I’d like to talk about education for entrepreneurs today. But first, a little history:
University MBA programs were developed in the early part of the 20th century, as the United States was becoming industrialized. Companies were becoming larger organizations, and as a result there was an unmet need for professional managers.
Before industrialization, of course, there was no such need. Most enterprises were family business (stores, hotels, eating establishments). You did the best you could at running your business and that was that.
With industrialization, the nature of business changed as companies like General Motors and Proctor & Gamble grew large and amassed hundreds (and then thousands) of employees. Suddenly there was a need for formally-trained business managers.
So Harvard launched the first Masters in Business Administration program in 1908, and over the next half-century most major US universities added MBA degrees. Curricula included accounting, finance. strategy, marketing, and operations. Students were taught how to develop 5-year plans and execute them. These MBA students graduated from universities and then went to work for large American corporations, building the country into the huge industrialized economy that it is today.
But as I said, today I’d like to talk about entrepreneurial education, which is a little different. We’ve come to realize that the skills required to be a successful entrepreneur are different from the skills taught in traditional MBA programs. For a long time it was assumed that a startup was just a small corporation. But it’s not.
“A corporation is an organization designed to execute a business model. A startup is an organization designed to find a business model.” — Steve Blank
So how is being an entrepreneur different from being a corporate manager? Part of the answer to that may lie in professor Howard Stevenson’s definition of entrepreneurship. He says “Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled”. This suggests that entrepreneurs are people who can see opportunity and then go on an expedition to find and obtain the resources they’ll need (capital, people, infrastructure, customers, strategy) in order to pursue that opportunity.
Which is to say that knowing how to operate a business is different from having the skills required to create a business. Entrepreneurship is more about the mindset, and less about the possession of skills.
Want an example? How about Mark Zuckerberg, arguably the most successful entrepreneur of the 21st century. He knew nothing about operating a business when he started Facebook — he was a 20-year-old psychology and computer science major. Clearly his business success can’t be attributed to the notion that he was a business expert. So what was it?
Jim Breyer was the first venture capitalist to invest in Facebook. If you ask Jim today why, out of all the different social media startups he looked at, he chose to invest Facebook, his answer is “More than any other entrepreneur I had met, Mark really understood the user”.
And this provides insight into something else that an entrepreneur must have. It’s not knowledge of accounting, or finance, or cap tables, or 5-year plans, or operating structures. It’s the ability to discover customers, understand them, and build something they want. If you do that successfully, you can hire MBA’s to handle everything else.¹
Today, there is a reasonably well-established canon of literature on entrepreneurship. It’s the work of Silicon Valley gurus Steve Blank, Eric Ries, David Kelley, and others. It emphasizes taking the time to really understand customers before you build a product (the first step in the Design Thinking framework is “empathy”, as an example), and it also emphasizes decision-making agility, hypothesis testing, validated learning and “pivoting” your venture as many times as it takes to achieve Product-Market Fit. Every startup accelerator program in the world today uses a version of this curriculum. And yes, even traditional MBA programs are incorporating aspects of it.
I’ve been teaching entrepreneurship at Stanford University for the past ten years, and I’ve been coaching startup CEO’s at Miller Center for Social Entrepreneurship for even longer. In those roles, I’ve tried hard to put together curricula that is relevant, meaningful, and actually helpful to aspiring entrepreneurs. It’s based on my own experience as a Silicon Valley entrepreneur, and more importantly it’s based on what I’ve observed over many years of working with hundreds of young entrepreneurs. I have an MBA from a highly-ranked university but, as good as that program was, I honestly think the skills we were taught represent an incomplete skillset for entrepreneurs. I’ve tried to fill that gap.
Higher education is at an inflection point today, all over the world. It was already being disrupted from various angles and now COVID has forced every university in the world to change the way they operate. Curricula are being restructured, pedagogy is being adapted to the new normal, and educational delivery methods are being altered for the sake of public health. There will be wholesale changes to higher education over the next decade. I think we’ll continue to see the skills of entrepreneurship creeping their way into formal curricula.
I believe in the power of entrepreneurship and innovation. I believe that entrepreneurship can change lives, create jobs, and has the potential to solve big problems. And I believe that improving our ability to teach entrepreneurial skills can be part of creating a more equitable future.
- In fact, after Jim Breyer made the investment in Facebook he helped Mark to recruit Sheryl Sandberg, a Harvard MBA who previously had built the advertising side of Google. By all accounts, it was the combination of the two of them that provided the magic that propelled the company into a billion dollar success.