During a meet-and-greet at a conference -- back when there were such things -- a young man told me he wanted to start a business but felt he needed to go back to school first.
"I really think I should take two years off to get an MBA from a top school before I take the plunge," he said.
I asked why.
"I'm lacking some things," he said. "I don't know enough about accounting. Since I barely passed my stats classes in college, I could definitely use better data analysis skills. I don't know much about marketing, don't know the first thing about business law ..."
"But why do you need an MBA from a top school?" I asked. "You can learn everything you just described on your own. And for free."
He narrowed his eyes. "Yeah," he said. "Maybe so. But I wouldn't have an MBA."
True. But he also wouldn't have the tens of thousands of dollars it costs to get an MBA from a top school. Nor would he have the money he would have made working for two years.
He later told me his current salary was $57,000 per year, so the true cost of going back to school for two years would be $114,000 plus the cost of tuition. (What's up, opportunity cost?) So if he did manage to get into a top school, where the average tuition is just over $70,000 per year, the tuition and opportunity cost add up to more than $250,000 for an MBA.
That means, in bottom-line terms, he would need to generate $250,000 in profit -- not revenue, profit -- to break even on his education investment. One he would in all likelihood earn largely online, which in large part he could do for free. (For example, MIT offers over 2,000 online classes on OpenCourseWare.)
And then there's this. According to Elon Musk, he would contribute to a major problem in American business.
As Musk recently said at the Wall Street Journal CEO Council Summit, "There might be too many MBAs running companies."
Why? Musk feels the "MBA-ization of America" limits the creation of innovative products and services. According to Musk:
There should be more focus on the product or service itself, less time on board meetings, less time on financials.
A company has no value in itself. It only has value to the degree that [it is an] effective allocator of resources to create business services that are of a greater value than the costs of the inputs.
Which is a Muskian way of saying that fancy spreadsheets, and comprehensive plans and analysis, are kind of a waste of time. What matters is that a company creates and sells products that actually make money.
Which, Musk feels, requires leaders who spend more time on the "floor." Rolling up their sleeves. Getting dirty.
"When I go spend time on the factory floor or really using the cars or thinking about the rockets, that's where things have gone better," Musk said. "[So] get out there on the goddamn front line and show them that you care, and that you're not just in some plush office somewhere."
Although you need a lot of things to be an entrepreneur, and knowledge is certainly one of them, customers don't whether you have an MBA; they care only whether your product or service solves a problem or meets their need.
Suppliers don't care about an MBA; they care only whether you pay on time. Employees don't care about an MBA; they care only whether pay and benefits are fair, and that their work provides a sense of meaning and fulfillment.
In career terms, the goal of an education is to provide graduates with the knowledge, skills, and at least some of the experiences they need to begin the lifelong process of achieving success in their chosen field.
But earning an MBA proves only that you know how to earn an MBA. It doesn't mean you know how to start and run a successful business.
What truly matters is applicable knowledge, applicable skills, and applicable experience.
What school you attended? Doesn't matter. GPA? Doesn't matter. Classes you took? To some extent, doesn't matter.
What matters is what you can do.
And what it cost you to gain those skills.
Because when you're an entrepreneur, every investment needs to generate a sufficient return.
Like Musk says: the value of the outputs must be greater than the value of the inputs.
Otherwise why do it?