Should I join my friends in a new medical startup instead of going to b-school?

I applied and was accepted to both Wharton and Stanford GSB. I only applied after my parents practically begged me to do so after my last business (real estate) failed.

Although I fully understand their concerns, I still remain upbeat about the future and undaunted by my failures. I believe my parents got a bit spooked by the economic downturn, and, concerned for my economic well-being, pushed me to apply.

Although I am fully aware how much of a blessing it is to be accepted into not just one but two of the nation’s top b-schools, I believe there is a time and place for everything. I feel confident giving myself another shot and joining my friends in a new medical technology venture instead of going to b-school.

Shoot straight with me, Chris: given this situation, what would you do? I place a high premium on my time and believe that two years spent away from helping this project become a reality is not worth the boost in security (perceived or real) that comes with a quality MBA, especially if I’m going to miss out on such a rare opportunity.

The Harvard MBA says:

I remember when I was applying to business schools.  It was 1997, and the dot com boom was in full swing.  I wondered whether I was making a mistake.

My friend Rock, a Stanford MBA, gave me some good advice.  “Chris,” he said, “Do you think it makes sense to maximize the number of years in your *before* you get your MBA, or *after* you get your MBA?”

If you intend to get your MBA, it generally makes sense to go to b-school as soon as possible (assuming you have worked enough to know what you want out of your b-school experience).

Nonetheless, general advice doesn’t always apply.  In fact, I would probably be far richer today if I had simply decided not to toss my invitation to Google’s launch party in the trash (one of the first two employees after Larry and Sergey was an old work colleague from my D. E. Shaw days) and gone to work there as a janitor.

I can’t tell you what to do without understanding more about your circumstances and the opportunity (you should feel free to reach out to me again; perhaps we can do a follow-up post).  But I can propose the following framework for thinking about the decision:

1) Lay out the probable income stream associated with going to business school.  This might look something like this:

  • 2009: +$25,000 ($50,000 in income; $25,000 in school expenses)
  • 2010: -$30,000 ($20,000 in income from a summer job; $50,000 in school expenses)
  • 2011: +$50,000 ($75,000 in income; $25,000 in school expenses)
  • 2012: +$157,500 ($150,000 in income + a 5% annual compensation increase)
  • and so on.

2) Lay out the potential income streams associated with joining your friends in a medical technology venture

  • 2009: +$50,000 ($50,000 in income; reflects 6 months of $100K/year income)
  • 2010: +$40,000 ($40,000 in income; reflects a full year of minimal founder pay)
  • 2011:
    • 60% chance the venture fails; you may then go back to having a regular job getting paid a market salary
    • 35% chance the venture raises a larger round; you are then getting paid a market salary
    • 5% chance the venture is very successful and results in a liquidity event which pays out $1 million

By laying out the scenarios, you can then do an apples to apples comparison and decide what makes economic sense for your situation.

Or, you may end up deciding to do what you really love.  Remember, all these tools of economic analysis are merely that–tools.  In the end, they cannot substitute for judgment.  It’s you’re decision–make the most of that freedom to choose!

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