Where Einstein Meets Edison

Suits in Silicon Valley

Suits in Silicon Valley

Jun 16, 2013

During the month of March, nearly a hundred MBA candidates from MIT Sloan visited Silicon Valley to visit 62 companies, ranging from very early stage companies to titans like Google and Facebook.  We learned that the Bay Area is thriving and picturesque, but would our MBA open doors?  Or are Silicon Valley startups so focused on building cool products that business-minded folks would be left on the sidelines?

Fortunately, we thought ahead to quantify our findings.  For each company we visited, we had one to three students score the company on a variety of metrics related to MBA hiring.  Diving into the data sheds new light on the complex relationship between MBAs and startups.

We asked the burning question: How Receptive are Silicon Valley Companies to Hiring MBAs

MITER - How Interested In Hiring MBA

Overall, Silicon Valley startups were not as hostile to MBAs as we were led to believe.  Over 75% of startups visited were interested in hiring an MBA.  Only a small minority of companies were outright hostile, although perhaps such anti-MBA startups wouldn’t have received us in the first place.

 

Experienced Entrepreneurs More Likely to Value MBAs

MITER - Founders Entrepreneurial Experience

The companies we visited had a good blend of first time entrepreneurs (39% of companies) and very seasoned entrepreneurs (18% of companies).  As entrepreneurial experience increased, we observed an increased willingness to hire MBAs.  We optimistically interpret this to mean serial entrepreneurs recognize MBAs are the key to startup success.

 Company Size Strongly Correlates with Interest in Hiring MBAs

MITER - Company Size

The stage of a company is a good predictor of how likely they are to hire MBAs.  Very small companies (<15 employees), which accounted for 17% of our visits, were the least likely to hire an MBA.  As they scale, they become more receptive to hire MBAs.  Anecdotally, we note small companies are most eager to hire technology talent.  As they scale, they start to staff out business development, marketing, strategy, and other MBA functions.

Startups in Accelerators Overall Less Likely to Hire MBAs

MITER - Accelerator MBA Hires

14% of the companies we visited had been through accelerator programs, and these companies were among the least interested in hiring MBAs.  Although these companies were disproportionately still small, we note this effect remained consistent for companies at all levels of employees.  We suggest that robust accelerator programs, which provide access to mentorship, networking, and business development opportunities, may supplant the value of some MBAs.

Interest in MBA Hiring Varies Sharply by Industry

MITER - MBA Industry Hiring

For each company, visiting students assigned it into as many industries as applied.  We note that medical, gaming, and consumer internet startups were less likely than average to hire business school students.  MBAs were most highly sought after in marketing/advertising, big data, or energy startups.

Silicon Valley: Open For Business School Students

In conclusion, the MBA provides a measurable value add for Silicon Valley startups.  An MBA is less valuable to an early stage startup or one that has gone through an accelerator program.  Serial entrepreneurs are more likely to value an MBA, perhaps indicating the degree may become more valuable if the current wave of startups propagates into future generations.

 

If you are a small startup looking to bring aboard an MBA, you should weigh a few pros and cons.  A startup necessarily carries a lot of risk, yet MBAs are often hard-wired to minimize risk or avoid it altogether.  Make sure the MBA you are talking with is on board because they share your passion for the idea, and are willing to accept a lower paid position than many of their peers.

A major benefit of hiring an MBA (as opposed to an undergraduate business student) is that they often bring quality work experience from before their MBA program.  Pay attention for MBAs with industry domain expertise, especially if you are in the B2B space.  A strong personal and professional network from a person nearly a decade into their career generates accelerating returns.

Finally, look for an MBA who can juggle the work of several later stage hires too costly for early stage startups, ideally one demonstrating real-world experience with skill sets like finance, accounting, HR, strategy or market analysis.  A dedicated expert in any of these arenas are useful but often too costly for a small company.  The right MBA can juggle several of these tasks for you.

In closing, around the Bay Area, there’s never been a better time to suit up!

 

About

Gerrit Hall is an MIT Sloan MBA student graduating in the class of 2014 and CEO / Co-Founder of RezScore and Barnacle

One comment

  1. Great piece! Cant wait for the E & I trek to the valley!

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