- The conversation is about the lack of preparation business schools provide for students to start tech companies.
- YC CEO, Michael Seibel, tweeted about the poor job business schools do in preparing students for startups.
- Jeff Buskang, a lecturer at HBS and GP at Flybridge Capital Partners, responded to the tweet as a professor at HBS.
- YC partners have to read around 500 out of 6,000-7,000 applications each batch, and many MBA students were missing basic qualifications for startups.
- Business schools tend to be expensive, and it is frustrating that students don't know or realize important startup principles.
- YC's model for entrepreneurship is hard to replicate, and it is difficult for schools to recruit entrepreneurs to teach startup skills.
- MBA students are not inherently bad at starting startups, but they may be more susceptible to certain mistakes, like spending too much time on research.
- The main issues for MBA students to address are finding a technical co-founder, committing fully to the startup, and demonstrating traction.
- MBA programs need to improve by creating more opportunities for technical talent and increasing technical proficiency within the class.

- The speaker discusses the lack of technical proficiency among students in business school and the need for more practitioners in the field.
- They suggest that business schools should accept more students with engineering backgrounds or coding skills to create an environment conducive to entrepreneurship.
- The speaker mentions that only a small number of students in their entrepreneurship class can write code, but more are taking courses to improve their technical skills.
- They propose that business schools should focus on teaching business managers of technical companies rather than coders.
- The speaker also discusses the importance of cross-pollination and the need for more social engagement between business and technical students.
- They mention the integration of the School of Engineering and Applied Sciences with the business school at Harvard as a step towards creating a more collaborative environment.
- The speaker acknowledges the challenges faced by MBA students in areas with limited access to technical resources but suggests that online tools and hustle can help overcome these obstacles.
- They emphasize the importance of building a minimum viable product (MVP) and the limitations of relying solely on research.
- The speaker expresses frustration with entrepreneurs who try to hustle their way through technical challenges instead of addressing them directly.
- They highlight the disconnect between the knowledge held by entrepreneurship centers and their acceptance of teams that lack technical expertise.

- The purpose of a university is to provide a pedagogical experience for students, not necessarily to create billion-dollar startups.
- There is a mismatch of goals between venture capitalists (VCs) and universities, as VCs push entrepreneurs hard while universities focus on providing a learning environment.
- MBA programs may be seen as coddling, but they serve the purpose of providing an academic and pedagogical focus.
- Some areas of universities are exclusive and locked behind prerequisites and recommendations.
- Entrepreneurship should not be seen as just a 101-level class; there should be more advanced classes for those who excel.
- The decision between business school and working at an early-stage startup depends on the individual's situation and goals.
- Going to a top 5 business school in a startup city can be beneficial for those interested in tech startups.
- Non-top 5 business schools may not be as valuable for those wanting to get into tech startups.
- The MBA is not seen as a positive credential, so it is important to extract as much value as possible from it.

- Many people go to business school to switch careers, not just advance in their current one
- Some business schools may not provide good advice or relevant content for students interested in startups
- It is important for students to read the "canon" of startup literature, such as books by Paul Graham and Eric Reese
- VC investors are more interested in transformative and disruptive ideas, rather than cute or small business spins
- Technical founders tend to have more success in creating something truly transformative, but business founders can also succeed with special ideas
- Blue Apron is an example of a business model that was discovered by a Harvard MBA and is seen as disruptive and transformative
- The conversation ends with gratitude and agreement between the two speakers.

The conversation discusses the lack of preparation business schools provide for students to start tech companies. YC CEO, Michael Seibel, criticizes business schools for not adequately preparing students for startups. YC partners find that many MBA students lack basic qualifications for startups. Business schools need to improve by creating more opportunities for technical talent and increasing technical proficiency within the class. The speaker suggests that business schools should accept more students with engineering backgrounds or coding skills. They also emphasize the importance of building a minimum viable product (MVP) and the limitations of relying solely on research. The conversation ends with gratitude and agreement between the two speakers.

Jeff Bussgang is a lecturer at Harvard Business School and General Partner at Flybridge Capital Partners.

Michael Seibel is CEO of YC.

Hey, this is Craig Cannon, and you're listening to Y Combinator's podcast.

Today's episode is a conversation about business schools and startups with Jeff Buskang, a lecturer at HBS and GP at Flybridge Capital Partners.

Jeff called in to talk with YC CEO, Michael Seibel, after Michael was tweeting about trends he saw in YC applications from MBAs.

And since we recorded this interview, HBS has actually announced a joint degree that combines their MBA with an MS degree.

I'll link that up in the show notes where you can also read the transcript.

Okay, So on April 10th of this year, Michael tweeted, reading YC applications and observing that business schools are doing a criminally poor job of prepping students to start tech companies.

Well, I said as a professor at HBS, I was particularly intrigued by that tweet because a lot of my students are applying to YC and I know we take a lot of pride at Harvard of trying to prepare our students to be great founders and to be effective in the startup land.

Cool, so I wanted to break apart a little bit like why you actually thought that and if the opinions of Silicon Valley and the MBA world actually match each other in terms of when you look at the data.

So, I think the thing that kind of triggered the frustration is that most people don't realize that as YC partners We have to read approximately 500 of the 6 to 7000 applications that come in every batch And so this usually involves 2 weeks of extremely intensive application reading.

And the piece that kind of triggered it was after some countless number of applications from MBA students that were clearly missing kind of basic core tenets of what YC would consider a qualification for doing a startup.

And I think what clicked in my head wasn't so much the idea that whether business schools are good or bad at teaching entrepreneurship in terms of in a classroom setting, but just more that business schools tend to be expensive and these are extremely simple rules that either these students didn't know or didn't realize were important.

And that was extremely frustrating because it's 1 thing to teach someone accounting or case studies about previous companies, so on and so forth but there are probably 3 to 5 kind of core YC tenants that if you don't know or you don't do, you don't get into YC.

And so I think that's what really triggered the outreach.

And it was great because, to be honest, a number of business schools reached out.

And it started a dialogue, and I started realizing a little bit more Kind of what I'm facing here

in what way what are the things you're facing?

I think that it's extremely What I think unfortunately YC has created this model for entrepreneurship that people are trying to replicate and it's extremely hard to replicate.

Everybody wants to have an incubator, but man, like it's a hard model.

And I think too, very specifically, it's extremely hard for the people who are leading entrepreneurship efforts In a school.

It's hard for schools to recruit entrepreneurs to do this work and So it's really hard to learn how to do a startup from someone who's never done a startup before and That tends to be the case for the a lot of people running these programs

Yeah, so first I love Michael's tweet and I love our back and forth because I think it does put the spotlight on this question of how do you prepare students to get out into the field and be great entrepreneurs and that's something that we think about a lot?

And what YC's framework represents is pretty general for all of startup land.

I don't think there's anything, I mean there's a lot that's unique about YC but I think the tenants that we'll get into in a minute are tenants that we're trying to teach in general to all budding, aspiring entrepreneurs.

So I think putting the spotlight on, encouraging students of all kinds to take a step back and get out of the ivory tower and get into the field and be more practical and be more attuned to what's happening in startup land, I think is spectacular.

And what do you think historically people have been doing wrong that has led to this preconceived notion that MBA students are not ones to create startups?

Well, first, I don't know if that's true.

If you look at the data, there have been a lot of great companies founded by MBAs.

There's a group called Poets and Quants that does this analysis every year of the unicorns, large high value startups that MBAs created.

I did a couple of analyses on this a few years ago and there's just a ton of examples, whether it's a Cloudflare or Rent the Runway or in earnest all 3 of them were founded recently by Harvard Business School alums.

There's a lot of great MBA startups but I think this general set of points that Michael is highlighting are lessons for all entrepreneurs.

For example, 1 of the things we've gone back and forth on is this question of research versus MVPs.

I think it's just that MBAs, because of their nature, may be more likely to fall into the spinning too much research time, a mistake as compared to a tech founder who's going to be more likely to jump right in and build something.

So I think it's, it's not that these lessons are not applicable to all entrepreneurs.

It's just that MBAs are more susceptible to these mistakes, I believe.

And I think like to, I totally agree with that.

And I think that In many ways, the challenge here is that oftentimes an MBA is either passively or actively putting themselves forward as someone who's received an education around business issues.

And I think that like, when I think about that group of people, they should be doing disproportionately well when pursuing startups.

And so to me, this is not a situation where I say, oh, an MBA applicant is worse than the average YC applicant.

I think the question that comes to my mind is, why aren't they doing disproportionately better?

They should be doing disproportionately better.

On average, they should be some of the best applicants we see because the vast majority of our applicants have no formal training, mentoring, or experience in the classroom dealing with any issues around startups.

And so I think that gap is what I'm trying to figure out how we erase.

And so what do you guys suspect are like the main issues right now that if addressed, MBA students would be more successful, disproportionately?

It's interesting, because I'd love Jeff to talk through the causes.

This is what I see as kind of the red flags.

So the first 1 is a lack of a technical co-founder, and the general willingness to outsource the tech part of a tech business.

It's, you know, can you get your entire team committed to working on this startup first and foremost, as opposed to we will do this startup if we receive funding, if we get into YC, if a variety of other criteria are met.

And then I think the last 1 is what we, what I like to call traction, which is just basically this idea of how long you've been working on this and what have you done.

And that speaks to Jeff's point around MVP versus research.

I think research is extremely important, but I think that being able to do research with a live product is far more valuable

a live product is far more valuable than being able to do research with a general survey and So I think like those 3 things like time and time and time again and don't be wrong Those are the central problems that most YC applicants have But once again, like I would imagine that like within this population.

These should not be the things taking these folks down

Yeah, so I think the root causes of the problems that Michael's identifying which are excellent Issues 1 of the root causes that a lot of MBA programs are created in silos and there may be technical talent in other parts of the university, but that technical talent is inaccessible to the MBA student.

They don't mingle every day with engineers in the way that they're mingling every day with sales people and marketing people.

So that's I think a real issue that a lot of MBA programs need to work on.

Secondly, there's not enough technical proficiency within the class.

This year for the first time HBS started a club called HBS coders.

There's been sales clubs There's the bargaining clubs or fashion clubs years and years and years But there's never been a coders club.

Yeah, it's all this year so That's a great sign but do other MBA programs have coder clubs?

What percent of the students coming into these classes have technical proficiency and can mingle with the bankers and the hedge fund people and the consultants to mix it up a little bit and help them with some of their technical skills and prototyping skills?

The final thing I'll say is there just aren't enough practitioners walking the halls.

Michael and I were having this conversation just before we started taping.

You know, and this game, it's started playing, it's moving so fast, if you're out of the game for 5 years, you're old.

And, you know, the models that might have worked 10 years ago, 15 years ago, 20 years ago when some of these professors themselves might have been startup entrepreneurs like me or worse, academics who never had an operating job in startup land and have a great theory about this or that and then they're teaching a class with no actual experience building product and building companies.

So at Harvard we've tried to create a lot of fluidity with current entrepreneurs coming in and out as entrepreneurs and residents and guest lecturers and Advisors, but it's really hard to do that Well in a lot of these environments where maybe they don't have access to as many great founders floating around because great founders are only sitting in 3 or 4 or 5 cities around the world in high volume.

Over the past week, I've been trying to think through what I would do if I were a business school dean.

And a business school dean with no shackles on.

And time and time again, I come to this thought that I probably can't change my teachers fast enough.

And I probably can't un-silo my organization fast enough or effectively enough.

And so the 1 thing that I can do is I can control who I accept.

And so 1 thing I wonder is like, do you think we're gonna see a day relatively soon where a school like HBS is going to accept, you know, 1 third of its students will have engineering backgrounds or will be, you know, people who actively write code.

Because, I mean, the 1 thing I think about is that, like, that in and of itself would create an environment where you wouldn't have to change anything else, you just put the right people in that room.

They organically become friends with each other, but they can find technical co-founders right within their class.

In my class of 100 students this year, and this is an entrepreneurship class for second year MBAs, the most ardent entrepreneur-bound students take, only 4 or 5 can write code out of a hundred.

So now, 15 or 20 are taking Code Academy courses or Flatiron School courses or Coursera courses, trying to get facile in software development and at least familiar.

Yeah, they'll probably increase that a little bit, but I think it's more likely that they're going to add more analytical skills and coding skills as part of the curriculum.

Like basically let's see if we can teach business school business school kids how to code?

More about let's teach business school kids the product prototyping skills and technical architectural skills to be good business managers of technical companies.

I don't think we're going to teach coders, but I think we can do a better job teaching managers of technical companies.

So assuming that we can't change the composition of the school.

I guess the second thought that I had around this was, is there any way that a set of courses offered at business schools could be radically changed in order to almost mandate a 50-50 engineer or non-engineer population.

So in other words, if we can't make it so that 50% of the folks who are at HBS know how to code, can we create a class where we grab people who do know how to code from elsewhere in Harvard and that's like a required ratio?

Because I do think that, man, It's really hard to meet people outside of class, where you live, and the normal school activities.

I think it's a great suggestion, and there's definitely a lot of that percolating at Harvard and at MIT, by the way.

MIT does, I think, a better job with integrating technical people into the MBA program.

What's happening at Harvard is the School of Engineering and Applied Sciences is physically moving across the river, across the Charles River, to be co-located with the business school.

And that's a multi-year project that's been funded by folks like Steve Ballmer and John Paulson and others.

A lot more social engagement as that opens up in 2019 and 2020.

In fact, I'm already seeing classes that hit exactly, being considered by the business school that hit exactly what you're saying.

I think taking classes at the MIT Media Lab, I love it because it shows that they're mingling with the engineers and with the visionaries and with the futurists.

And I think we all know great startups and great ideas come from cross-pollination.

And that's why the silo thing is so heartbreaking to me because we have so many really smart kids getting siloed in these narrow lanes.

And I don't know what you see geographically with the YC group, but I think if you're not in cities where you're seeing a lot of cross-pollination, It's a real disadvantage for those entrepreneurs.

That kind of relates to what I was wondering, which is like, we're talking about all of this like top-down organizational structure of a business school program.

And I was wondering, Jeff, if you had run into people who just on their own had been incredibly successful at making those technical connections and doing some of that cross-pollinating?

Because what we're talking about is like, it's HBS, right?

And so what if you're at an MBA program that's not that?

And you're in the middle of a place that might not be focused on tech.

What have you seen people do that has been successful that someone who's getting their MBA, who just got their MBA can replicate?

Yeah, look, I think it's hard if it's on a platter for you at Stanford and at MIT and Harvard and it's not on a platter for you in other environments where you can't just walk out the door and take a lift or a subway and find, you know, a fantastic bunch of technical people running around in a coffee shop.

So, you know, what do people do in Indianapolis?

Louis, what are people doing elsewhere in the country in Ohio and Michigan.

I think it's hard, but look there are engineering programs, computer science programs in all of these places And there's also a ton of online tools.

That's an AI in Kentucky and he just hustled his way to build the network of angel investors and software developers and AI specialists and has become really plugged in to the AI community from Kentucky to Boston and subsequently.

But he got his company off the ground and funded out of Kentucky because of his hustle.

So it does take a little extra hustle and a little extra connectivity.

What are the things that someone can do to get out of the research mindset?

I mean, I have to be honest, the number 1 reason why people stay in research is they can't build their MVP.

Like this is 1 of things I often say to founders is that this is a hard problem, but it's not a complex problem.

But if you have a bunch of people who are trying to build a technology business and they don't have access to people who write code, the path's gonna be harder.

I think the 1 thing that always gets me is every entrepreneur has this sense of hustle.

And when I see founders overextending the hustle To compensate for these core issues, you know, that's what what often kind of frustrates me.

It's that like, okay, you know We don't have technical co-founder, but man I found Some dude in India who's gonna build this thing for me Like don't I deserve a pat on the back.

I got through that no technical co-founder challenge.

And it's as if no one's telling them that some things are foundational, like some things you can't hustle around, or if you hustle around them, you're decreasing your chances of success significantly.

And I don't know how to communicate that to people.

It's really strange, because I mean, we talk about this stuff all the time at Y Combinator, but people still apply without this information.

And over the past 2 weeks, I've talked to a number of kind of directors of entrepreneur centers and the constant thing that I'm surprised by is that they know these things that I'm talking about, but they still accept teams that don't abide by these rules.

So they're kind of rewarding something that they know is gonna necessarily make these teams' lives harder.

But like, you know, the head of an entrepreneurship program at a university like for some reason that's completely acceptable

1 of the insights that I feel like people miss,

you know, look I'm a venture capitalist by day.

So I totally get this tension But 1 of the things that we should be careful to distinguish is the purpose of the university.

It's not to create billion-dollar startups.

It's to have a pedagogical experience for their students.

And so it may be that there's a little bit of a mismatch of goals here, you know, sometimes you have to look at incentives and goals.

Because VCs of course are gonna push entrepreneurs really hard and there's this dynamic of you don't get funding unless you're taking the right approach.

But in a university environment, the attitude is, hey, you're here to learn, so we'll be a little softer, we'll let you run the hoops, we'll let you run the experiments and make your mistakes.

And it's, you know, you're still gonna have your nice dorm room and your nice classroom and your manicured lawn the next day.

You know, you're not gonna go out of work and lose your job and lose your funding.

So there is a little bit of a coddling, maybe, is the thing to say, that MBA programs do put forward, but they're doing it for the reason of just providing You know because they're providing an academic and pedagogical focused goal

I think so that's my challenge though because there are some areas of a university that it's clear they're trying to expose all of the students in a very open and honest way.

But there are many other areas of universities that are completely locked behind prerequisites and recommendations and that are extremely exclusive.

I mean, for example, I had a, there was a whole major at Yale where I went to school that you had to apply to even be able to major in that subject.

There is already, Yeah, after getting into Yale, you had to apply to be able to do this major.

And so it's interesting to me that there's this mental framework that entrepreneurship is at the kind of 101 level and only there.

When if you look at the odds, I mean, we're talking about the same odds of becoming an NBA basketball player.

And there is no high school team that accepts everyone who walks in, let alone college, right?

So, once again, it's like, if I wanna go to a 400 level physics class and I walk in the front door and I don't know how to do calculus, I'm not staying in that class for very long and that's undergrad.

So I'm not really asking where's the place for the 101, I think that that should exist.

What I'm asking is what's the 400 level class?

Because the 1 thing that we've noticed here at YC is that the best people only want to be around the best people.

And if you put a class together and you're trying to attract the best, but you also are in the 101, Man, that's hard.

So sometimes I feel like the educational institutions are not using all the tools they could.

There's this general theme, oh, anyone can build a billion dollar company.

And it's like, sure, anyone can, but it's kind of like telling your kid that you can be a rock star or you could be a Kobe Bryant, it's like it's a high bar So I think the other thing that I'm trying to figure out is what should people in the meantime who are considering business school and wanna be entrepreneurs, what should they do?

Because I think that a lot of people here in the Valley would argue that if you're a business person, you don't have access to a technical network.

Spending 2 years at an early stage startup in the Bay Area might be more fruitful than spending those 2 years at a HBS or a like school.

Look, I think there's an argument for that trade-off in the short term.

I think the harder question for people is, 10 years from now, 20 years from now, 30 years from now, where am I gonna end up?

Because if I spend the 2 years stepping off the treadmill at Harvard or Stanford or at MIT, I'm gonna come back with a network, a set of relationships, and a skill set that may not be immediately high ROI.

In fact, I have a lot of my students who come from startup land and go back into startup land at the same level that they left after 2 years of spending $100,000 on their MBA program.

I've got a woman I've been coaching who's graduating this year who's in that exact boat.

But 10 years from now, 20 years from now, she's gonna be an awesome CEO and she's gonna have an extraordinary network and I don't know if she would have had that.

I can't say she would have had the same benefits In the long term that she would have she had never done the program

But let's let's push back on that like if she were to build a successful company She probably would have that network, right?

I mean, it's a lot easier to build a network when you're doing something that people are attracted to

I think the risk though is that do you have the tools to scale as an executive while that company scales?

You know, let's look at Sheryl Sandberg as an example.

Would Sheryl, if she had never gotten an MBA and never taken the 2 years out, would she have scaled as an executive and as a leader at Google and then later at Facebook?

Or was she enabled or enhanced because of her 2 years at the MBA program?

See, I think I find that tricky because I think that if you were to grab the average person on the street in the Valley, and or the average angel investor in the Valley, they would say that that MBA might have been much more of a filtering and kind of rewarding process than it was an educational process.

And I don't know many people in the Valley who would say that you learn more getting an MBA than you learn 2 years in the grind at an early stage startup.

So it's tricky, it's tricky, because there are a lot of MBAs that have been successful, but there are also a lot of non-MBAs that have been extremely successful.

Well, to present the other side, there are a lot of startup founders that are incredibly unsuccessful.

Certainly being technical is not a ticket to success.

I just, I guess the thing that I think about is that.

And I would say there are a lot of high functioning mid-level people who get stuck as directors and VPs.

Yes, I guess that's the thing I think about.

I think the thing I think about is not whether or not the MBA can be valuable.

Maybe a better way of putting this is, if I have to choose to spend that hundred and some thousand dollars and those 10 years, and I also have the opportunity to be at an early stage startup in a valley or somewhere else,

And I think what I say to people when I talk to young professionals who ask me that question is if you have high conviction that you're in the middle of a Google or a Facebook or a LinkedIn and You're in you've got mentors and you've got a great path, then you should stick around.

But that's a 1 in a thousand, 1 in a million situation.

But if you're kind of bumping around in a company that's growing 20%, 40%, even 60% a year, it's not clear it's gonna be a $10 billion plus company, then you would benefit tremendously from taking 2 years off the treadmill and to take a page from Stephen Covey's book, Sharpening the Saw, a little bit.

You know that story of the guy in the woods who's sawing like crazy, a dull saw, but he can't get the tree down.

He said, hey, why don't you just stop and sharpen the saw?

think that applies past the top 5 business schools in the country?

I say to students, look, go to the top 5, which are cities who happen to be in the middle of startup land cities, you know, rich innovation ecosystems.

I'm not sure I would go to others If I'm in if I'm in the middle of a startup if I'm trying to transform myself, you know, who knows?

But if I'm in the middle of a Startup that's going well in New York or and Tel Aviv or and yeah, Austin or Silicon Valley, you know Between I don't want to name a school, to be too negative, but if it's a non-top 5 school, then I'm not sure you could go.

So I think that that's an extremely important point.

I think that like, I could say that hands down.

I could say that if you're not going to a top 5 school, you are not technical, and you wanna get into tech startups, it makes no sense to me why you wouldn't try to get a job in an early stage company in a startup city.

And I think the 1 thing that people might not realize is that people do not see the NBA as a startup.

It's not seen as like a positive resume item.

So you better squeeze as much fucking value out of it as humanly possible because it's not gonna be like, oh, like that's on your resume, here's some extra points.

And I think sometimes people don't think about it that way.

And it's interesting, is my wife went to business school and what surprised me more than anything were the number of career switchers at business school.

I think people often, I originally thought most people went to business school to advance within their current career.

And strangely enough, more than half of her class was doing banking or consulting and then looking to do something else.

And it was tricky because they were pitched, oh, come to this business school and we'll do this for you.

And then in the end of the day, they kind of got scooped up into middle management from like, you know, the big companies in the Bay Area and I'm not exactly sure that's like Maybe that's better than banking.

I don't know but like I don't know that's So I think that you know The other thing that I want to dig into is that what do you do if you're a student and you know You're not getting good advice.

I mean like you look at the person giving you advice and you're like they are legitimately not qualified to talk to me about startups.

Like what would you advise a student in that situation?

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How Should Business Schools Prepare Students for Startups? – Jeff Bussgang and Michael Seibel