Tuesday, January 20, 2009

MBAs in the Internet Industry Part 2

In the first post of this article Reasons for an MBA graduate to go into the Internet industry… Are there any? I discussed mainly the current difficulties and drawbacks that exist today for an MBA Graduate that chooses to go into the Internet Industry. There were many reasons against making this choice, the most relevant being: There is not an MBA culture in this industry, there’s no hiring expertise and programs for MBA’s, salaries are lower and there are very few positions available (big companies recruit very little and smaller companies don’t even consider it).

The question here is obvious for an MBA graduate considering this in this field:

  • Why would I choose an industry where there is no culture at all, my title isn’t recognized like in many other industries, there are much less positions available and on top of that, salaries are lower?

Although with this outlook the Internet industry might seem very unattractive, there’s always another side of things. Us (MBA’s) also have our advantages in this industry… and some are very powerful indeed…

When less (in the industry) means more (opportunities)

As mentioned at in the first part of this article, comparatively there are very few MBA’s in the internet industry. This was first seen as a bad thing, because being less means less people are able to recognize the value of an MBA Graduate, and also means lower salaries…. But it can also be seen as a good thing. Less MBA’s in the industry means there is less competition. There will be less people in the industry with the same set of skills that your MBA gave you, and that’s quite an advantage. It could be a drawback in the short run that turns into an advantage on the long run. Later in your career when it comes to Top Management positions, it doesn’t matter how good the leading technician was at programming, if you don’t have the skills to manage people or have direct P&L responsibility for example, you won’t get promoted. Guess who will be in a better position to get a promotion at that point…

A different angle on things

MBA’s have (or at least should have) the ability to see a business opportunity faster than average. The knowledge acquired during the MBA gives you the tools to look at one market/industry and study it, dissect it, analyze its competitive landscape and see things in a different perspective. These tools should be an advantage to spot business opportunities that currently people within the industry haven’t seen.

Fundraising… our biggest asset

Even great ideas need proper funding to get started. If you look at the greatest achievements in the Internet Industry (let’s say Amazon, Google, Yahoo and Microsoft for example) their founders were not only great programmers but also, and maybe even more important, great businessmen. Everyday millions of software developers, programmers and people in this industry come up with great ideas, brilliant ideas that never materialize because lack of proper business planning and access to capital. Being an MBA gives you the necessary knowledge in accounting, finance, HR and Marketing to create a strong and coherent business plan to be used for fundraising. MBA’s have also the required tools to discuss head to head ROI’s, Marketing Ideas, cash flows and competitive strategies with Private Equity Firms, Business angels, banks and the like. In a young industry like this one, where most of innovations come from small start-ups with little capital, this is a skill that can be very valuable. If you can partner with a programmer who has a prototype, an engineer that has a great idea and you’re able to get funds for the project… he/she will love you the rest of your life !!

Marketing… a very valuable skill to have in this industry

On the early days of Internet most of the biggest success stories (Napster, Google, eBay, etc) didn’t have to rely on traditional marketing strategies to be successful. Most built their initial success on word of mouth and viral marketing because the innovation they brought to the market was so significant that almost nothing else was needed. Nowadays, most of the marketing for companies related to the Internet industry is still online marketing (SEM, SEO, Social Networking, Blogging, etc), and still dominated by webmasters and programmers. Nevertheless, in my opinion this is changing and at a fast pace. Online marketing is still marketing at the end of the day and should be managed by someone with the right marketing mindset, not a programmer or a webmaster. Increasing competition in this area means more professional management will be needed. MBA’s that enter the industry now, will have in some years the necessary experience when this change materializes. The days where you can have an amazing new idea and it builds itself into a multimillion company just trough word of mouth are over (or very close to be over, there are still “Facebook’s” and “Myspace’s” kind of companies that arise every now and then). Now, new Internet companies need more professional marketing strategies, they need to include offline advertising, branding, alliances with offline companies, etc and here is where the Online Marketing Gurus can’t help them. MBA’s are in a privileged position to take leadership in these kind of roles.

Entrepreneurship… You can really be an entrepreneur in this industry

If your idea of a job is to work for a salary your whole life and your only goal is to get promoted to have a bigger check, then this is not the industry for you. On the other hand, if you are an entrepreneur this industry is probably much better to be in than other ones. Imagine starting a new business from scratch in the… FMCG/Retailing Industry? …. In the Steel Industry ? … In the Banking Industry ? … Probably not a feasible idea unless you’re a millionaire. The internet industry does provide an environment where you can start your own business (tipically with much less money than other industries), get the appropriate funds and work on your own. As mentioned before, the MBA does give you some competitive advantages than many other people in the industry don’t have, like in fundraising and marketing.

Finally and most important… choose what you like

Finally, just as a disclaimer, the idea of this article wasn’t to put the Internet Industry above others, but just to give it the place it deserves. Every industry has its advantages and disadvantages. If you choose the consulting industry you know you’ll earn a lot of money in salary and bonuses but you’ll have to work long hours and travel a lot. If you choose to work in a public/state owned institution you know salary won’t be great, but you’ll have a pretty stable and predictable career path. If you choose the Internet Industry, I hope now you know more or less what to expect. After finishing your MBA you can pretty much go to any industry you could think of in almost any country so… Why not choose something you really like?... And if it happens that you like the Internet industry after the MBA… Why not go for it?


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The Blogger Source said...

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magda said...

Hi there,

I found your blog most interesting...I completed my MBA last year. I have worked in Marketing for a few years and I am drifting towards the digital world, I totally agree with you, an MBA really helps people look at business and organisations in a totally different way and increases our business acumen, I just hope the digital industry starts appreciating this kind of skills soon!!!

jennifer.nielsen said...

Do you happen to know of any MBA courses that have a high focus on Internet Business and Marketing? I am considering an MBA, have run businesses for many years and am moving into the environmental space online. Someone must be doing one?

Pedro Neira said...

Hi Jennifer thanks for the question.
Actually I don't know of any MBA with a focus on Internet Business. Usually Top Tier MBA's are generallistic and don't have a focus on any industry although in the second year you can choose the elective courses that fit best your interests. Nevertheless, If you're interested in Internet Business, probably Stanford would be a good bet, mainly because of the networking you'll be able to develop there. Google and Lot's of other online entrepreneurs have studied there.