What type of education does an entrepreneur need to be successful? Vivek Wadhwa, a columnist from the Washington Post, recently asked the question, “Would the Facebook IPO have bombed if Mark Zuckerberg had an MBA?”*
In case you missed the story, Zuckerberg is the 28 year old entrepreneur who dropped out of Harvard as an undergraduate and just lost $2 Billion in personal assets in 2 weeks (out of his $16 plus Billion) after Facebook’s stock price dropped precipitously. The first Venture Fund that invested in Facebook was founded by Peter Thiel, who co-founded Paypal at 30 years old after receiving both an undergraduate and a law degree from Stanford University. He recently started the Thiel Fellowship, which gives $100,000 and 2 years free to 20 young entrepreneurs at a time, requiring that they drop out of college to pursue their passions and attempt to change the world. Do entrepreneurs need MBAs? Or college degrees for that matter?
My company has interviewed more than 100 entrepreneurs in the past year and a half. Note, we have not interviewed Mark Zuckerberg nor Peter Thiel. We have, however, interviewed entrepreneurs with 1 to 1000’s of employees. These entrepreneurs founded companies that exist today, while some were sold, others were closed and still others went public. Of the entrepreneurs interviewed, almost all graduated from high school, most have college degrees, and about a third have graduate degrees, very often in fields that are not directly related to their businesses. For example, quite a few had law degrees, like Thiel. I heard more than once that after working as a lawyer for a time, the entrepreneur yearned to change careers, and found a niche for a new business. They started businesses in new industries, such as financial services, mediation, child play programs, and marketing.
Degrees are not the only type of relevant education, of course. Unlike Zuckerberg and Thiel, most entrepreneurs start businesses after they have worked quite a few years in other businesses or organizations. Of the millions of new businesses created in the US in 2011, about 68% were started by entrepreneurs over the age of 35. 29.4% were started by entrepreneurs between 20 and 34 and 38.2% were founded by entrepreneurs over 45** One of the young entrepreneurs we interviewed said that the most important things he learned in preparation for starting and growing a business he learned from his parents and the US Marine Corps.
What does an entrepreneur need to know to start a new business? All businesses have numbers (math) and require communications to sell something. But what else? One entrepreneur, with a graduate degree, admitted to not knowing how to create an excel model. The business is nevertheless growing rapidly and the entrepreneur had the foresight to hire someone to set up an online system to track the numbers.
Foresight turns out to be a vital to entrepreneurs. You can hire someone who is educated in the business requirements, such as tax liabilities, legal entity organization and employment laws. And, of course, there are people and online services to help with patents, copyrights, and trademarks. You can use services and small business software to manage payroll, customer relationship management and bookkeeping. There are online services to help with recruiting, operational management, inventory management, order tracking, billing and payment. There are even entrepreneurs who hire people to manage all their marketing functions, including social media. Finally, if you want to sell a business or take it public, there are bankers, financial advisers and legal teams with more than enough graduate degrees to help you through the process. The entrepreneur has to have the foresight to understand how to put it all together effectively.
No matter the industry or the size of the business, entrepreneurs need to learn how to have foresight. Foresight: the farsightedness and vision to anticipate, prepare, and plan, while having the care and precaution to limit risk. That is the extraordinary ability to put together the necessary people, software, and services to grow quickly and profitably, while identifying and managing the “soft spots” and thereby reducing risks along the way. Entrepreneurs develop foresight from high schools, colleges, graduate programs, parents, mentors and jobs with big and small companies or organizations, from other start-ups to the Military.
Our first 100ELL mobile app is being reviewed by Apple and we expect to have it available at the iTunes store this week. We have distilled lessons learned from our 100 plus interviews with entrepreneurs and turned them into audio and written stories, in hopes of providing some foresight to other entrepreneurs, no matter their educational level and experience.
All the best, and I wish for you great foresight!