MBA path to pitch for investors. We'll see how I get on... :-)

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