Here’s another Friday video offering. I admit that when I saw the title Boost Creativity with Humor, featuring this video by Stanford business school prof Jennifer Aaker, I was expecting funny. The Disney World story it opens with made me chuckle, but the video itself isn’t. But if you want studies to show that funny is good for creativity, health, and, well, humans … this is it. It has nice details.
All over the web, on Q&A sites, blog posts, and so on, in panels and conferences, and in the occasional book, know-it-all alleged experts are lying to young entrepreneurs about the value of education. They sprout clichés that are unrealistic, impractical, and that when taken to an extreme, are even tragic.
Lie: A startup is better than an education.
It is so not true, but sadly also so widely believed.
They say education is a waste of time. They say that a “real” entrepreneur skips school to do a startup now. You’re in high school and they tell you being an entrepreneur is a viable alternative to getting an education. You’re in college and they tell you to drop out. They’re tricking you.
That’s crap perpetuated by wishful thinking. Sure, starting a business sounds better to you than sitting in a classroom or doing homework. And, when studying bogs you down—as it does at some point for all of us—they tempt you with this lie you can turn to instead: “You don’t have to do this. You’ll just be an entrepreneur. Way more fun.”
Tragic? Yes. They throw you off track. Tragedy is what might have been, but isn’t because something—lies, maybe laziness (that’s what makes those lies work)—got in the way. I learned that in a classroom at college. They are like those beautiful sirens—mythological Greek ladies, sexy as hell, singing from the sidelines—who lured sailors off course and into the rocks.
But no, wait. You don’t have an education, so you have no idea what that reference is about. Unless you saw it in some low-grade movie.
Don’t kid yourself: You get the education when you’re young because it makes your life better.
First, it means doing something hard, something that takes a few years, and that builds you up. You do homework, you take tests, you write papers. You lose sleep turning work in on time. You grow. You face challenges and overcome them. The best path goes uphill sometimes. You can’t always take the easy route; you’ll end up nowhere.
Second, you learn to think, digest information, communicate, discuss ideas, evaluate options, and make decisions. You acquire skills and mindsets that make you better.
Third, it’s about options. Ten and 20 years will go by really fast. If you have a degree, then you have options. You have more choices. If you don’t get an education, someday there will be a thirty-something-year-old person living in your body, cursing you.
And, by the way, study what you like doing. I majored in lit, then did journalism in grad school. Ten years later, I went to business school. I ended up a software entrepreneur, writing my own code in the beginning. Your business success—or lack of it—isn’t what you learned or didn’t learn in school. It’s who you are. Life is way better with an education, but it doesn’t have to be a business education. Your education is part of who you are. Business is fine if you want to study it, but if not, no sweat. You can still do your own business later.
Yes, there are an extremely rare few who have earned the right to scoff at education. Peter Thiel, for one; nobody can doubt his credentials. He’s not just another amateur expert reading what everybody else says. And yes, Steve Jobs, Bill Gates, Mark Zuckerberg, and a few other rare exceptions. Each of them is one in several million. And all three of them were dragged out of education by one of the biggest deals of the last 100 years. Rumor has it that Jobs actually got the education by auditing—without getting the paperwork—at Reed College. And you won’t find either Gates or Zuckerberg claiming others should drop out. And you aren’t them. They are exceptions, not the rule.
Don’t risk real life betting on yourself as that one in a million. Give yourself options. Look at the odds.
Give yourself time. Startups take seasoning.
In the real world—for the rest of us—actually starting a business takes seasoning first. You need some time. Work as an employee, keep your eyes open. The right time will come. It’s not one of those “now or never” situations until you pass 60 or so. Most of us need a decade or so in the work world, at least, before we’re ready to start our own business. I was 33 when I went out on my own, and 45 when it finally took off.
A few decades ago, before this craziness started, I took a course in entrepreneurship from Steve Brandt, at the Stanford Business School. Look him up on Amazon. It was a privilege I still appreciate.
Toward the end of the course, he paused, looked up at the lot of us, and said (something like): “Listen. I’m not saying you’re supposed to pass this class, graduate, and go start a business. That’s not realistic. You’re too young. You need more experience. So, if you’re serious about this, what you do now is choose the stream you want to swim in. Take a job in an area that interests you. Wait until you’re ready.”
A few decades later I was teaching entrepreneurship part-time, having built my own business, when one of my students asked me how he could set up a business in coffee roasting right out of school. He wasn’t the typical undergrad. He was married and in his middle twenties. I told him to work with a coffee roaster first. He did, for two or three years. Today, about 10 years later, he and his wife own a successful multi-location coffee roasting business called Back Porch Coffee in Bend, Oregon.
If you do get that education, you’ll have a huge advantage over the uneducated in distinguishing data that matters from data that doesn’t. So you’ll realize I’m right. But for a quick data fix, check out what the Kauffman Foundation discovered when they analyzed 479 successful high-tech startups. Here’s what they say:
The average and median age of U.S.-born tech founders was thirty-nine when they started their companies. Twice as many were older than fifty as were younger than twenty-five.
The vast majority (92 percent) of U.S.-born tech founders held bachelor’s degrees. Additionally, 31 percent held master’s degrees, and 10 percent had completed PhDs. Nearly half of all these degrees were in science, technology, engineering, and mathematics (STEM) related disciplines. One third were in business, accounting, and finance.
U.S.-born tech founders holding MBA degrees established companies more quickly (in thirteen years) than others.
Those with PhDs typically waited twenty-one years to become tech entrepreneurs, and other master degree holders took less time to start companies than did those with bachelors degrees (14.7 years and 16.7 years, respectively).
U.S.-born tech founders holding computer science and information technology degrees founded companies sooner after graduating than engineering degree holders (14.3 years vs. 17.6 years). Applied science majors took the longest (twenty years) to create their startups.
Conclusion: They are lying to you.
Before you swallow entrepreneurial advice from anybody, ask first whether they’ve ever built a business. And even then, don’t believe them; think about it, and decide for yourself.
Over this weekend I was in email with a college student who asked me to answer some questions about business education, as part of a class project. I found this one interesting, and one that comes up a lot, so I decided to post the question and my answer here today.
On your blog, you strongly recommend getting an education for the purpose of living your life better. However, I know many people who have sadly passed that opportunity — they are parents and are overtaxed by their own small businesses. Is there a minimum curriculum you recommend to help these people deal with their own businesses — classes that busy owners can’t afford NOT to take?
I like your question and I think that’s a very useful idea. I would recommend basic courses in accounting, finance, and marketing. Most of business is learnable outside of a classroom but understanding cash flow and the principles of marketing is a very real advantage. Debits and credits, the difference between sales, costs, profit, assets, liabilities, and capital, and the difference between cash and profits are essential, in my opinion. Also, the fundamentals of marketing including market segmentation, target marketing, and market focus are every bit as important in the new world of social media as they were 50 years ago in the old world of advertising. Although you can learn those outside of a classroom, it’s the kind of knowledge base you can pick up quicker in a class.
For the record, I practiced what I preach. I did the Stanford MBA while married with 3 kids with no economic help from family, from savings my wife and I had managed from a Journalist’s salary while raising our kids, and working part time. The meager savings lasted just the first quarter of the first year and the rest was financed with my own part-time income and debts. So I know that’s hard to do because I did it, and I don’t want people to think that when I recommend it that I’m being unrealistic about what it takes. And I want to add, also, that when I have recommended it, I’ve always been respectful of the fact that it may be a luxury that not everybody can afford.
For those of you who want to get in on the ground floor of a new venture, but haven’t yet worked up the nerve to start your own, begin with a job at a startup.
I say that it’s not just the nerve to start your own; it’s also the resume, experience, and resources. And that you shouldn’t feel that every entrepreneur proves him or herself by jumping straight from childhood to business owner. Breathing first, and learning something, is a good idea.
When I was in business school 30-some years ago, Professor Steve Brandt paused on one point, in front of the class, and reflected. He was teaching developing a business plan and getting funded. He said:
Most of you are too young and not ready to jump from school into your own business. Don’t worry about it if that’s the case. If you’re serious about entrepreneurship, just choose the right stream to swim in. Get out of school and do something that relates to what you’d like to do eventually.
I repeated that advice often during my 11 years teaching entrepreneurship one quarter per year at the University of Oregon. Some of my students took it to heart. They didn’t jump straight from college to starting a business. Instead, they worked with startups in their field of interest and eventually started their own.
I’ve noticed since then that the world changes very fast, and the startup leap is happening much more often at a much younger age. But the fundamental value of that advice still applies.
Martin Zwilling goes on to list some concrete specific tips that might help. If you’re interested, that’s a good post to read.
For another taste of that post, let’s finish this post with this quote. I agree with this …
But a word to the wise, be picky about what startup you join. Ask around about the founders. Make sure you meet more than the boss and check the culture before you take the job. Reporting structures are fluid in startups, and unfortunately many startups are like dysfunctional families.
I’d gone to business school after a decade in journalism-laced-with-consulting out of Mexico City. My (meager) income doubled when I jumped from regular journalism to business writing, from United Press International (UPI) to Business International and McGraw-Hill World News. So when David Kreps asked the question “what’s the value of business information,” I raised my hand. I said:
I’m not sure, but it’s a lot. Information is worth a ton of money. Big companies paid my last employer thousands of dollars for economic projections, inflation and currency updates, and so on.
Prof. Kreps said no, that was way off. Here’s the answer:
Information in business is worth the difference between the business’ bank account balance. Take the cash in the bank with the information, and subtract from that what it would have been without the information, and that’s the value.
Sure, that’s a bit hypothetical. But it’s also stark reality. It was hard for me to absorb, because I tend to like touchy-feely vague definitions and case-by-case answers; also, this cold hard money definition felt like a reduction. But there it is.
Why scary? Ask yourself: how much time, trouble, and money do I spend on information I don’t use? How much do I research beyond what I need to make a decision?
The question continues: study entrepreneurship, or just jump in? Does a degree help? Can anybody teach entrepreneurship in the classroom? Can anybody learn it?
You may have seen this post here from last week, about one problem with entrepreneurship education. That post was enhanced by John Wren’s comment there:
I haven’t seen any research that shows a connection between being a successful entrepreneur and having studied entrepreneurship, have you?
Interesting emphasis on research there. Can anything be true or false without research? Does a tree fall in the forest if there’s no rigorous research that says so? It would be hard to research this right, because entrepreneurship is a relatively new idea in university business schools. The idea has exploded in the last 10-20 years, but a lot of the all-stars didn’t really have a choice. That makes meaningful research less likely.
Research or not, education is good when it works; when it fits with life. Short cuts are good too. Knowledge is good. Wasting time is bad. All of that can be school.
Education in trade or business related subjects is about making things better, faster, and easier. If you can learn in a day in class what would take you a roller-coaster ride through the hard knocks, is that better? If Bill Gates did Microsoft without studying entrepreneurship, does that mean you don’t want to?
Things change. Shakespeare didn’t have a PhD in Literature. So how did he learn Shakespeare?
I think the value of studying entrepreneurship depends a lot on the specific case. Not that these are the only cases, or polar opposites, but:
Start with the basic truth of studying what interests you. Don’t study business to get ahead in business; study business because you’re interested. Don’t study literature to get ahead, or science or math, either.
If life gives you a valid choice, general education is better than business education. I’m really glad I studied Literature first, then Journalism, then business. I’m glad my children majored in education, history, psychology, and political science instead of business. First learn to think, analyze, read, and write, and you can learn business later. Not everybody gets that choice. Not everybody wants it. But if you can, that’s good.
Entrepreneurship is the best of business. You have to get your head around the whole business, not some functional part. Studying entrepreneurship is the best way to study business.
It’s not for nothing that I’ve spend a long time focused mainly on business planning. That’s also about getting around the whole business, not just parts. Strategy, operations, marketing, finance, they all come together in startups and small business. Which we call entrepreneurship.
When it works out right for you it can be a big advantage, you’re already in school, and you’re interested in the subject, it’s a natural part of that time of life that people dedicate to learning, it can be a huge advantage. I did business school exactly at a career inflection point, jumping from business journalism to business, and it worked really well for me. Entrepreneurship would have been even better, but that wasn’t an option. Today, for you, it is.
Ultimately, there’s no formula here that works. You have to decide for yourself. I’m really glad for my two years in business school, even if they weren’t teaching entrepreneurship. That doesn’t mean I recommend it for everybody.