A Newly Minted and Indebted MBA Eschews Corporate Life for a Startup
Alexander Kleiner tells Business Week Online why entrepreneurship is hot at B-schools
If you thought the point of spending tens of thousands of dollars on an MBA was
to buy a shortcut to the corner office of a Fortune 500 company, consider
this: One of the hottest areas of business-school education is entrepreneurship.
In 1970, only 16 business schools offered classes in starting an enterprise.
Today, more than 500 profess to do so -- and 100 B-schools have entrepreneurship specialties.
To that, add entrepreneurship centers, startup incubators, and business plan
competitions. The upshot: More MBAs are taking the entrepreneurial route. Among the 1998 graduating class at Stanford School of Business, for example, 28% work at small companies or run their own businesses.
What's the motivation -- given the prospect of poverty and grueling work -- to attend B-school?
Business Week Frontier Online's Nadav Enbar interviewed one starry-eyed entrepreneur, 31-year-old Alexander F. Kleiner III, to find out. A 1998 graduate of
Massachusetts Institute of Technology's Sloan School of Management,
Kleiner went straight from commencement into the throes of startup life.
His company, Frictionless Commerce Inc., makes software that helps Internet
shoppers compare products. Kleiner didn't even participate in the corporate
courtship ritual that B-schools orchestrate to assure their graduates jobs.
He's heavily in debt. Moreover, he won't recover the $200,000 in tuition
and foregone income that he invested in his MBA anytime soon. Here's an edited
transcript of Kleiner's thoughts on his plunge into risk:
Q: Is there a specific psychology behind being an entrepreneur?
A: Absolutely. I don't know how you would label it -- some kind
of a psychosis. The way I think about it is, you really have to disassociate
yourself from the traditional, rational way of thinking. As an example,
I didn't look for a job during my second year of business school, because
I knew I wanted to start my own company. The rational thing to do would
have been to diversify and see what all my options were. But I just didn't
want to get caught up in any kind of a path of least resistance. So I didn't
even get my résumé together.
Q: Are you leveraged to the hilt trying to make your dream come
A: I've described my financial situation to people and seen the
blood drain from their faces. When I quit my job at Banker's Trust to go
through a $50,000 business-school program, I managed to live off of savings.
But now I've racked up tens of thousands of dollars of consumer debt in
just the few months since I graduated in June. Not to mention, I've
cancelled my pension at Banker's Trust. I also have a 2-year-old child,
my landlord died, and I was evicted from my home, and my wife is an adjunct
lecturer earning a low salary. My outlook is: If I don't try this now, I'll
always look back and wonder, "What if?"
Q: Does the prospect of an economic downturn in the coming months,
as the market continues to oscillate, have you thinking
about cashing out for a job that offers more security?
A: Not at all.
Q: Aren't you afraid of venture-capital funding opportunities
A: No. At this point in the company's life cycle, it's mostly
coming from the heart. With the team and the market opportunity and the
idea, it just seemed like the right thing to do. In my mind, once I start
thinking about how many weeks of cash we have, or how long I'll try this,
or what will happen if certain external factors in the economy occurred,
then I think it'll probably be time to start looking for something else
to do -- because I just won't have the same risk tolerance.
Q: Do you feel that you needed to earn an MBA to do what
you're doing now? Has it really made a difference for you in angling
Frictionless Commerce toward profitability?
A: That's a subtle question, because I think it's absolutely
made a difference in my case. But I don't think [a degree] is a necessary condition. I think you can certainly do this without an MBA.
Q: What do you feel are the biggest benefits of earning that MBA
in the context of your startup?
A: People would be surprised, but the best lesson I got out of
MIT Sloan is sales and networking. Being part of the MIT community is the
kind of thing that you just can't buy or you can't read about in the library. It's something to experience. And I think the personal network is
amazing: It helps you out in ways that you don't expect over and
Q: Has the Sloan network played a large role in garnering your
company funding? Or putting people in touch with others for new ideas
for other companies?
A: Oh, all of the above. Our first two customers were generated
through direct contacts from the entrepreneurship center -- [either] the institution
or the people who have worked there. Having that connection is key
to a new company.
Q: You previously mentioned the MIT community where there's a give and take of ideas, funding, and possible partnerships. Can you elaborate?
A: One of the reasons that I chose to do this business is because
of the people and the team that I've been working with for close to a year.
We share the same ideals. We're trying to create something out of nothing.
I can't play the saxophone, but I would love to. I can't sing worth a damn, [but]
I'd love to. I'm not tall enough to play hoops.... This is the way that
I can be creative.
Q: Looking to the future, how do you plan to use Sloan as your
ally throughout your company's life cycle?
A: I guess the word "plan" makes it sound a little nefarious.
You just think of it as being part of a family or part of a relationship.
You keep in contact as you move along, and you grow together. Ideally,
what is meaningful to me is being able to hire people and to feel like
I've had a hand in creating jobs.
Q: Has your optimism grown since you started Frictionless Commerce?
A: I've definitely grown and matured as a person. This experience
accelerates time like you wouldn't believe. I've had jobs in a previous
life -- five years of banking and a couple of years of consulting work
-- where months would go by and the landscape hardly changed. For me, [running
a startup] has always been a lot of fun. As soon as we started paying
payroll, that's when a lot of the stress came in, because then I started
worrying about supporting other people. So far, however, I'm not jaded. My optimism hasn't been tempered yet.