To finish up from yesterday…
Check it out: If you use bschool to launch a business, then that means you’re going to not only have the standard massive student loan debt to deal with on graduation, but you’re also going to be working on a startup founder’s income – which typically is called “not much.” And often it’s called “nothing.”
Oh, but don’t worry – there’s people who want to invest in you! You can even get a peer-to-peer loan from individuals who want to see you be successful (they get a cut of your future earnings). Which basically means you’re hocking your future even further. (Sorry but something is unsettling to us about the idea of asking people to pay you to cover your Harvard MBA loans… which we know is being done there. This is just us but it doesn’t sit right.)
HERE’S THE DEAL: If there is in fact a bubble in startup-land, then this easy money – from bschool startup challenges and bplan competitions to these peer-to-peer lending sites – it’s gonna dry up.
If you’re reading this blahg now, that means you’re probably thinking about applying to bschool this fall, which in most cases means you’ll be graduating in 2017. That’s a long ways away. The economy can do many things in that time, and none of them are predictable – certainly not by the ‘Snark. A bubble in Silicon Valley could pop and have little impact on the rest of us, or whatever impact could be absorbed by the time you’re graduating. Or there could be no bubble at all.
However we just have to wonder at the logic of going to bschool and taking on all that debt and then tossing your hat into the ring of lottery players in the startup scene.
Remember, MOST STARTUPS FAIL. The schools don’t tout those statistics. Does Harvard tell us what percentage of those 50% of graduates’ companies go bankrupt? The schools do like to brag about the big success stories – there’s companies like Honest Tea (founders from Yale SOM) and Bonobos (founders from Stanford) and we’re sure many more (you can name examples in the comments if you think of some) but the on-the-ground reality of real challenges in building a viable business means that many of these student startups are not going to last.
Most of you are very young and maybe don’t even have solid memories of what the dot-com bubble was like. That was in 2001. You were, what, in grade school then? Old Crusty Snark has to tell you, it wasn’t pretty. A site called “f—edcompany.com” went up to track news of layoffs and bankruptcies. It was a very busy site.
Oh hey, there’s an idea! If there is another such bubble burst, you could start your own 20xx version of it! Oh wait, maybe that market is covered.
So hm. It sounds like we’re telling you to drop your dreams, that your ambitions have no place in this world, that you’re never going to have a chance at it. Phooey on that. That’s counter to everything we believe in. It’s not what we’re saying.
We’re just offering the idea that you may want to think things through on this.
And we’re mildly wondering how ethical it actually is for the bschools to be promoting this entrepreneurship craze, given how getting an MBA is not exactly the most cost-effective endeavor in the world to begin with. Sure, your school can be very supportive of your startup, and you can (theoretically) tap the vast network of alumni for help and even funds. But the schools don’t have to live with the consequences of their actions. They can promote starting a business through bschool all they want; their tuition was already paid, they’re not saddled with the debt.
The economics the situation of graduating with an MBA, with no income, and lots of risk… well that is pretty scary when you dig into it.