I can’t help but weigh in on the “MBA – startup” meme going around.  First, context on my background: I chose not get an MBA. Before my current startup, I worked for 4 VC-backed companies (founded by others) in various sales/marketing/bizdev roles, and bootstrapped and sold 1 company of my own.  I did feel a need to learn finance, but figured I could get paid to do it, so worked at Broadview (now Jefferies) doing tech M&A. My only jealousy of contemporaries who got an MBA is the incredible network.

Across my colorful career, I’ve worked with plenty of sharp MBAs from top schools, and some not-so-sharp ones from those same schools.  Some were incredible producers, and others just wanted to take credit for other people’s work.  The only places where I’ve seen an MBA provide a real advantage are M&A/IPO i-banking (definitely not in trading) and management consulting. Even there, it’s not that much of an edge (if any) over someone who spent those extra two years doing the job.

Jon Steinberg, EIR at Polaris, kicked this off by writing that he did not feel his MBA was the best use of money and time. Rob Go, of Spark Capital, recently responded to Jon, writing:

In my view, the point of an MBA at a top tier B school is to provide students with the perspectives and pattern recognition to be a really great C-level executive.  It allows a person to feel like they have “seen this movie before” in more situations and respond more decisively.

I don’t buy it, simply because I’ve never seen this come to fruition in real life.  I’ve always seen MBAs learning on the job, and making calls from hands-on experience just like anyone else.  I’ve also never seen an MBA graduate with superior knowledge on how to manage people — actually I’ve seen more disasters from an unhealthy brew of arrogance and naivete.  Granted, Rob does imply that he thinks people are going to biz school too young and inexperienced.

Rob tries to make a few suggestions to improve MBA programs, such as doing more to teach sales and product design. I do think that MBA students can learn and practice customer development.  With sales and product design, however, I just wonder how much can be taught with limited involvement.

Let’s take sales.  First, let’s cross off internships at big companies since that’s a different beast than sales at a brand new venture.  Second, shadowing a startup sales guy won’t teach enough — you learn sales by working a territory/account list, and building and closing a pipeline over the length of multiple sales cycles. Third, I question how many startups would want a part-time sales person for any kind of real opportunity. (tangent: some previous thoughts on hiring startup sales people)

My first job out of college (at Trilogy in ‘94) included being the strategic marketing shadow to some highly experienced enterprise sales reps.  All that experience didn’t mean diddly compared to being handed the western quarter of North America at Envive a few years later and told, “go get our first customers.”

True entrepreneurship is about fierce and focused execution, commitment, and teamwork in the face of huge odds, pressures and risks. How can that ever be compatible with an academic program?

Right now, I think the best, most realistic and applicable theory you can learn to jump-start entrepreneurial knowledge is out there on the lean startup blogs and a few VC blogs (I’d highlight Suster and Skok).  And even all that good advice probably won’t sink in until you are in over your head fighting the good fight.

This post isn’t about whether an MBA program has value, because I think it can offer a lot of value and a lot of options to many people. This post is about entrepreneurship.  I know some incredible entrepreneurs who received MBAs, but I don’t think it’s the MBA that has anything to do with their effectiveness and success.

I would argue that if you really want to start a company, but don’t feel like you are ready, an MBA should be your *fallback* position.  Your first choice should be to get a job at a great startup, ideally one with some traction and some good management that can mentor you.  Yes, I know that this is easier said than done because startups want people who can hit the ground running — the two links below might be helpful.  As a second choice, I would also compare getting an MBA with working for a more established tech company. With the latter, the brand name on your resume certainly carries more credibility and your network of colleagues will be useful down the road.

Other interesting posts:

• Vivek Wadhwa on how an MBA helped him transform from coder to eventual entrepreneur
• on getting a job at a startup, written for MBAs, by Charlie O’Donnell
• response to Charlie’s post by Rafael Corrales
• on getting a job at a startup, written for for undergrads, by me
• on “the ideal startup career path“, by Chris Dixon (make sure to read the comments)

This week saw two interesting and related posts on startups and hiring/careers.  Mark Suster wrote about who you should hire into your startup, and Chris Dixon wrote about the ideal startup career path.

Mark’s message is to hire hungry, smart people who want to get to the next level in their career, not the ones who have already arrived. Chris writes, “if your goal is to start a company, it is mostly a waste of time to work anywhere but a startup – with the possible exception of a short stint in venture capital.”

These two statements are related. Working for a big company can give your resume “brand power” making you more hireable, and in some cases more fundable, but it will not teach you about startups.*  Even venture capital won’t teach you what it means to be in the trenches.

Their posts got me thinking specifically around startup sales.

Hiring Sales People
If you are a business person (rather than a coder) and want to start a company, I highly recommend getting direct sales experience (I’ve done marketing, bizdev and sales, and usually wear all three hats, but the latter was most transformative for me as an entrepreneur).  Doing this for a big company can be very useful for your career, but doing so for a startup will be more applicable to your entrepreneurial goals (especially if it’s young enough where you can wear a few different hats).

In general, sales people from big companies are used to a different market environment and set of resources behind them.  They are used to coming from an important brand name, not cold calling as a “nobody”.  They are typically used to selling products that have already been fleshed out, have achieved market success, have lots of marketing backup and customer references.  Their sales process itself might be very complex, but the sales person gets to focus mostly on the relationships because the product itself, and everything around it, has already been figured out.

A startup, especially one creating a new market, has none of that.  The product is a moving target, pricing and business model are being defined as you go, the market isn’t always aware it needs your innovation, marketing materials barely exist, customer case studies are only a handful, etc.  In other words, you have a completely un-commoditized product and a sales cycle that is complex on multiple levels.  If you drop a sales person successful with “figured out” products into this new, unstable environment, you risk them quickly becoming incredibly frustrated, consuming vast amount of company resources as “support”, promising the wrong things to prospects, and pointing a lot of fingers.

I agree with Steve Blank that you don’t want to hire much of a classic salesforce before you have product/market fit (instead try to find product marketing or product management people who are scrappy, personable, and aren’t afraid to sell, cold call, etc). Even when you are starting to get confident about product/market fit, be careful with hiring:

• Don’t hire someone who is used to a relatively simple product/ process for a highly technical sale or a complex, multi-step enterprise sale, even if they are really personable.
• Don’t sacrifice hunger for a rolodex. You want someone hungry, determined, ambitious and willing to hit the streets for you.  A rolodex is very useful, but not enough.
• As a startup, you never have as much time to mentor people as you wish, so also be careful with someone completely green.  They can work out beautifully, but only if 1. they love your product, 2. they are smart and willing to listen / apply lessons, 3. they are ready to work really frikkin’ hard.  They don’t yet need to have learned to be a “closer” — as CEO in the early stages, you will be the best at that as long as something is fully teed up. I’d rather have someone green who fits this bill than someone experienced but lazy.
• Don’t overpay for a sexy candidate — by which I mean compensation should be heavily commission based, and if you agree to a high guaranteed commission level for the first 6 or 12 months, give yourself an out in your employment agreement so you can more easily fire them if they end up sitting on their ass collecting that money (which I, sadly, watched happen at an enterprise software company early in my career).
• Take quick action if someone proves ineffective in your environment — both the company and the sales person will be better off parting ways and finding fit elsewhere.

Of course, if you find someone completely awesome that belies standard guidelines, be willing to follow your gut.  Guidelines are by nature generalized, but people are individuals.

Additional Points of Interest on Hiring & Careers
Mark Suster also repeats the saying “A players hire A players, B players hire C players, C players hire D players.”  It’s an expression I heard at my first job 15 years ago at Trilogy, and something I still believe is absolutely true.  I’ve learned to listen to my gut when it comes to hires.  Every time I have been uncertain about a hire and went ahead anyway to meet growth needs, I have come to regret it.

*Greg Battle, an interesting guy I met in college and who I recently rediscovered on the net, also had this to say about careers:

“I’ve been fortunate enough to work in a startup capacity at many big companies, so it’s not necessarily a choice of one or the other. Big companies launch new products, divisions, and lines of business too. Saying you “love startups” isn’t enough either, as there are so many steps in the startup business cycle, from founding, alpha, beta, pre-funding, growth phase, pre-IPO, etc.. When thinking career, you have to consider the nuanced nature of each position, independent of the catch-all bucket you may place it in.“

I think Greg is right to remind everyone not to oversimplify. Every startup I’ve been part of (going on 6 now) has been different, with many different lessons.

Previous thoughts on startup sales: Don’t Be Afraid to Lose