Dharmesh Shah explores whether MBA-educated executives doom SaaS startups. Starting with a 1% baseline success rate, he models how each additional MBA might halve those odds, then walks through HubSpot's own team of MBAs across product, marketing, sales, and engineering to show how quickly the probability could vanish.
Chapters
All that aside, so going back to when HubSpot kind of first started, I met this guy, Brian Halligan, who's the founder and CEO of HubSpot. We met in grad school at MIT, and there was kind of one problem with Brian, and the problem is that he was in business school working towards an MBA. Now some of you may be like, well, why is that a problem? It's like lots of people get MBAs. And it's because the conventional wisdom in the startup world was and still is— I'll explain by way of this formula. So let's assume the probability of success for a SaaS company is roughly 1%. And that formula is true given some definition of success. Right? So work with me here. It's okay. And that probability is impacted sometimes negatively and sometimes exponentially by certain things. One of those things supposedly is the number of MBAs on the early team. So the math going through my head is like, okay, well, we're just getting started and here we've got this MBA that's joining a 2-person co-founding team. It's like, holy crap, we like just dropped our odds by 50%. And then it occurred to me a few minutes after that thought that actually I was in business school too. Thereby taking the odds down another 50%. And so if that weren't enough, you know, we have the founder CEO, founder CTO, me, MBA. Hire the VP of marketing, MBA. VP of sales, MBA. VP of customer, MBA. VP of engineering, MBA. And now the odds of any semblance of survival, let alone success, are like vanishingly small at this point. And by the way, they're all MIT, as it turns out. Weird. Coincidence there, all within network, and it's like, okay, what could possibly go wrong, right? We've got a bunch of MBAs trying to build a SaaS business here. And the reason I kind of put this out there, no knock on MBAs, obviously I have one, is that I think one of the mistakes we make in SaaS sometimes is because SaaS has the word software in it, and software is tech, we automatically assume that everything is, it's like all about the product. Product, product, product, product, product, like find a great designer, get the product right. And the thing we've learned is that yes, a great product is essential, but there are so many other things that contribute because it's a large, kind of very complex machine in the SaaS business, and everything impacts it, right? So it's not just about getting the product team right, it's about getting analytical people across the entire organization. So that's— I posit 3 theories. Theory number 1 is it's possible, possible that not all MBAs are gonna predoom your startup to failure. Crazy thought, but could be true. Working out okay so far, by the way.
