Is the MBA a key to entrepreneurial success?

Is a master of business administration the right move for your entrepreneurial future, or is real-life experience the way to go? We asked business leaders and upstarts on both sides of the fence to share their thoughts

 

The case for ?

Fraser Pogue earned his MBA and jumped into risk analysis, but you won’t catch him wearing pinstripes to work. A power suit isn’t exactly proper attire when you’re heli-skiing in powder. Pogue is spending the winter in the B.C. backcountry fine-tuning his company’s product: Snowpak, a hand-held electronic device to assess avalanche hazards by gauging the hardness of snow layers. He’s standing waist-deep in snow pits alongside teams of ski guides who will be among his future customers, testing prototypes and getting feedback for improvements. Pogue’s company, Fraser Instruments Ltd., aims to replace a longstanding method for analyzing avalanche risk: prodding the snow pack with your hands.

Pogue, who graduated from UBC‘s Sauder School of Business in 2015, credits his MBA education with giving him the tools to get started as an entrepreneur. He had been contracting as a software engineer for eight years, an experience that nurtured his entrepreneurial mindset, but he lacked business know-how.

“Coming from a software background, my financial background was next to nil,” Pogue recalls. The MBA program taught him about topics like forecasting and revenue models, business intelligence and accounting. That knowledge enabled Pogue to secure funding grants to get his company off the ground and, once it launched, to keep costs down by managing his own financial records. “The benefit there, for the MBA program, in my case was overwhelming,” he says.

Pogue in many ways exemplifies the changing face of MBA students in B.C. and how the province’s business schools are adapting to new demands. There’s a relatively small local job market for traditional post-MBA careers in finance, corporate management and consulting. Toronto has nearly three times the number of head offices that Vancouver does and five times the number of head-office employees, according to Statistics Canada.

So B.C. MBA programs are expanding offerings tailored to entrepreneurial and tech-focused students who aim to join the province’s growing startup sector, either as founders or employees. At the same time, MBA schools here and around the world are changing how they teach: moving toward more hands-on experiential learning and away from academic and theoretical approaches criticized as being divorced from current business practices.

Paul Cubbon leads the entrepreneurship and innovation group at Sauder. He says programs such as Sauder’s provide invaluable experiences for people like Pogue by giving them a sandbox to explore different disciplines and fill gaps in their knowledge. Although some students start their education with well-defined ambitions, many arrive looking for a career switch and a place to experiment. “They’re coming to a crossroads and they’re hoping to find their way,” Cubbon says.

The most vocal critics of MBA programs vow that the best way to learn business skills is to dive right in—especially when it comes to learning the skills demanded by fast-paced, high-growth, technology-charged industries. Entrepreneurship is the greatest source of innovation and is best learned hands-on rather than in the classroom, they argue. What’s more, employers in innovative fields care more about skills and accomplishments than credentials when hiring and promoting. They want employees who are entrepreneurial, even if they’re not actually entrepreneurs.

Business schools are adapting to the times, though. “Every single major university offers an entrepreneurial pathway,” says Jonas Altman, an innovation adviser based in Vancouver and London, England, who’s also an adjunct professor at Sauder. “Thirty-odd years ago, there were only a handful.”

MBA programs have become more technology-focused, particularly in B.C., with its growing tech sector of startups and outposts of big international players like Microsoft Corp. and SAP SE. SFU‘s Beedie School of Business has offered an MBA in management of technology since 2000. Universities are also making learning more hands-on, self-directed and connected to industry-—mirroring some of the approaches of the startup accelerators, incubators and mentorship programs that are challenging MBA schools as development platforms for business leaders. Altman, for example, helps guide entrepreneurs at startups and incubators, and he tries to adapt experiential learning methods to his UBC MBA classrooms. “The best way is through experience,” he says. “However, this can be in tandem with, or be supported through, formal and informal education,” Altman adds.

There were few places at all for people with entrepreneurial leanings to learn business skills when Jill Earthy got her MBA in the late 1990s. Accelerators and incubators hardly existed then. Earthy says she chose UVic because it was one of the few MBA schools offering an entrepreneurship specialization. She went on to found two companies and is now chief growth officer of Vancouver-based FrontFundr, an online equity crowdfunding platform that connects investors with early-stage businesses.

Despite all the new training resources available to entrepreneurs, Earthy says she’d still go the MBA route if she were deciding her path today. In her view, MBA schools aren’t what they were 20 years ago. “I think they are more innovative,” says Earthy, a member of SFU‘s board of governors. “They are understanding that times are changing.”

MBA programs offer greater flexibility and connections to the business world now, so people don’t have to derail their careers or ventures to go to school, Earthy says. “There are more opportunities not to lose momentum,” she notes.

“We make great efforts to connect students with the real world as they go through the program,” says David Dunne, a professor and the director of MBA programs at UVic’s Peter B. Gustavson School of Business. For example, each semester students in the university’s full-time MBA program work on an integrated project that places them in consulting roles for local clients. “Given where we are, in Victoria, these clients are not big multi-nationals,” Dunne says. “They’re entrepreneurs. They’re people who are facing real-world business problems.”

An MBA is not for everyone. The degree can cost between $30,000 and some $58,000 at a B.C. university and take one or two years to complete. Many people find they’re not suited to an academic setting or lack the background needed for admission. But although an MBA may not be a one-size-fits-all solution, for many it remains a vital building block to a successful career.

People shouldn’t expect an MBA to be a golden ticket to success, warns Shane Moore, director of recruitment and admissions at Beedie. Successful applicants need a strategy for building around their formal education through networking, further skills development and seeking out mentors, he says. “It’s having that 360-degree plan for how an MBA can be part of the next step.”

And if MBAs don’t suit everybody, neither do the alternatives that many critics suggest. Massive open online courses (MOOCs) teach a variety of business disciplines and are generally lower-cost or free, but they suffer from high dropout rates: in a 2013 study, the University of Pennsylvania reported that on average, just four per cent of students completed its courses offered on the Coursera platform. Coding boot camps don’t teach business skills. Startup accelerators are geared to entrepreneurs, but not to what Sauder’s Cubbon calls intrapreneurs—entrepreneurially minded people who create innovation as employees and managers of companies rather than as owners.

Entrepreneurs are increasingly encouraged to follow the Silicon Valley mantra “Fail fast, learn fast” and learn from the experience of running a business. But Cubbon argues that it’s better to fail and learn those same lessons within the structure and safe environment of an MBA program. “Failing is overrated,” he says.

The case against X

Ray Walia is proof that you don’t need an MBA to succeed in business, and as a startup adviser and investor he’s helping others skip B-school, too. Walia is a serial entrepreneur whose many job titles include co-founder and CEO of Launch Academy, a Vancouver-based education and mentorship hub for early-stage companies. The non-profit’s Gastown offices exude a decidedly tech-startup chic, with exposed-brick walls, fat couches doubling as workstations and an unbearably adorable puppy wagging her way through the mostly open, 12,000-square-foot space. Despite the casual appearance, this is no playground; dozens of young people stare earnestly at their screens as they build new companies.

Launch Academy is a co-working office, classroom and community centre for entrepreneurs. About 70 tech startups work out of the space, alongside software development boot camp Lighthouse Labs and venture funds like Highline, Stanley Park Ventures and Victory Square. A roster of experienced entrepreneurs hold office hours to mentor fledgling founders. Walia says he and his three co-founders began Launch Academy in 2012 because they wanted to be around like-minded fellow tech entrepreneurs so they could leverage each other’s networks. “We realized that Vancouver needed a nucleus, a tech hub that really made it easier to connect with the rest of the community,” he recounts.

“Our goal is to get entrepreneurs early, so get them while they’re still working out of mom and dad’s garage and basement,” Walia adds. “Get them out of those environments and put them in an environment with fellow entrepreneurs. They have a far greater chance of success when they are surrounding themselves with resources, mindsets and experiences that they can leverage.”

Walia is among a new breed of leaders who assert that traditional business schools and their MBAs are growing obsolete. Organizations like Launch Academy say they can offer a better, more streamlined path for people looking to succeed in business. Besides Launch Academy, there’s a growing raft of other organizations, like startup accelerators, boot camps and online classes that provide training, mentorship and networking opportunities for people to develop their careers. Proponents of these alternatives say MBAs cost too much, take too long and can’t keep pace with the rates of change seen in the most innovative industries.

Ryan Holmes, founder and CEO of Vancouver-headquartered social media powerhouse Hootsuite Media Inc., is careful not to prescribe how others should educate themselves. But he’s been vocal that his choice to drop out of UVic’s business school in 1998 to run a company was the best career move he could make. “We were studying things in the classroom that I had learned firsthand,” Holmes says. “Being an experiential learner, I wanted to get out and just do it. The program wasn’t getting me where I wanted to go fast enough.”

Going out and doing things roughly sums up the lean-startup approach that’s come to dominate high-growth, technology-intensive industries. “Build something, measure the results, tweak, repeat,” is how Holmes describes the method for rapid innovation. Walia and Holmes contend that the same approach can be applied to learning about business. “It really comes down to how you learn and where you can level-up the fastest,” Holmes says.

MBA schools offer two main benefits: educational knowledge and networking opportunities. However, hard business skills like accounting and finance are increasingly accessible for free or cheap from top universities through MOOCs. MBA critics say the less-concrete skills are better developed by doing and experimenting—in business rather than in a classroom. For networking opportunities and mentorship, there’s an ever-expanding array of options, like incubators, meetup groups and online communities such as Slack.

“I love learning, but for me, learning on the fly is really the best way to gain new skills,” Holmes says. “In growing Hootsuite to nearly 1,000 employees, I’m pretty confident I’ve covered the standard MBA curriculum backward and forward, from identifying business opportunities to calculating revenue streams, tackling HR and understanding investment.”

Holmes and serial entrepreneur Meredith Powell co-founded The Next Big Thing (TNBT) in 2013 to provide training, mentorship and networking opportunities to entrepreneurs under age 25. Over eight months, TNBT takes young entrepreneurs and helps them develop their products, secure funding and scale their budding businesses. Unlike MBA schools, TNBT doesn’t require a top GMAT exam score or great GPA to get in. Business success isn’t dependent on academic achievements, asserts managing director Joanna Buczkowska-McCumber, who holds an MBA from UBC. “We come at it from a very different angle at TNBT,” she says. “We are saying you can be an entrepreneur whether you have a university degree, a high-school diploma or none of those.”

But what if you don’t want to start your own business? It’s fair to say that startup accelerators and hubs like Launch Academy and TNBT cater almost exclusively to founders. For non-entrepreneurs, informal paths to developing business skills remain more limited. Still, Holmes and other B.C. technology entrepreneurs say accomplishments speak louder than formal credentials. “I think an MBA still boosts your chances for employment, but it no longer offers the same value it once did,” Holmes says. “At Hootsuite, certain roles may call for advanced degrees. But in almost all cases, equivalent experience—a track record of getting things done—speaks just as strongly as a formal accreditation.”

Jeff Booth is co-founder and CEO of BuildDirect.com Technologies Inc., a Vancouver-based online marketplace for home building supplies. He says hard business skills count, but they’re not as crucial in the workplace of tomorrow as a capacity for learning. “I look for the best candidates, which means that some will have an MBA and some will not,” Booth explains. “I ask a lot of questions that probe for attributes that prove the person knows how to learn and is driven by curiosity.”

Matias Marquez founded his digital gift-card company, Buyatab Online Inc., in 2008 while still an undergrad at SFU. He’s a model technology entrepreneur who made this magazine’s 30 Under 30 list last year. COO Marquez doesn’t have an MBA, but Vancouver-headquartered Buyatab’s chief executive, Johann Tergesen, earned his from McGill University in 1990. Both have a great deal of respect for formal education and believe an MBA can add value. Still, they think real-world experience is critical whether you choose to get an MBA or not.

For Tergesen, an MBA education is far more effective if a student gives it context and meaning by first going through some hands-on experiences and struggles. “I think you’d have a much greater respect for what it is that you’re learning,” he says. 

Marquez’s take: “Go stub your toe on real life first.”