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July 17, 2009

The Entrepreneurial MBA

Emily McHugh ’99
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McHugh was recently featured on MSNBC’s “Your Business” (watch the video).

Emily McHugh ’99 is the CEO and co-founder of Casauri, a manufacturer of designer laptop cases and accessories. This post is re-published from McHugh’s Casauri blog.

When I applied to Columbia Business School I was not exactly sure what I was going to do once I received my MBA. My hope was that I would “figure” it all out in business school and ultimately end up with a job that was better than the one I had before business school. Business school gives one the opportunity to be exposed to various opportunities from a unique vantage point. It is like being offered a smörgasbord of career paths from which to choose. However, in order to choose, it is important to ask yourself whether you are able to muster the passion necessary to be truly happy and fulfilled in a particular career. Being passionate means that you love something so much that you are willing to suffer and endure whatever it takes to be successful.

I came to the realization of my passion during the last semester of business school when I took an entrepreneurship course. It was in that class that I finally “figured” out what I was going to do with my MBA — go into business for myself. After all, I would be able to put everything I ever learned into practice and become a true-blue businessperson.

Having an MBA is not a prerequisite to becoming an entrepreneur, neither does having an MBA guarantee or improve your chances for success. However, the MBA teaches key business principles. The MBA helps to remove some of the uncertainty in the business landscape by teaching the vocabulary and components of business.

The entrepreneur can expect that having an MBA will: 1) add credibility to a potentially incredible endeavor, 2) develop confidence to overcome the impossible, and 3) build stamina and endurance to persist in the face of uncertainty. Having an MBA will not: 1) make starting a business easy, 2) save the entrepreneur from struggles and hardships, and 3) teach you everything you need to know about starting and running a business.

It is probably safe to say that with or without an MBA, most entrepreneurs have to start their businesses from scratch without the benefit of a defined and predictable path. Most entrepreneurial skills have to be learned on the job or during the course of the entrepreneurial journey. Moreover, despite the commonalities that entrepreneurs share, each entrepreneur’s experience is unique and highly dependent on the type of business venture being pursued.

The two most valuable lessons I learned in business school that helped to prepare me for entrepreneurship were valuation and negotiation. One does not become an expert in these areas just by taking a class, however, one becomes aware of the tools needed to be effective in assessing value (valuation) and persuading someone to give you what you want (negotiation). Ultimately, communication unifies the above two skills. Being able to express or “sell” yourself expedites entrepreneurial success, since most of your time is spent trying to convince people to believe in you.

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What has been the most valuable lesson from business school in your experience? Please leave a comment.

 

In business school, valuation is mainly taught from a financial perspective in terms of valuing companies or pricing securities. However, valuation principles are applicable to any situation where determining worth is in question. Since most of the decisions entrepreneurs make involve applying limited resources to limitless needs, being able to intelligently allocate resources is essential. As entrepreneurs, we have to constantly determine value — of products, employees, customers, and services. This skill requires extensive practice, since it is not an exact science.

Negotiation is another nebulous area, as it involves many independent factors to be effective. Negotiation is the ultimate team sport. It is like a dance where you try to avoid stepping on the other person’s toes. To negotiate requires research and as thorough an understanding of the given situation as possible. We negotiate at every level of our lives, starting from infancy to adulthood. Entrepreneurship requires endless negotiation, the ability to overcome obstacles, inspire others to action, and risk losing what you actually may want to obtain.

The MBA provides the tools that improve one’s ability to valuate and negotiate. Beyond these skills, the MBA provides access to an incredible network of contacts that can help propel your business forward. It is a personal choice whether the business school experience will be appropriate for each entrepreneur. I would not recommend to someone contemplating entrepreneurship to wait, go to business school, and then start a business as a fixed formula. However, I would recommend seizing opportunities as they present themselves. In my case, I am very glad the opportunities included an MBA.

Comments

by Sonal Sinha | July 21, 2009 at 12:10 PM

Hi Emily, I recently started my EMBA from Berkeley-Columbia and wanted to say that your article is so dead on! It certainly reflects what I have been going through and my experiences at Columbia and Berkeley (albeit only for a few months so far) have already started helping me to shape my views and confirm some of my business ideas. Thank you for writing the article - it truly did re-enforce my feelings about the MBA and myself. Regards, Sonal

by Emily McHugh | July 22, 2009 at 3:45 PM

Thanks Sonal for your kind feedback! I appreciate your taking the time to write and to share your experience. I wish you all the best with your studies and future endeavors! - Emily

by Lara Junaid | July 29, 2009 at 12:15 PM

Great article. For me, a key benefit of the Columbia MBA is the opportunity to learn from the experience of classmates, professors and speakers. I recently started a company, www.capeweaver.com and I find myself drawing upon key learnings from my CBS experience on a daily basis. Without my MBA, I would eventually learn these concepts but it's nice to have the wealth of knowledge and others experience to draw from.

by Sean Casey | July 29, 2009 at 6:45 PM

Having just completed the Berkeley-Columbia program and engaged in start-up activity, I would concur that two valuable skills are valuations and negotiations. Much of the financial course work leads to a good valuation approach. The negotiations skills are then helpful is selling this valuation (present value of future cash flows) to investors. That said, the MBA also helps you to understand the global economic context of your business which is now a fact of most businesses.

by Richard Russo | August 01, 2009 at 11:07 PM

Your article was very insightful, especially about each person's path being somewhat different. I have found that judgment based on experience and a solid understanding of one's customers to be a key to successful in a start up. As you note, this type of judgment is necessary in many phases of an entrepreneurial business, from the selection of partners and staff to determining what sources of investment funds to pursue. I suspect that most successful entrepreneurs in my industry, medical devices, do not have the benefit of an MBA. I also believe that the conceptual tools that we can obtain during an MBA course can help us accelerate growth in our capabilities and allow us to 'tap into' the experience of others.

by Robert Hacker | August 04, 2009 at 7:15 AM

Your point about valuation is well taken. Another B school subject that is very valuable is option theory and identifying the embedded option. Frequently an option is created that the counter party in many types of transactions (not just finance) does not recognize or attribute value to.

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