The Value of a Degree: Why Silicon Valley Startups Need More MBAs

Business.com / Education / Last Modified: February 22, 2017

MBAs lack technical expertise, but they do know how to help startups grow into sustainable and profitable organizations.

Silicon Valley is the global capital when it comes to innovation, creativity and entrepreneurship.

Every year, hundreds of web based products, mobile apps, social networks and other innovative forms of tech startups emerge from the development labs and studios of the technological hub. It has become a major attraction for engineering students around the globe who dream of making it to a world changing startup one day.

MBAs, however, are traditionally looked down upon in the tech startup culture. Many CEOs and tech innovators argue that MBAs take creativity away from startups and convert them into traditional old fashioned businesses.

This trend, however, is quickly changing.

For MBA students, the chances of making it to a Silicon Valley startup are higher than ever before. Modern tech companies are realizing the value of high quality MBA professionals, and that’s the reason why many startups are actively hiring MBA graduates directly from their university campuses.

Here’s are some solid reasons why Silicon Valley startups need more MBAs.

Startups Need MBAs for Marketing

Marketing is always a crucial component of any company, irrespective of the nature of its business. Most startups in Silicon Valley are run by hardcore technical experts and engineers who are masters at creating high quality products and innovative solutions. However, for most of them, marketing is a weak area.

Related Article: 8 Essential Oversights That Startups Often Commit

Marketing is not just about promoting your product or business. It is a scientific field in its own right that requires careful market analysis, need identification/generation, segmentation, targeting, pricing and many other factors that demand specific expertise.

This is where MBAs are irreplaceable. They are professional marketers who know how to market products and businesses in a way that benefits their organization. A marketing department without an MBA is like a ship without a captain.

Startups Need MBAs to Grow and Expand

Most companies at Silicon Valley begin as 1 to 5 people startups. In the startup phase, the key product conceivers and engineers invest their energies in creating a remarkable product that is financially viable and solves problems. In such small teams, the communication modes are informal, there are no defined processes and most of the operations are run based on the mutual understanding of the founders.

However, every startup needs to eventually grow into a fully functional organization. This cannot be done without documenting your best practices, building processes, developing communication channels and laying the foundation of a scalable organizational structure.

You can manage a 5-10 person company based on mutual understanding, but you can’t run a company with 100 or 200 employees without having proper procedures and well defined policies.

Again, this is where MBAs come in. They are trained professionals who understand organizational hierarchies and realize that no business, no matter how creative, can grow without well-defined policies and procedures.

They can work closely with startup founders in developing procedures that are scalable and financially viable, and at the same time do not compromise the culture of innovation and creativity at the company.

Startups Need MBAs for Market Research

In this new era of technology startups and web based businesses, market research and analysis is crucial for businesses to grow and compete. There are dozens of enterprise level analytics and market research tools available that are meant to help innovators and startup founders identify trends and make informed decisions.

However, tools are only useful if you have people who can run them effectively. MBAs are masters at analyzing, interpreting and finding actionable trends from complex data. They are specialists in simplifying data for the business decision makers, and highlighting the key areas entrepreneurs need to focus on.

Startups Need MBAs to Network With Influencers

Most startup founders are engineers, designers and other creative professionals. They are specialists when it comes to their core skills. But most of them are introverts who prefer working in isolation, focusing on their product.

But in order to grow their business, startup founders need to network with the right people who can fund their idea, help them reach influential circles and build long term business partnerships.

This is where MBAs can add immense value.

MBAs have strong professional networks full of influential business owners, and decision makers in some of the largest corporations in the world. Throughout the MBA degree program, students are trained to build and expand their professional networks. The top universities and business schools invite leaders and influential professionals from different industries to deliver lectures and hold workshops with the students.

So by the time an MBA student graduates, he already has a large network of influencers that can prove vital for the growth of a startup.

Related Article: A Risk Assessment Guide for Sailing Startups

Startups Need MBAs to Manage Human Resource

Effective communication is one thing most engineers and technical professionals lack. Since many of the startup founders are introverts who prefer working in isolation, they face a dilemma when their organization grows and their teams become more diverse.

Because of their weak human resource management skills, technical startup founders find it hard to manage their employees, understand their needs and expectations, and help them grow with the company.

This is where they can use the services of MBAs with specialization in human resource management. The HR management skills of experienced MBAs can help Silicon Valley startups attract the right talent, make them key stakeholders in business growth and use their talent to create more innovative solutions.

Startups Need MBAs for Customer Service

Customer service is no longer a cost center or a support department. Modern businesses use customer support teams to build brand loyalty, convert customers into word of mouth marketers, and boost retention rates.

MBAs study specific in-depth courses on consumer psychology, customer services and effective communication. They are complete packages ideal for managing customer services operations in any company.

By hiring customer service and relationship managers, startup founders can rest assured that their clients are in good hands.

Related Article: Customer Relationship Management for Small Budget Startups

Startups Need MBAs for Financial Management and Planning

No matter how innovative and creative a business is, it needs to make profits by increasing sales and decreasing costs. Startup founders are usually short on cash so they need to make optimum use of their finances.

But as startups grow into bigger businesses, they can easily fall in the trap of spending unnecessarily on things that do not contribute directly to their growth.

This is where MBAs, who’re financial experts, can make sure that startups remain profitable despite the growth of their teams. They can indicate the cost centers and profit centers to startup owners and help them maximize profits and minimize costs by focusing on the right areas.

Wrapping it Up

Startups are created around product conceivers, engineers and technical experts. But in order to grow, they need people who can help them effectively market their products, build relationships with influencers, ensure that their work force is motivated and increase profitability through effective financial planning.

MBAs are experts in all of these areas and that is the reason why tech startups in Silicon Valley are now realizing that they cannot build viable businesses without the help of competent and professional MBAs.

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