Harvard Business School is often seen as a “finance” school, or a “consulting” school, or a “general management” school—and usually isn’t the first MBA program you’d think of when it comes to entrepreneurship. My experience, though, was that HBS had a great entrepreneurial curriculum—and despite the fact that I’d founded two businesses prior to the program, I learned some invaluable lessons that I’m applying every day to ZipBooks, my current startup.
1. Leverage the Innovator’s Dilemma
Even though the term “disrupt” is tossed around casually these days, it’s generally used outside of its original meaning. Founders, TechCrunch articles, and even investors can get caught using it as a placeholder for “do something really awesome.” The term was coined, originally, by one of my favorite people at HBS, Professor Clay Christensen, and popularized in his book, “The Innovator’s Dilemma.” Disruption, used in this sense, means a new entrant to an industry serving—with a new technology—the bottom portion of the market that incumbents can’t or won’t serve, due to their profit-maximizing nature. Over time, that technology matures and is able to serve the most profitable portions of the market, “disrupting” those incumbents and displacing their technology.
As my team at ZipBooks creates strategy, we think deeply about the advantages and disadvantages we have as a new company, what portions of the market we can service, and how the dynamics of technology and pricing might play out over time. I think many founders and startups could do well to figure out how their own products can be “disruptive” in their own right.
2. Solve a real problem
As part of HBS’s first-year curriculum, students are required to form intra-section teams and get a small grant to start their own startup. My team focused on what most of our classmates were thinking about at the time—finding jobs for the summer and post-graduation! To help solve that problem, we built a product called “SpotRocket,” which gathered data all over the web about startups, then pushed that data through an algorithm to rank startups against others in similar geography.
We positioned it as a tool to help students find jobs at startups in different regions, and released it to the public. People loved it. It produced several thousand signups in just a couple weeks, and our team won our section competition. It was exciting to see the power of what you can accomplish with a product or service that really solves a problem—and often, looking at your own problems can be a good way to find one.
3. Build the right team
Nearly every course at HBS is taught using the “case method,” where students come having studied a “case” that lays out a real-world situation that a manager, entrepreneur, or other professional has gone through. Sometimes they describe successes, many times they describe failures.
And over the course of at least 300 cases, I noticed a common thread in the failures—it was a lack of a great team. Jim Collins preaches “getting the right people on the bus,” and I’m convinced that nothing is more important. The starting point for a great team at a startup is knowing what you’re good at, and more particularly, what you’re not. Then, take as much time as necessary to find the perfect complements to your own skill set. This can be frustrating, time consuming, and difficult—but it will be worth it.
4. Seek to be the fund returner
If you’re looking to raise venture capital for a startup, it’s helpful to know how early-stage investors think. In a venture capital course at HBS, we dived deep on the dynamic between early-stage VCs and their own limited partners (investors). An early-stage VC knows that many companies of their company will fail—literally return $0.00—after their investment in them. They also have pressure from their LPs to create 25%+ IRRs and lofty cash-on-cash multiples, due to the illiquidity, risk, and time horizon of early-stage investment.
That means that each investment they make has to have the potential to truly blow up and create sky-high returns. And the companies that create this dynamic—not one where this will “for sure” happen, but one where it could—are the ones that get the love from VCs.
5. Leverage who you know with what you know
An MBA is an expensive proposition. For many students, along with high tuition and living expenses, there is a substantial opportunity cost to attending an MBA program full-time. But in exchange for that high cost, you can also extract high value, especially if you take the time to create relationships with your peers and others you meet during your time at business school.
Those relationships, along with your own growing skills and knowledge, can create a powerful dynamic as you dive into entrepreneurship. That principle has proved itself again and again in my time since graduation, as I’ve taken what I learned at business school and augmented it through the expertise of others, or recognized where I’m deficient and bringing in outside help.
Final thoughts
There’s a lot you can get out of business school if you’re an aspiring entrepreneur. Despite popular belief, not all startup learning has to be experiential. In the classroom, you can learn from the successes and mistakes of others. And when the time comes, an MBA can be a surprisingly effective tool as you take on the world with your own new venture.
Tim Chaves is the founder and CEO of ZipBooks, an intuitive online invoicing software that helps small businesses get paid faster.
Related Resources:
• Why Do YOU Need an MBA?, free guide
• Harvard Business School 2016-17 MBA Essay Tips & Deadlines
• FT’s Top MBA Programs for Entrepreneurship