Interview, Fireside Chat
How Should Business Schools Prepare Students for Startups? – Jeff Bussgang and Michael Seibel
- Core Conflict: YC CEO Michael Seibel observed that MBA applicants frequently lack fundamental startup tenets despite receiving formal business education, prompting a debate with HBS lecturer and Flybridge GP Jeff Busgang on the efficacy of business school preparation.
- YC Application Reality: YC partners review approximately 500 applications per batch out of 6,000–7,000 total, leading to intense scrutiny where MBA applicants often fail to demonstrate basic qualifications required for admission.
- Specific MBA Pitfalls: Michael Seibel identifies three primary reasons MBA teams are rejected by YC:
- Technical Deficit: A lack of technical co-founders and a tendency to outsource core technology rather than building it in-house.
- Commitment Issues: Teams that condition their work on receiving funding or admission rather than maintaining full commitment from day one.
- Research vs. Traction: Excessive time spent on theoretical research rather than building Minimum Viable Products (MVPs) and securing user traction.
- Structural Causes in Business Schools: Jeff Busgang attributes these gaps to systemic issues within MBA programs:
- Siloing: MBA students are often isolated from technical talent, lacking daily interaction with engineers found in other university departments.
- Curriculum Lag: HBS launched a "HBS Coders" club only recently, indicating a historical lack of technical proficiency emphasis compared to sales or marketing clubs.
- Lack of Practitioners: Many faculty members lack recent operating experience in startups, relying on outdated models that no longer apply to the current fast-paced startup landscape.
- Institutional Adaptations:
- HMS Integration: Harvard Business School is co-locating with the School of Engineering and Applied Sciences (crossing the Charles River) to foster cross-pollination, funded by donors like Steve Ballmer and John Paulson, with physical integration expected in 2019–2020.
- Curriculum Shifts: Schools are increasingly adding analytical and prototyping skills to curricula rather than attempting to produce coders, with students taking courses at MIT Media Lab.
- Geographic Disadvantage: Jeff Busgang notes that students outside top hubs (e.g., Indianapolis, St. Louis) face significant hurdles in finding technical co-founders, requiring exceptional "hustle" to build networks in AI or tech communities remotely.
- Pedagogical vs. Commercial Goals: A fundamental tension exists where universities prioritize pedagogical safety and allowing students to "run experiments" without real-world stakes, whereas VCs and YC demand immediate, high-risk execution and tangible traction.
- Success Metrics:
- MBA Track Record: Data from "Poets and Quants" shows significant success among MBA-founded companies (e.g., Cloudflare, Rent the Runway, Earnest), debunking the idea that MBAs cannot build startups.
- Long-term ROI: Seibel argues that while MBAs may not yield immediate high returns, the long-term value lies in network building and executive scaling skills (e.g., Sheryl Sandberg), whereas non-technical founders often hit ceilings as directors without formal training.
- Strategic Recommendations:
- For Students: Michael Seibel advises that non-technical individuals not attending a top-five school in a startup hub should prioritize working at an early-stage startup over pursuing an MBA.
- Self-Education: Students should bypass flawed school curricula by studying the "canon" of startup literature (e.g., Paul Graham's essays, Steve Blank's The Startup Owner's Manual, Eric Ries).
- Investment Criteria: VCs like Flybridge seek transformational, massive market opportunities; purely business-model pivots (e.g., Blue Apron) are rare exceptions, and most MBA applicants are rejected for proposing "cute apps" in well-trodden markets rather than disruptive visions.
- Future Outlook: HBS recently announced a joint degree combining their MBA with an MS degree, signaling a shift toward integrating technical education with business training.