The Silicon Valley college dropout is a well known trope — but while it’s good in movies, that isn’t always how it works off the big screen.
A Fortune 100 CEO study found that 54% have a graduate degree, 59% of which were Masters of Business Administration (MBAs). On top of this, plenty of famous founders — including Micheal Bloomberg — have grad degrees.
“This myth that you need to be a dropout to become a successful entrepreneur, it’s simply wrong,” says Dries Faems, chair of entrepreneurship at German business school WHU — Otto Beisheim School of Management. “These are more the exceptions that get a lot of media attention, but in reality the people that have gone through grad school or get an MBA are more likely to have a successful startup.”
Yet, some people still haven’t warmed to MBAs, and there’s still some negativity about them being expensive, elitist and too ‘establishment.’
We spoke with WHU programme leaders, and a high school dropout founder, to find out what the real benefits are.
Building a network
Having a supportive network around you is key when starting a business.
A report from last year found that a quarter of UK students now run, or plan to start a company, while still at university. Now, many schools have incubators, accelerators and other programmes to encourage and support tech startups.
For Sebastian Thunman, cofounder and COO of Swedish fintech Team Together, this didn’t come from an alumni network. He and his cofounders met in high school while working on a project together. After learning to code, they dropped out to found the business, a decision he doesn’t regret.
This myth that you need to be a dropout to become a successful entrepreneur, it’s simply wrong
But, he says, a key part of his founder journey was that he was so young, and still had a supportive network around him: “Especially when you're young, you may have the support from friends and family to try and spread your wings. So I think being young gives a certain advantage, and you also have less responsibilities.”
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For Sabine Noe, director of recruitment & admissions for WHU’s MBA programme, one of the most valuable things a future entrepreneur can get from grad school is being able to tap into a supportive network of founders, well after graduation.
“Studying with people who are inspiring, diverse, yet like-minded,” she says. “Those connections are priceless and this is one of the main reasons why people should pursue grad school if they’re interested in starting a business.”
According to Noe, over 700 startups have been founded by WHU students or alumni. This includes 15 unicorns, like delivery startups Flink and JOKR, as well as meal kit startup HelloFresh and fashion company Zalando.
Studying with people who are inspiring, diverse, yet like minded. Those connections are priceless and this is one of the main reasons why people should pursue grad school if they’re interested in starting a business
Faems says these alumni networks add hands-on support in the form of guest lectures, acting as a resource of advice and even investing in one another's ventures.
You can develop a range of skills… fast
Many argue choosing work experience over school can provide real world work experience that can’t be simulated in a classroom, including startup-specific skills like marketing, operations and product management.
But one of the benefits of a grad degree, MBAs specifically, is being able to pick up a holistic set of skills — quickly — that could directly help build a business. Think of it as a cheat sheet.
“It’s a very compact degree,” says Noe. “You could figure it out yourself when you’re starting a business but it would take so much longer and it’s a nice format of getting everything you need within one or two years.”
Faems says founders need a strong set of generic and basic skills that, sure, you could watch Youtube videos on, but a business school will be able to provide quality assurance.
You can make mistakes
Thurnman says one of the most important skills of being an entrepreneur is being okay with failing: “If you’re not ready to go out and make mistakes. It's just not gonna work anyway.”
Around 90% of startups fail, and while founders like Thurnman often learn this through work experience, a grad programme creates a space where students can fail and get feedback before they have to follow through with an idea.
If you’re not ready to go out and make mistakes. It's just not gonna work anyway
“This is super valuable because usually in business when you’re trying something out, you don’t get a second chance,” Noe says. “They can really get honest feedback, not only from fellow students but also from the professors and company representatives.”
Experience through failure is important, and grad school can buy you valuable time while you figure it out.
WHU’s Master in Entrepreneurship programme for instance provides education for many opportunities, whether you want to be an entrepreneur, founder, consultant, venture capitalist or tech expert. According to WHU, 36% of its class of 2020 went on to become founders.
It’s expensive — but there’s help available
One of the main barriers to grad school is cost, and the bill for an MBA can be upwards of $140k. There’s also a common argument that expensive degrees are elitist — a British accounting software firm found 172 of the 498 entrepreneurs who founded or cofounded the world’s 250 top unicorns got degrees from just the top 10 universities.
Experience through failure is important, and grad school can buy you valuable time while you figure it out
“An MBA or a grad school degree from a good school is a big investment,” says Noe. “For the full time MBA programme people need to quit their jobs and so don’t have a salary for an entire year.”
To combat this, schools like WHU offer a range of partial scholarships which reduce the cost of tuition by a certain amount. And as there’s still a massive lack of diversity in European tech, several of these are specifically aimed at women and minority groups to diversify the student body — and alumni and startup ecosystems at large.
“One of the biggest pain points remains the lack of diversity, so the involvement of women, the involvement of minorities,” says Faems. “If 50% of your population is female, you want to have a representative part of them engaged in startups and if that’s not the case, I think it’s an obligation of policymakers that we try to stimulate that as much as possible.”