Question: Do You Want to Be an Entrepreneur? Recent years have seen a sometimes public debate around the question of whether entrepreneurs are better off skipping college. For reasons noted below, we think this is a false debate, and we'll explain why. But before we're done, we will identify an unexpected way in which a higher education can legitimately be seen as limiting one's ability to innovate and start a new business.91 Let's start by acknowledging there are complex links between education and entrepreneurship and by explicitly stating our point of view: The right person can become an entrepreneur without the benefit of a college degree. But having a college degree is no impediment to becoming an entrepreneur and can further provide the benefit of formally studying the dynamics of real business-just as we are doing in this class. One volley in the debate was a provocative article in Forbes, titled "The Secret to Entrepeneurial Success: Forget College." Another article listed 100 impressive entrepreneurs, none with a college degree and some with only an elementary school education.
And while some famous entrepreneurs neglected higher education (Mark Zuckerberg dropped out of Harvard; Steve Jobs dropped out of Reed College), entrepreneurs are more likely to be better educated than most business owners. Just over half of business owners have a college degree. And while the very different entrepreneurs in this chapter were chosen for their business success and innovations, and not their education, they all- Jeff Bezos, Sara Blakely, Michael Dublin, Reed Hastings, Elon Musk, Jimmy Wales, and Oprah Winfrey-have college degrees. On the student side, business majors are drawn to the entrepreneurial role. Over the past 20 years, there has been an explosion of entrepreneurial programs at business schools, all in response to demand. Some 50-75 percent of MBA students from the leading programs are becoming entrepreneurs within 15 years of graduation. But there is a more likely way in which higher education could be the enemy of entrepreneurship: the crippling impact of large student loans. According to a new report, the higher the student loan debt in an area, the lower the net creation of very small businesses. The correlation of those two factors comes with some caveats:
• These effects tend to affect only the smallest businesses, which are more likely to take on debt that's secured by the founder's own personal credit.
• The authors of the report stop short of claiming that heavy debt burdens hamper an individual's attempt.
• An alternate view of the data would be that students with high debt load go directly to higher paying corporate jobs.
1. Thinking about today's business climate, would you say that now is a good time to start a business? Why or why not?
2. Do you see higher education as a benefit or detriment to becoming a successful entrepreneur? Why or why not?
3. Identify both the up and down sides of taking on personal debt to finance a higher education.
4. Does it matter where (in terms of geography) you start your business? Why or why not?
5. Explain how you would apply the strategic management framework to enhance your startup's chances to gain and sustain a competitive advantage.