MBAs/start-ups: disruptive students

Business Education

Business school graduates need an additional qualification: thick hides. Critics say Master of Business Administration stands for “Mediocre But Arrogant”. Entrepreneurs can be particularly snarky. A Silicon Valley boss once claimed $250,000 should be deducted from the value of a start-up for every MBA employed.

Business schools are trying to become hipper. They have poured millions into start-up courses and innovation labs. Yet conventional MBA courses are still seen as too academic and long-winded. UK entrepreneur Brent Hoberman believes he has found a solution. The businessman, who co-founded travel website Lastminute.com, is launching the Founders Academy. The alt-MBA programme will offer free tuition and paid internships with tech start-ups.

This is just the latest attempt to reinvent business education. In the US the appetite for traditional MBAs appears to have peaked. Demand has been blunted by fee inflation, a healthy job market and an unwillingness to take a career break. In response, even respected schools such as the University of Iowa’s Tippie College of Business had to wind down its full-time MBA programme. Harvard Business School has frozen tuition fees at $73,440 a year.

Lex chart: MBAs

Many faculties have responded by teaming up with edtech companies such as 2U to offer MBA programmes online. But competition is intense. 2U’s share price fell 65 per cent in late July, on a big quarterly loss. There are limitations to the online model. The value of a course depends on who you meet in the café, as well as what you learn in the classroom.

Business schools still have strong brands. MBAs benefit some aspiring entrepreneurs, even though many of the world’s most successful founders were college dropouts. That is not just because most start-ups fail. Anyone trying to build up a small company has to be a multitasker.

Mr Hoberman’s apprentice-style version of the MBA is a backhanded acknowledgment that business is not as instinctive as some entrepreneurs believe. It can be taught. Haters doubtless hope MBAs are becoming obsolete. That is just another challenge for graduates to neutralise with characteristic slickness. Threats to the qualification are cyclical, not secular, a distinction taught in all good business schools.

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