The co-founder and former chief executive of Lastminute.com, a UK travel website that listed on the London Stock Exchange before being sold for £600 million, has said that business schools are “wrong for today’s entrepreneurs”.
Brent Hoberman, a renowned British entrepreneur and investor, suggested that business schools cannot teach the most important qualities that entrepreneur’s possess.
He said that devising an academic program to produce entrepreneurs would be “virtually impossible”.
His comments come as a record number of MBA students have founded start-up companies, and as dozens of business schools launch masters in entrepreneurship degrees.
Brent, who is also the co-founder of Made.com, an e-commerce start-up which is reportedly poised to float on the stock market with a £100 million-plus valuation, penned his views in an opinion piece in the Financial Times this week.
He said that traditional business school education teaches students how to manage big companies, “not how to found start-ups”.
Brent said that programs are trying to teach entrepreneurial skills, but most are “struggling to adapt fast enough” to meet changing circumstances and demand.
“Even devising an academic program to produce entrepreneurs would be virtually impossible,” he said.
“Some of the most important qualities in an entrepreneur are tenacity, determination and an ability to embrace uncertainty and risk. Business schools can’t teach that.”
Brent, who is also the co-founder of venture capital fund PROfounders Capital, which is part of Oakley Capital, an asset manager with more than $1 billion of assets under management, added that “debt-laden students” may find their appetite for risk diminished.
“Many will be inclined to seek corporate jobs where their ability to repay debt is more certain,” he said. Top MBA programs can cost well over a hundred-thousand dollars.
His views echo many in the entrepreneurial community who are put off by business schools’ high price-tags, and who prefer to learn on-the-job without the investment of time needed to complete a degree.
But increasing numbers of MBA students are founding companies. At MIT’s Sloan School of Management, 36% of 2011’s MBA graduates started a business. At Babson College, which specialises in entrepreneurial training, 39% of 2011’s MBA cohort launched a start-up.
Nazareno Mario Ciccarello, founder of consumer goods company Functional Gums, said that his MBA was the spark he needed to pursue a start-up venture.
“I had started my MBA aiming to be a successful manager of a big multinational, and ended it dreaming of setting up my own company,” said Nazareno, who graduated from IE Business School in Spain.
Aside from motivation, the network has proved the most useful so far. “I got the chance to know many people from all over the world with very different experiences and skills. They have been, and still are, a real added value to our start-up,” he said.
Several high-ranking business schools have also launched specialist courses focused on entrepreneurship.
Rotterdam School of Management in Europe runs an MSc in Strategic Entrepreneurship, and 40% of RSM graduates have started a business over the past decade.
In the US, USC Marshall School of Business teaches an MSc in Entrepreneurship, and Michigan’s Ross School of Business has a similar masters degree. About 20% of Ross’ students started a business plan in 2014.
Others have set-up dedicated start-up centres, such as the Center for Entrepreneurship at the W.P Carey School of Business in Arizona, or the Rock Center for Entrepreneurship at Harvard Business School.
A large number of schools also teach entrepreneurship within their full-time MBA degrees.
Nitzan Yudan, co-founder and CEO of FlatClub, a flat-sharing site similar to Airbnb, said that he would not have founded a company without his MBA at London Business School.
LBS provided him with the two “most important” factors for an early stage business – network and reputation, he said. “The support of faculty, students and alumni has been critical in building the business, leveraging resources, and [in] fundraising,” Nitzan said.
FlatClub has raised $1.5 million in funding from investors including venture capital firms MLC50 and InterCapital, and two of FlatClub’s investors are faculty members at LBS.
Nitzan added that starting a company is not made easier by the debt that comes with a degree – the LBS MBA will cost £67,750 in tuition fees this year – but he said starting up a company can be done with just 10% of an MBA program’s tuition.
“Increasing my debt by 10% is not a[s] high risk [a] decision as one might think,” he said.
Brent, who has board seats at The Guardian newspaper and Shazam, the music discovery start-up, added that opportunities for entrepreneurial learning will continue to evolve in interesting ways, and business schools will “be part of the conversation”.
“But they will have to adapt much faster to the needs of students,” he said.