Opinion: Why hiring an MBA- or getting one- isn't a bad thing
This is an opinion piece written
by Kia Davis, who advises startups throughout the Middle East and
Africa.
“To value your company, add $1 million for each engineer, and
deduct $500,000 for every MBA.”
I heard this at a recent tech event in Dubai, quoting Silicon
Valley’s Guy Kawasaki, the former Chief Evangelist at Apple. This
is a really common view held in Silicon Valley, where MBAs are
generally regarded with suspicion, and everyone knows that business
school doesn’t teach you how to build startups. Of course, neither
do philosophy schools, but there’s no ban on philosophers. As an
MBA myself, I find the attitude puzzling.
I don't for a minute believe that an MBA is required for startup
success, or that an MBA is always an asset for startups. But I
think that the never-hire-MBAs attitude can be the equivalent of
founders shooting themselves in the foot.
The same reasons that make this attitude charming in Silicon Valley
make it silly in the Middle East and North Africa. Silicon Valley
startups are innovation-led above all else; advisors are more than
willing to fill the gaps in business knowledge, banks and lawyers
sometimes take equity in lieu of fees, and some investors have
teams of advisors that help startups with the business side.
Unfortunately for startups in the Arab world, this level of support
doesn’t exist yet. The venture capital (VC) community, by its own
admission, isn’t actively seeking wild and innovative ideas to form
the bulk of its investments. The market isn’t built for viral,
instant growth: the US is 300 million relatively high-income
English-speaking technophiles, while Arab world is comprised of 300
million socioeconomically-diverse and technologically-varied people
who speak many dialects of Arabic (or Turkish, French, Farsi, Urdu,
Hindi, etc).
In a region where 'clones' of proven business models are popular,
it seems illogical to dismiss out of hand people who have
experience in execution. Rocket Internet, the German clone shop,
recruits heavily at business schools because of their aggressive
focus on execution and speed. The MBA also comes with extensive and
powerful networks useful for funding round, landing corporate
clients, or leveraging relevant industry experience.
Over the past 4 years, I've mentored dozens of founders across
Silicon Valley, Europe, Africa, and the MENA region, and I'm an
'official' mentor with the U.S. State Department's innovation
program. I've won, judged, and organized pitching competitions. As
a temporary operating executive, I've sat on teams to help
companies launch or scale. As a connector, I've matched founders to
investors, advisers, customers and partners.
In this region, I meet with founders all the time who lack
some of the basic skills for building a business, and that's tough
when the local environment doesn't value innovation above all else.
Understanding the drivers of pricing and profit can mean the
difference between winding down and making it to the next funding
round. Wowing investors with your professionalism and preparedness
can also tip the scales in your favor.
Using my MBA degree and professional experience, I’ve been able to
help startups with investment proposals, pitches, pricing models,
distribution models, customer proposals, and sales materials. I’ve
explained the investor portfolio decision-making methodology to
founders so that they can anticipate questions from investors. I’ve
calculated ROI and offered valuation methodologies. I’ve sat in
client negotiations and run numbers on a laptop to make sure the
final agreement is profitable for the startup. I’ve used my network
to connect startups to investors, clients, and event sponsors.
These are things that founders could have learned to do on
their own, given enough research and time, but my help has freed
them to do what they do best: develop and sell great products.
Of course, there are real risks to adding someone with an MBA to
the team without looking at what else they bring to the table. The
degree itself is simply not enough to add value to startups, and,
if there is a culture clash, the fallout could be significant. For
another thing, people with MBAs often have well-paid corporate
options as backup plans. In a startup where everyone must sink or
swim, having a cushy job as a fallback option could discourage
people from sticking it out. Like anyone else, an MBA who joins
your team should have the skills, passion, and drive to create
startups, and bring the skills you need to achieve this.
There is also a big difference between being an MBA and
having an MBA. My business school class included
people who had been COOs of gaming companies in Silicon Valley, had
founded and sold software companies to Cisco, and had made millions
in the tech boom of the 1990’s. These people did not ‘unlearn’ what
it was like to build companies, they added to it. They remain just
as entrepreneurial, driven, focused, and innovative as they did
when they entered the program, but now with new skills to manage
the challenges of a budding business.
The fact that an MBA doesn’t automatically spell doom for a startup
can be seen in the major companies that have been started by
founders with MBAs, including Git Groupe, Warby Parker, Rent The
Runway, Zynga, as well as Namshi, Souqalmal, and Sukar/Desado in
the UAE. Top tech people like Apple CEO Tim Cook and Facebook COO
Sheryl Sandberg also hold MBAs. Not to mention Guy Kawasaki, the
MBA who coined the phrase at the beginning of this article.
I recently had a conversation with a Silicon Valley VC about MBAs
vs engineers. He had attended an MBA daylong bootcamp and a
hackathon back-to-back, and his biggest observation was that the
MBA bootcamp produced ideas that weren’t very innovative but were
very feasible, while the hackathon produced ideas that were highly
innovative but unlikely to get off the ground. Bringing these two
groups together in the right way could be a winning formula for
some startups.
Adding an MBA to your team in some capacity isn’t the right
decision for everyone. Some of those who ponder innovation have
justifiably warned that people with MBAs in startups can create
a cultural mismatch, especially if they bring a big-company
perspective instead of the nimble and innovative approach startups
need. Whatever you do, don’t add someone to the team just because
they have an MBA, and without thinking long and hard about what
else they bring to the table.
But, as Muhammed Mekki pointed out at Wamda's Mix N' Mentor Dubai
event last year, some MBAs can bring valuable relationships and
other benefits to startups in the region. In an ecosystem that is
still learning how to support startups, swearing off MBAs carte
blanche doesn’t make sense.