Mark Zuckerberg’s reputation has grown from the heralded genius to the “worst Bond villain of all time.” So why do so many business school graduates still want to be the next Zuckerberg?
Despite Big Tech’s declining reputation, many business school graduates are poised to become the next great founder of tech.
Tom Eisenmann, an entrepreneurial entrepreneur at Harvard Business School, sought to determine why so many graduates are attracted to startups in his new book âWhy Startups Fail: A New Roadmap for Entrepreneurial Successâ.
But beyond providing some interesting case studies, Eisenmann fails to provide any insight into what is driving the continued movement towards these “reckless and hapless enterprises”.
This is an opinion column. The thoughts expressed are those of the author.
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The spectacular fall of big technology has happened with astonishing speed. In the eyes of the public and regulators, the executives of these companies have gone from being iconic beacons of American ingenuity to that of selfish thief barons.
Facebook, for example, was widely regarded as the best-run company in tech, and in 2018 had just completed an unprecedented three-year period as the best place to work in America overall. But that image quickly changed. Last year, the FTC took the extraordinary step of suing Facebook to reverse two previous acquisitions that had been reviewed and approved almost a decade ago. Before this dramatic about-face, the federal government had left hundreds of deals largely unchallenged by Facebook and other tech giants. Facebook founder Mark Zuckerberg rose from Personality of the Year in 2010 to ‘Worst Bond Villain of All Time’ in 2020.
Despite the collapse in popularity of modern tech titans, the aspiration to become the next transformational founder has never been brighter. The best business school graduates of a previous generation aspired to become investment bankers or consultants. The ultimate sign of success today is to start your own business or work in a start-up business with the dream of becoming the next unicorn – securing outside capital at a valuation of over $ 1 billion. .
This fight to lead the next big thing persists despite the fact that most of these businesses will end up in financial ruin. So it’s good news that Professor Tom Eisenmann, who has long taught the Introductory Entrepreneurship course required for first-year MBA students at Harvard Business School, has decided to take a step back and consider what he learned by following his students’ businesses for almost a quarter. century.
Cheerleading with few useful conclusions
In “Why Startups Fail: A New Roadmap for Entrepreneurial Success”, Professor Eisenmann draws not only on personal experience, but also on a detailed survey of nearly 500 founders / CEOs to chart a detailed obstacle course end to end from the original ideal to getting up and figuring out what to do after a business collapses. The book is helpfully organized to address the distinct challenges encountered when launching, scaling, and ultimately managing failures.
While packed with useful information along the way, Why startups fail Reads a bit too much like a business school case discussion: long lists of issues are identified, and both sides of each topic are considered, but few specific conclusions are drawn.
This approach on both sides is more exhausting than bewitching. Thus, charismatic founders are good at raising funds and inspiring troops, but can be defensive and dangerously unrealistic. Likewise, raising too much or too little money has advantages and disadvantages. In the hands of a great teacher – and Professor Eisenmann has written over a hundred classic Harvard Business School cases – who can bring out these considerations through a Socratic dialogue with students, the case method can be a remarkably effective online teaching tool. But supporting an engaging narrative in book form requires more than urging the reader to carefully balance the various factors depending on the situation.
The survey results might have supported a stronger point of view on some key topics, but often these bordered on tautology. How surprising is it that unsuccessful startups are more likely to report taking on too many or too few business model âhubsâ than their successful counterparts?
Ultimately, although I have no doubt that the many checklists and stories provided in Why startups fail are valuable, the breadth of variables identified and the depth of uncertainties involved leave a strong impression that nothing is likely to fundamentally change the overwhelming propensity of startups to fail.
Professor Eisenmann identifies a significant social benefit in his efforts to eliminate the “avoidable mistakes” that cause startups to fail. âSociety needs entrepreneurs to solve a series of problems, and cannot afford to have talent and resources tied up in reckless and unhappy endeavors,â he writes. Eisenmann doesn’t contemplate the possibility, however, that far fewer would have to pursue startups in the first place and that the company would be better off if more of that talent was directed to improving established businesses.
Indeed, Professor Eisenmann ends the book by noting that he contacted the first alumni who launched projects – “which almost all failed” – at the height of the first dot-com bubble in 1999 and 2000. According to him, ” all but one founder of alumni insisted they had no regrets, “leading Eisenmann to urge the last generation to put their fears aside and” Go build something big! “
The problem is that the number of people likely to answer his call is now much greater than in 2000. In 2020, for the first time, more than 10% of the class representing more than 100 graduates of Harvard Business School have decided to start their own business rather than take a job. In the years prior to 2010, it was not uncommon for just 3% of the class to take this route. This reflects a larger explosion in the number of the most talented graduates who now want to either start their own business or work for someone else’s startup. At Stanford Business School, zero point of start-up fever, nearly 20% of graduates now graduate alone, double the number who followed this path in 2000.
Of course, if you’ve always dreamed of starting a business, you should. But I doubt that fervent entrepreneurship has infected so much of the population. This radical change in career direction probably reflects the same old herd instinct pointing in a different direction rather than an innate desire suddenly discovered. And no preparation or study will change the statistical likelihood that most of these businesses will end in tears.
Given the random nature of the training and development available in startups, the downside for those who follow this path in the absence of a true vocation is not trivial. And the potential benefit to the rest of us if they were to instead bring our skills to proven companies in need of innovation could be significant.
Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and Senior Advisor at Evercore. His next book, The platform illusion: who wins and who loses in the age of tech titans, will be published in September by Portfolio.
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