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Planning a career move : Startup or MBA ?

September 30th, 2011 Leave a comment Go to comments

After few years in their career, some folks plan on getting MBA . The motivation for an MBA is that  they their career stuck and/or  is not moving at the desired pace. . Most of these are professionals have been doing the same job for last many years (for eg IT programmers) and are looking for some different roles and job functions. For some of the folks I had known personally , it was more because they want to move up the career ladder of managing the people instead of sticking with programming.
I m not sure how many of them thought of joining a startup or doing their start up instead of going the traditional route of MBA . When you are stuck with a similar situation, what would you like to do ? In this post, I would like to share my thoughts on what could be advantages and disadvantages of joining an starup vs doing an MBA. This analogy holds true for young grads with few years of experience . Will MBA boost their chance of success in corporate world ? Or you want to be next google or facebook ?

Start ups – This is not every one’s cup of tea. As sexy it may sound by dreaming your picture to be in front page of Inc or Fortune, start up is not for every one.

The failure rate is astonishingly high(90%). It has a lot of stress, ups and down( mostly down initially) and you might end up draining yourself than what you had every thought of.
On other hand MBA are generally on a defined trajectory. You know how much it is going to cost, how much time will it take and you are very much certain /hopeful that you would get a career jump and a hike which you had been dreaming of.

A few of my friends and colleagues who were not happy doing their current job and wanted to move up the career hierarchy, went for an MBA. Here are the profiles of some of those people who did an MBA

mba

  • 5 10 years experience in it services , programming, project management
  • IT consulting with top notch reputed companies
  • Software Engineer/programmer
  • Business analyst

All or most of these had one simple goal. Make a career switch and do something which is more rewarding than current one in terms of job satisfaction, quality of work and get rewarded with a higher salary.If you are in US  and plan to do an MBA, you would generally have few career options if switching from IT. Some of the career choices
1.  Investment Analyst
2. Sales /marketing
3. HR
4. Strategy Consultant
5. Business analyst into a financial domain.
6. Managerial/Operational roles

Investment Analyst : Join financial institutions like Citibank, BOA as a investment analyst or some other top notch position which pays well. This was the most sought after option before 2008 and God knows how many people left their promising career only to join Wall Street with dream of becoming an overnight millionaire.
Post financial crisis, unless you demonstrate some specific skills, past experience , pass out from top ranked institution like Harvard or Sloan  and most importantly have some contacts or network with people in company, you cannot possibly land up a Job. Even if you do,  I do not think there are any fast way to become a millionaire.

Sales/Marketing: You can land up in a sales or marketing gig which has decent base salary and good bonuses. But you should really ask yourself, is this job for me ? I have seen lot of people whose presentation, communication and social skills are not such great and they land up in sales. Sales and marketing are not for everyone. If you do not enjoy socializing, meeting, traveling, you will not live this role. And the biggest indicator of your performance is how well can you sell.

HR :  Not to say much on it but Human resources and recruiting (although they are different roles) is another area where people land up

Strategy Consultant/Management Consultant : One of the most popular sought up  options post MBA.  There are not much jobs in this area and whatever are ,they are  limited to top companies like E&Y, MCG, Cap Gemini.  These companies rarely take candidates other than top notch business schools.

Business Analyst : People who have good domain experience tend to make a better business analyst so it has to do more with experience than education. Unless you did specialization in Finance, an MBA does teach you much to work as business analyst. But I have seen people with decent experience , taking on managerial responsibilities and moving up the career path.

In my opinion , the biggest gain one  can get from an MBA is the network you build with smart people around you. This  network could be one of the most valuable asset build during the 2 year course.  If you are going for MBA, make sure you have in mind what you want to learn and start building the network from day one.

Having said all this, let us evaluate the options of a startup. It could be either you starting a company or joining an existing startup.

startup

What is starting a company going to teach  you ?

1. Out of Box thinking : You start thinking out of the box. Although your idea or product may itself be not a very revolutionary , you have taken out time to think in terms of what you can do to create some value. What can be build to solve some of existing problem ? Instead of some one telling you what to be done, you start to brainstorm on  ideas and solutions.
2. Network : You will start building network. One of the most important factors in contributing to your success as a individual or as a company is how well your are networked, connected to people who can give you inputs, ideas, feedback  ( and maybe money) to build out your company.
3. Team building : You will either have to find co founder or a business partner in order to start. If you plan to go solo, you will need to find some trusted source to work with. Since you would be on very minimal or no funds, it is a challenge to build team and convince them about your concept.
4. Time management : Unless you are super lucky to have your start up funded , you might be keeping your day job and working with your startup or might have quit job for 6 months to give it a shot, you would be pressed against time to get the results. I have seen people working full time to support family, pay mortgage and then toil in the night cranking out code, seeking out partnerships, feedback , answering emails of early customers.
5. Marketing. Not everyone has in build marketing skills but the marketing game has changed drastically in last couple of years. With SEO, web based marketing,   Google adwords, social media ( twitter, Facebook, google+), it has evolved from the traditional print and media . The motivation to sell your products/concepts to your  customers would help you understand these concepts.

Once you get your self going, You would learn so much stuff that it is unbelievable.  You let go your fears, hitch and jump into the world . If you would be raising funds, which I am sure you would try, you would learn to  understand term sheet, preferred stock, vesting schedule, etc.

With all this said it very important to mention that start up world is filled with more failures than success. Reading the success story at Tech Crunch would make you feel good but that is the bright side of startup world. The harsh reality is a lot more people burn their hands & money than you could think of. Years of hard work, late night work, sacrificing your personal , family time might lead to no where.

For every Google there are a million “startups” that never even get off the ground. For every Google, there are 100,000 “startups” where the company barely makes enough to cover the 36K a year the founder pays himself. For every Google there are 10,000 startups that barely make enough to cover the salary of 2 founders. For every Google there are 1,000 startups that have a small amount of profit(~50K). For every Google there are 100 startups that actually have some traction, and can sell for 1-10 million. For every Google there are 10 startups that might have a 100+ million exit.

Over 90% startup fail because they did not find a market or customer

I am not advocating for a startup in favor of an MBA. That decision I am leaving to you.  It is is not that you have to start the company to learn Joining a small organization in early stages, teaming up with your friends and equally be fruitful in terms of learning.

Note : This post is my own opinion

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