Startups: 10 Things MBA Schools Won't Teach You

July 8, 2009

Now that 3 years have passed since I got my graduate degree (and the founding of my current startup), I think I can make fun of it a bit.  [Note: Only a moderate amount of harm was inflicted on MBAs — and investment bankers, in the making of this article].iron man stupid phone onstartups

10 Things Most MBA Schools Won’t Teach You About Startups

1.  No amount of strategic planning will ever substitute for managing your cash flow.  Financial statements are great.  The most important one is your bank account statement.

2.  There are always more things to do than there is time to do them.  Startups are a continuous exercise in deciding what not to do.  You can sometimes win by just not doing things faster than your competition.

3.  Sleep is that time you’re working on startup problems with your eyes closed.

4.  It helps not to call people “human resources”.  They’re people.  And, as it turns out, people like to be treated like people. Go figure. 

5.  No amount of academic theories on efficient pricing will prepare you completely for what people will actually do.  Finding the “optimal” price is really hard.  In the meantime, remember that a sub-optimal price is a lot better than no price at all.

6.  Price discrimination (in an economic sense) is a wonderful thing.  Except that it often ignores the real costs in terms of organizational complexity.  Every time you add a new product or product option a small part of your company dies.

7.  There are an infinite number of ways to spend money on marketing.  You have no idea what’s actually going to work.  The idea is to experiment broadly and learn lessons cheaply.  On a related note, no amount of MBA marketing classes will prepare you for the day that you have to produce leads in order to close sales.  As it turns out, marketing is about more than product feature matrices and the right shade of blue for your logo.

8.  To recruit the best people, fair compensation and equity are adorable kitten onstartupsonly a start.  Company culture and a demonstrated passion for your vision is hugely important.  (Oh, and your vision should be on the larger path to truth, justice and overall goodness).  Your vision should not involve harming kittens.  They’re adorable. [insert gratuitious kitten photo here]

9.  There’s a lot of value to being likable.  Good things happen when people like you.  When people like you, bad things have less of a chance of being fatal.  I advise being likable.  That’s why I advise against being an investment banker after getting an MBA.  (I also advise against being an investment banker before getting an MBA).

10.  Advanced game theory is exceptionally useful.  Basic game theory is dangerous — because it assumes that you’re dealing with a  bunch of rational “players”.  It’s like trying to design a real car that’s going to be driven on a theoretically frictionless surface, with no air resistance and no idiots on the road.

 What are your top startup lessons learned that even the top MBA schools don't teach?

Topics: strategy school

Written by Dharmesh Shah


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