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When Simo Dragicevic got round to studying for an MBA, aged 36, he appeared to be on the corporate fast track. But he quit his job as a director at Barclays Bank, which was sponsoring his studies, to become an entrepreneur, which meant he had to pay his tuition fees himself.
“I have and continue to make some large personal sacrifices,” he says. “However, we can pay ourselves and invest in the business, and this is an incredibly satisfying feeling.”
Dragicevic founded Bet Buddy, a supplier of user data analytics software for gaming companies, helped by his experience of implementing technology in the fields of risk, marketing and finance during his time at the bank.
He credits his decision to reinvent himself as an entrepreneur to a throwaway comment by a tutor during the first lecture of his MBA course at Cass Business School in London.
“He said, somewhat in jest and somewhat in truth, that MBAs typically don’t go on to build $10bn-plus businesses,” Dragicevic recalls. “However, he also said MBAs can for sure teach you the tools to build a $10m-plus business.”
Although most MBA students are still unlikely to follow Dragicevic’s path, he is among a growing number of MBA-educated entrepreneurs.
It is a change being driven more by the rewards of creating something of value than disillusionment with the career-enhancing potential of an MBA, says Noam Wasserman, a professor at Harvard Business School.
“Far more of our students are running to entrepreneurship, rather than running away from the non-entrepreneurial job markets,” he says.
“They see entrepreneurship as a way to have much more impact, and impact much sooner, than they could in almost any other post-MBA job. They are excited about heading out into new terrain, developing ideas and businesses that fill needs that aren’t yet being addressed. They are heading into that terrain with far more knowledge about what awaits them and how to avoid the recurring pitfalls that have plagued the dreams of past entrepreneurs.”
The number of Harvard MBA students becoming entrepreneurs has been about 7 per cent in the past three years, Prof Wasserman says, roughly double the number before that.
Prof Wasserman runs a course for MBA students called “Founders’ Dilemmas”, which he describes as a “collecting ground for future founders”. Twenty-eight per cent of students who have taken this course later founded companies, up from 20 per cent in 2009.
The picture is similar in China according to Shimin Chen, associate dean and MBA programme director at China Europe International Business School in Shanghai (Ceibs). “Most MBA students still look for traditional salary-based jobs with large multinational companies, consulting firms or investment banks, but because of the success of entrepreneurship in China, more and more of our students are taking it up,” he says.
Like other business schools, Ceibs offers electives for its MBA students that teach skills relevant to a business founder, such as marketing and finance, and promote them as such.
The school’s entrepreneurship club counts more than half of the MBA student intake among its members. Many are drawn by the positive image of entrepreneurship in Chinese society even if they themselves will never become founders, Prof Chen says.
Dragicevic found a great deal of support from his fellow students for his decision to go it alone, even though the pressure to earn back the cost of an MBA meant many did not follow his lead.
“For many the short- to medium- term financial implications and low success rate of business start-ups were not the most attractive option. For the majority who were not sponsored and having paid their MBA tuition fees, there was certainly some pressure to capitalise on the investment as early as possible.”
He says his MBA tutors also taught him skills that he has found useful in running his business, which this year is expected to break even on revenues of about £350,000, as Dragicevic is still spending cash to develop operations.
“An MBA certainly provides one with tools to tackle a variety of business problems in the corporate world, and some of these tools are also valuable to the entrepreneur,” he says. “I have met a few scientists and engineers who have built products but who have struggled to grasp many of the aspects of commercialising the products.”
Despite support from his peers, Dragicevic feels he was discouraged by Cass from taking the path to entrepreneurship, perhaps because his potential salary increase if he had returned to Barclays would have helped the school up the UK’s MBA ranking leagues.
“I was one of the top salary earners in my cohort,” he says. This is something that the British ranking organisations need to address, Dragicevic believes.
Sarah Juillet, director of postgraduate careers and MBA programme at Cass, says: “While rankings are important to business schools, what is more important today is the focus on individual students and their individual ambitions. One of the ways Cass has improved this focus is the recent merger of the career service and MBA programme to align more closely on content and outcomes.”
She adds that the MBA includes entrepreneurship electives, while the Peter Cullum Centre for Entrepreneurship offers incubation space, mentoring, advice and access to funding networks for early-stage start-ups. Cass alumni and students can also apply to the school’s £10m venture capital fund.
“More people will take entrepreneurial paths in future, and business schools investing in entrepreneurship may not be getting the credit they deserve,” Dragicevic says. “I have built a high-tech product, I am building equity in a new company, I have created jobs, I have brought business to the UK from overseas clients and I have produced original peer-reviewed research published in respected scientific journals working with British academics. But I earn a lot less than when I was at Barclays.”