There has been a lot of commentary recently stating that MBAs, and Harvard MBAs specifically, aren’t very good startup founders.
“Only 12 of the 39 companies had any MBAs within their co-founding teams…only three had at least one co-founder who went to HBS.” – Dan Primack of Fortune
“I would bet a large amount of money that the overwhelming majority of us would not look favorably on a company started by one of you” - Chamath Palihapitiya on Harvard MBAs
“I want to start companies and build shit and a [business] school environment is just not the place to do that” – Greg Gomer of Bostinno
“The types of people who are going to create a disruptive business no longer need MBA programs” - Chase Garbarino of Bostinno
Those comments are being made in spite of data that proves exactly the opposite.
Here’s my take on the same numbers that have been thrown around the last couple of weeks.
By using the first “only”, Primack implies that MBAs in general have a low relative share of the unicorn outcomes (companies that have been created in the last 10 years worth more than $1 billion) referenced by Aileen Lee. By using the second “only”, he implies that Harvard MBAs have a low relative share of the unicorns.
But data shows that on a relative basis, MBAs are a part of a very large relative share of those unicorns, and Harvard MBAs are a part of a massive relative share of the MBA unicorns.
There are ~1.8 million college degrees awarded in the US every year. ~126,000 MBAs graduate in the US every year. ~900 Harvard MBAs graduate each year.
So 8% as many MBAs graduate each year as compared to bachelor’s degree holders. So on a relative basis, MBAs should be a part of 8% of the 39 unicorns, or 2.73.
.05% as many Harvard MBAs graduate each year as bachelor’s degree holders. So on a relative basis, Harvard MBAs should be a part of .05% of the 39 unicorns. Or basically zero.
So on a relative basis, MBAs are a part of 4.4x more unicorns than they should be, and Harvard MBAs are a part of 153.8x more unicorns than they should be.
So rephrasing Primack’s statement in the context of this analysis:
“Incredibly, 12 of the 39 companies had MBAs within their co-founding teams…and an astounding three had at least one co-founder who went to HBS!”
Now we’re talking.
My analysis is incomplete. It ignores the truly amazing fact that 8 of these companies had a college dropout as a founder. It doesn’t control for the changing mix of MBA degrees versus bachelor’s degrees over time.
But using the word “only” in the context of data that supports the exact opposite just doesn’t make sense.
And in regards to Gomer’s point about business school being “just not the place” to “start companies and build shit”, I took a look at Crunchbase to see how the startups founded on campus by my classmates were faring. Professor Tom Eisenmann supplemented Crunchbase data with internal data from the HBS Rock Center. The list below represents only startups founded by my classmates from the Class of 2010 as well as members of the Class of 2009 whom I overlapped with. The data offers 645 million counterpoints to Gomer’s argument.
This list doesn’t include Tough Mudder (HBS ‘09) which has been profitable since inception and is reportedly doing over $100 million in revenue.
Dollars raised is not success. But Palihapitiya said he’d bet a lot of money that VCs would look unfavorably on HBS MBAs. Gomer believes that business school is a “good place to party like a UGRAD” but a bad place to start a company. I would argue that this data tells a different story.
But that would be a very MBA-like approach for me to take.
*Thanks Jeff Bussgang for feedback on this post. If you’re interested in this topic, check out his post from last fall. Thanks to Tom Eisenmann for a more complete list of startups from ‘09-‘10.