How to Create Your Own Real-World MBA

(Photo: DavidDMuir)

It’s fun to think about getting an MBA.

They’re attractive for many reasons: developing new business skills, developing a better business network, or — most often — taking what is effectively a two-year vacation that looks good on a resume.

In 2001, and again in 2004, I wanted to do all three things.

This post is the first of two that will share my experience with MBA programs and how I created my own…

In the process, it’s my hope that these writings will make you think about real-world experiments vs. theoretical training, untested assumptions (especially about risk tolerance), and the good game of business as a whole. There is no need to spend $60,000 per year to apply the principles I’ll be discussing.

Last caveat: nothing here is intended to portray me as an investing expert, which I most certainly am not.

Beginnings

Stanford University Graduate School of Business (GSB). Ah, Stanford, with its palm tree-lined avenues and red terra cotta roofing, always held a unique place in my mind.

But my fantasies of attending GSB reached a fever pitch when I sat in on a class called “Entrepreneurship and Venture Capital,” taught by Peter Wendell, who had led early-stage investments in companies such as Intuit. The class is now co-taught by Eric Schmidt, CEO of Google, and Andy Rachleff, founding general partner of Benchmark Capital.

Within 30 minutes, Pete had taught me more about the real-world inside baseball of venture capital than all of the books I’d read on the subject.

I was ecstatic and ready to apply to GSB. Who wouldn’t be?

So I enthusiastically began a process I would repeat twice: downloading the application to get started, taking the full campus tour, and sitting in on other classes.

It was the other classes that got my panties in a twist. Some were incredible, taught by all-stars who’d done it all, but others — many others — were taught by PhD theoreticians who used big words and lots of PowerPoint slides. One teacher spent 45 minutes on slide after slide of equations that could be summed up with “If you build a crappy product, people won’t buy it.” No one needed to prove that to me with differential calculus.

At the end of that class, I turned to my student guide for the tour and asked him how it compared to other classes. He answered: “Oh, this is easily my favorite.”

That was the death of business school for me.

How to Make a Small Fortune

By 2005, I was done chasing my tail with business school, but I still ached to learn more.

Then, in 2007, I started having more frequent lunches with the brilliant Mike Maples, a co-founder of Motive Communications (IPO to $260,000,000 market cap) and a founding executive of Tivoli (sold to IBM for $750,000,000).

Our conversations usually bounced between a few topics, including physical performance, marketing campaigns (I’d just launched The 4-Hour Workweek), and his latest focus: angel investing.

“Angel investing” involves putting relatively small amounts of money — often from $15,000 to $100,000 — into early-stage start-ups. In Mike’s world, “early-stage” could mean two engineers with a prototype for a website, or it could mean a successful serial entrepreneur with a new idea. The angels usually have relevant business experience and are considered “smart money” — their advice and introductions are just as valuable as the money they put in.

After several lunches with Mike, I’d found my business school.

I decided to make (in my mind) a two-year “Tim Ferriss Fund” that would replace Stanford business school.

Stanford GSB isn’t cheap. I rounded it down to $60,000 a year, for a total of $120,000 over two years (these days, it’s $100,000+ per year).

For the “Tim Ferriss Fund,” I would aim to intelligently spend $120,000 over two years on angel investing in $10-20,000 chunks, so 6-12 companies in total. The goal of this “business school” would be to learn as much as possible about start-up finance, deal structuring, rapid product design, initiating acquisition conversations, etc. as possible.

The curriculum could be thought of as “The Start-up Lifecycle from Birth to Acquisition/IPO or Death.” But curriculum was just part of business school; the other part was getting to know the “students,” preferably the most astute movers and shakers in the start-up investing world. Business school = curriculum + network.

The most important characteristic of my personal MBA: I planned on “losing” $120,000.

I went into the “Tim Ferriss Fund” viewing the $120,000 as sunk tuition costs, but also expecting that the lessons learned, and people met, would be worth that $120,000 investment. The two-year plan was to methodically spend $120,000 for the learning experience, not for the ROI.

I would not suggest mimicking this approach:

1) Unless you have a clear informational advantage — insider access — that gives you a competitive advantage. I live in the nexus of Silicon Valley and know many top CEOs and investors, so I have better sources of information than the vast majority of the world. I don’t invest in public companies precisely because I know that professionals have better access to information than I do.

2) Unless you are 100% comfortable losing your “MBA” funds. You should only gamble with what you’re very comfortable losing. If financial loss drives you to even mild desperation or depression, you shouldn’t do it.

3) Unless you have started and/or managed successful businesses in the past.

4) Unless you limit angel investment funds to 10% or less of your liquid assets. I subscribe to the Nassim Taleb school of investment, with 90% in conservative asset classes like AAA bonds and the remaining 10% in speculative investments that can capitalize on positive “black swans”.

The problem is often that, even if the above criteria are met, people overestimate their risk tolerance. From my previous post, ‘Rethinking Investing: Common-Sense Rules for Uncommon Times’:

I’ve come to realize that the questions most investment advisers (and investors) ask are the wrong questions, or incomplete. Even if you have only $100 to invest, this is important to explore.

Most advice and decisions center on one question: what is your risk tolerance?

I had one wealth manager ask me this, and I answered honestly: “I have no idea.” It threw him off.

I then asked him for the average of his clients’ responses. The answer:

“Most answer that they would not panic, up to 20% down in one quarter.”

My follow-up question was: when do most panic and start selling low? His answer:

“When they’re down 5% in one quarter.”

Unless you’ve lost 20% in a quarter, it’s hard—neigh, impossible—to predict your response.

It’s not dissimilar from a common boxing maxim: everyone has a plan until they get punched in the face.

To would-be angel investors, I suggest the following: go to a casino or racetrack and don’t leave until you’ve spent 1/5 of a typical investment and watched it disappear.

Let’s say you’re planning on making $25,000 investments.

I’d ask you to then purposefully lose $5,000 over the course of at least three hours, and certainly not all at once. It’s important that you slowly bleed losses as you attempt to learn the game, to exert some control over something you can’t control. If you can remain unaffected after slowly losing your $5,000 (or 1/5 of your planned typical investment), consider making your first angel investment.

But proceed with caution.

Even among brilliant people in the start-up world, there is an expression: “If you want to make a small fortune, start with a large fortune and angel invest.”

The First Deal and First Lesson

So what did I do? I immediately went out and broke my own rules.

There was a very promising start-up which, based on comparables using Alexa ranking correlations to valuations, was more than 5x undervalued! If it hit even a “base hit” like a $25,000,000 exit, I could easily recoup my planned $120,000!

I got very excited — it’s the next Google! — and cut a check for $50,000. “That’s a bit aggressive for a first deal, don’t you think?” asked one of my mentors over coffee. Not a chance. My intuition was loud and clear. I was convinced, based on other investors and all of the excitement surrounding the deal, that this company was on the cusp of exploding.

Two years later, it still hasn’t popped.

[TIM UPDATE, 2013: This start-up is now dead, so I lost that $50K.]

Following the Rules

Lesson #1: If you’ve formulated intelligent rules, follow your own f*cking rules.

I learned many more important lessons over the following two years, most of which I’ll share in the next post. Thus far, following the rules, the stats look something like this:

15 total investments (some of which are listed here)

0 deaths

1 successful exit

The one successful exit thus far, DailyBurn, guarantees that I will not lose money on my two-year fund. But, as they say, “Once you’re lucky. Twice you’re good.” I’m still not convinced I know what I’m doing.

My hope, and that of most angels, is that each start-up will “exit”, or be bought within 3-5 years. I’ll therefore have a more complete view of the “Tim Ferriss Fund” two-year portfolio by 2013 or 2014. There will be fatalities, no doubt.

[TIM UPDATE, SEPT. 2013: Now, I’m in 20+ investments, and I’ve made (cash in bank account) about 3-5x back what I invested. I have several million dollars on paper with investments like Twitter, Uber, Evernote, and others. If half of them pan out, I will make more in angel investing than all of my books combined. Only time will tell. Still plenty that could go wrong. Oh, and there have been more startups “deaths,” too. It’s a full-contact sport.]

But recall that the learning was my main reason for doing all of this.

I had one other exit: my own company. Using what I learned about acquisition deal structures through angel investing, I became less intimidated by the idea of “selling” a company. It need not be complicated, as I learned, and BrainQUICKEN was sold in late 2009. This means the ROI on my personal MBA is, so far, well over 2x and could end up more than 10x.

Creating Your Own MBA

How might you create your own MBA or graduate program? Here are three examples with hypothetical costs, which obviously depend on the program:

Master of Arts in Creative Writing – $12,000/year

How could you spend (or sacrifice) $12,000 a year to become a world-class creative writer? If you make $50,000 per year, this could mean that you join a writers’ group and negotiate Mondays off work (to focus on drafting a novel or screenplay) in exchange for a $10-15,000 salary cut.

Masters in Political Science – (same cost)

Use the same approach to dedicate one day per week to volunteering or working on a political campaign. Decide to read one book per week from the Georgetown PoliSci department’s required first-year curriculum.

MBA – $30,000 per year

Commit to spending $2,500 per month on testing different “muses” intended to be sources of automated income. For an example of such, see “How I Did It: From $7 an Hour to Coaching Major League Baseball MVPs.”

If you’re interested in experimenting with angel investing, whether as an angel or as a start-up, here are a few of my favorite resources:

AngelList (I’m now an advisor; here is my profile)

AngelSoft

VentureHacks

Commit–within financial reason–to action instead of theory. Learn to confront the realities and rewards of the real world, rather than resort to the protective womb of academia.

Question of the day (QOD): what would you like to learn specifically about start-ups, angel investing, or start-up financing? Please let me know in the comments with “QOD”.

Continued in Part II…

The Tim Ferriss Show is one of the most popular podcasts in the world with over 500 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.

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312 Replies to “How to Create Your Own Real-World MBA”

  1. Dude, what an eye opener you just wrote. I attended an MBA program for 2 semesters until I realized the monumental waste of time and resources it was draining from me. Sure, some of the lessons I learned were great theory, but nothing taught me more about business than getting out there and testing different ideas. I believe you hit the nail on the head with creating your own MBA. You’ve been a great influence in my life and this is a prime example why. Thank you for all the insight you’ve given me into modern business.

  2. Thanks for this Tim. Regardless of which way you go, investment in yourself is only going to help in the long run. One would the think the more you learn, the better you become.

    I went to a seminar where someone defined INVESTMENT as ‘I INVEST IN ME’.

    My personal mantra is that the minute you stop learning, is the minute that you’re dead.

    Thanks for providing the informative post once again.

    Cheers

    Anthony

  3. This is good advice, Tim. I’ve gained the vast majority of my training in the real world, only taking a school credential to fill in some blanks, also enabling me to put something (including the name of a respected school) in the place many managers automatically look for it.

    QOD: I’d like to know what kind of package startup CEOs typically negotiate (or try to negotiate) for the possibility that they’re forced out or otherwise need that parachute.

    Thanks!

    1. Hi Michael,

      I’m interested in something along the same lines of a school credential to fill in some blanks – what you would recommend.

      Thanks!

      John

  4. Angel investing is new to me. I see the name cropping up everywhere on the web and your post has certainly made it clearer. Looking forward to the other posts on the topic.

  5. Love it, love it, love it. This is the exact article type that I first fell in love with way back in the day. Tim, I would pay you for more posts of this high quality. Thank you for your insight.

  6. Nice encapsulation of Angel Investing and how creating your own Personal MBA curriculum can increase the chance of getting better ROI over the investment in education in today’s time.

    I have also created a personal MBA program for myself which consists of books recommended from PersonalMBA.com (Josh Kaufmann) and few other mentors giving there industry specific insights into the liking of my subjects.

    Awesome read, Tim! Waiting for the next post!

  7. Once again your out-of-the-box perspective on things puts your ahead of the curve.

    I do believe that a “real world” education can be far more valuable than an MBA. Here in Australia the value of having an MBA has been eroded due to the slacking of entry requirements of the major universities.

    Once I have enough leverage, the advice you have offered in the article is something I am going to take up.

    Awesome stuff Tim:)

  8. Tim,

    Great read. I very much love the idea that you’ve presented with “Tim Ferriss Fund”. I don’t have that kind of money but I’d really have to come to terms with ‘losing’ that amount of money.

    Still, the idea of creating one’s own MBA program == pretty damn awesome.

  9. Hi Tim,

    I think you made a damn cool real world MBA and based on your crunchbase, I predict a financially successful one to boot.

    To answer your question… Did you enjoy angel investing? What was the process like, especially for someone new to the game?

    Finally, after doing some angel investing has your perspective changed on muse project/lifestyle businesses versus (venture backed) startups?

  10. Tim,

    I read Rework right after I had a chance to watch your last episode of random. The book had a lot of advice like yours and was a good refresher with some new angles.

    Something about this last read mentally pulled my trigger finger from “what if” to “what the hell” and I am testing like a mad man.

    Great article, would love to hear about start-ups. Bar tending and working security at a night club for the moment seem to be enough for start up financing using the methods suggested in your book.

    Best Wishes,

    Jason

  11. Tim, you’re an impressive guy.

    On the surface, this isn’t your most impressive work. Two years to double or triple 120k. Lots of business success books come out every day. Nor is it necessarily an inspiring story of turning a passion into success.

    The proof will be in going forward – how strong are the connections and wisdom you’ve acquired?

    Here’s my challenge to you: Become a billionaire, then show us how it’s done.

    Sure the money becomes meaningless after a point, but money is also an economic measure of how much value you’ve delivered to people, and a partial measure of power to influence the world.

    1. JB,

      Good points. The financial return is definitely not the most valuable part of what I’ve gained, but I would argue that doing 3x ROI isn’t anything to dismiss. In absolute dollars, it’s not a ton, but in percentages, it’s a pretty damn good return from 2008-2010.

      To your last point, I’d rather create a thousand millionaires than become a billionaire.

      Tim

  12. “The Ten-Day MBA” by Steven Silbiger is a good resource if you want to know what you’re missing in some of the theoretical classes.

    And three months in a face-to-face commission sales job can also be highly educational.

  13. Thanks for the post Tim

    I have never liked university, and have relied on the school of hard nocks to teach me what I need to learn.

    It’s good to put into perspective for universities as well.

    Ads.

  14. Tim

    99% of MBA students are financed through their courses and come out jacked to the hilt in debt. If you’ve $120,000 in free cash you’ve unfortunately been successful enough to not require an MBA, for your CV or otherwise.

    I say unfortunately because obviously, and despite your successes, you appear still to have an inferiority complex about your lacking this ‘vital’ qualification which you rightly sight as a two year long, very expensive holiday.

    Good luck in your investing but don’t let’s pretend we all have access to the resources necessary to imitate your actions.

    1. BenJam,

      Thanks for the comment but…

      I have an inferiority complex? Funny that’s how you should read it. Despite the fact that we are all, I believe, insecure on some level, not having an MBA isn’t one of my pet insecurities. Not having a PhD in something else, perhaps.

      Perhaps, also, you didn’t take the time to read the intro and what I hope readers to get from these two posts. I never indicated that all readers would have $120K to spend. That was never the point.

      Tim

  15. Interesting how quick we are to put money towards “education” but we’re much slower to invest in real world education even if it would be a smaller cost.

  16. Tim,

    Any thoughts on how much more your learn through investing in a start-up rather than just having a relationship wth people. You seem to have learnt from people like Mike Maples and Nicholas Taleb without the risk to your cashflow.

    Also would be interested on the multiples on BrainQUICKEN, if you’re including this in your ROI then 2x seems low.

  17. I just started yesterday with reading the Four Hour Work week (at page 98 now). And as with many things I’m going, how on earth do I implement that?!

    For example, how do I cut back on 8 hours a day of work, when my important task spans more than just 1 day?

    If I work too fast it’s going to look bad, because then we planned the project incorrect and we could’ve done the project cheaper. That would not make the customer a very happy customer.

    Then getting to the article, my passion is with writing a novel. It assumes an income of 50,000… I don’t even make half of that! (around 18,000)

    So how do I spend 12,000 a year and cut down on my salary, when my salary is that low already. (filled in the dreamline worksheet and my buffer is more than I make in a month…)

    And to think I have a well paying job for being just 23.

  18. Great Post Tim!

    QOD: If you are working in a “conservative and conventional” industrial market (i.e. selling optical backbone equipment, like I am), how would you help or guide or protect a two-person startup looking to sell key technologies to a huge company like Cisco or IBM? What can an angel investor do to protect the small from the big while still attracting the big companies as customers?

    How can a start-up/university spin-off make sure they are to be taken seriously by big customers?

  19. Dear Mr. T.

    100 years from now, there will be scientists analyzing how the hell your brain worked. You’re so smart, I feel inferior.. but hey, that’s the only way you can look up to someone, right?

    Do you usually define your goals and schedule what it takes to accomplish it with isolation (like with yabusame) and just work your face off until it happens? is that how you break down your “being” goals? I keep going back to that section on your book, I can’t wrap my head around it.

    If you can’t answer, no worries. I’m not gonna start an anti-Ferriss blog 🙂

    BTW wish you luck with Evernote.. I LOVE it!

    I’m starting to sound a little fruity here, I’m gonna go to bed now. Can’t wait for part 2.

  20. QOD

    Tim, your work is so inspirational and outstanding, love it!

    I am starting a non-profit to help underprivileged teens or those in a bad homelife get the chance to travel. I hope to arrange a trip for them(anywhere they want to go) for 1to 7 days so they can get a new perspective while learning a few life skills and escaping their problems for a little bit. What is the best way to get funding/donations? Have you ever had to do anything like this?

  21. Thanks for this Tim, great insight.

    I visited one of the biggest this weekend, and I thought that being a market stall trader is a very pure business education, you face your customers and the market head on, if they do not like you, your product or your stall they walk away. For those not able to lose enough money to get into startups, work on a commission basis on a market stall, I think what you learn can be applied in any business environment.

    Sale, Marketing, Market Analysis, Customer Service, Suppliers, it is all there.

  22. My QOD: how do you know when you’re ready to be an angel? I sold my business recently and now have funds to invest but my instinct has been to go straight for starting another business (previous one was a services business and now I want to have a crack at a product business to test whether I was lucky or good…) I would be really interested to know your thoughts on what makes a great angel versus a successful serial entrepreneur – or are they 2 sides of the same coin?

  23. Tim,

    I don’t know if you’ll address the following questions in the next post, but here we go anyways:

    Do have to move to Silicon Valley?

    What if you have money, but are really young or don’t have much wisdom to offer companies?

    (sorry this is kind of off topic…) I am a 18 and going to college soon and not majoring in business, but planning to start my own company as soon as I can. I read your book and realized that the automated business model would be perfect to have while in college. Do you think it’d be possible for a student to create a business like how you described Brainquicken – outsourcing everything, with the minimal hour workweek and all? You should write a post on how students can apply the 4-hour workweek.

    Here’s the vision: Taking only a laptop, or cell phone, study abroad for an entire year while getting rich off your automated business. -Possible?

  24. For many years I lived amongst the Wharton MBA students in Philly…

    When you talked to them, say at a bar, they’d always be looking at their watch, and over your shoulder for someone else more important to talk to. This whole conscious *networking* mindset, I found to be ridiculous. It was like they were all speed-dating each other!

    In 1996 or 1997 Michael Dell showed up on campus for a guest lecture which I sneaked into. The room was absolutely packed and the man really delivered. These same MBA clowns were palpably drooling at a guy who was just about their own age – if not younger.

  25. Yep – definitely one of your best posts Tim!

    I had the exact same struggle with business school. Too much theory – not enough practice. Also, most business schools are filled with former i-bankers and consultants who will go on to middle management jobs – not become entrepreneurs. Stanford is somewhat of a an exception to this rule, but I still found this very discouraging.

    Thanks for sharing your experience!

  26. If anyone’s interested in conservative investing to take care of all the other money than what you want to be angel investing (and you don’t have access to Nassim Taleb personally :-), then The Intelligent Investor has a similar comes highly acclaimed by both myself—not that important—and Warren Buffett.

    http://www.amazon.com/dp/0060555661/

  27. Like Tim mentioned, his situation was favorised by the fact he lived in the S. Valley and the fact that he already knew CEOs and top notch people.

    But I like his main advice. Instead of paying $XXXXX in theoretical education, try to find ways to spend it in actual learning experiences.

    I didn’t realize he was involved in so many startups (I knew about RescueTime and DailyBurn).

    Great post!

  28. Tim, this concept is wicked smart, and I think it takes 4HWW concepts to new levels. You are, in a sense, testing out your concepts to find the real opportunities. This has potential for a new book, or a new chapter…how to find angel investors for your startup. Which begs the question:

    QOD: How were your investments valued as a percentage of the companies you invested in? How did you make sure your investment was properly valued? Was it a negotiation, or handled by an investment banker?

    Lastly, my wife and I have been planning a less practical, though potentially more enjoyable degree…in Life. I half-jokingly call it a Masters in Living from the Real World University’s School of Innovation. It will include cooking classes (and hosting weekly parties), learning a foreign language, mastering Yoga, and living in various places around the world for short periods of time. We’ll probably include some academic classes, but only for fun.

    Brilliant post!

  29. Oups, forgot to answer your last question Tim.

    Startups being such a high risk investment, why do angel investors put their money in there instead of safer investments like properties?

  30. A Real-World MBA sounds enticing. Unfortunately, unless you plan on becoming a serial entrepreneur or full-time private investor, how do you translate a “Real World” degree to something that is marketable on your resume for those who seek to advance their professional careers?

    Also, I would imagine there would be an IMMENSE amount of work involved in preparing yourself for this type of learning. What a good business school arguably provides, besides the networking, career counseling, prestige etc. are a structured curriculum that enables progressive, specialized learning. Unless someone was a very astute learner, a trial-by-fire approach like the one you suggested could be extremely frustrating and overwhelming. If I were to try this, I would not do so without a support group of incredible mentor(s); that, of course, not everybody can have access to.

    Thoughts?

  31. Tim you legend;

    I have been feeling a little deflated and disconnected with my muses and life as of late. This article has made me a laser again (not an incandescent bulb).

    Thanks buddy; time to hack away at the unessential.

    QOD: How do you keep on top out developing muses while traveling?

  32. You’ve just summed up what many successful investors & businessmen know but rarely share: real world knowledge occasionally differs with classroom notes. Plus it comes without all the fancy equations and unnecessary charts.

    IMO, there are two important things you get when you do an MBA:

    1. Knowledge (duh). But this tends to be delivered in a convoluted manner – to much chaff in the wheat.

    2. A Network. The people you meet could open up several avenues in many areas of your life: business, friendships etc

    You also get certification, but I don’t consider this important.

    You don’t need $120,000 to do your own MBA. If you can find a way to gain knowledge, test many assumptions and network (very important), then you can consider yourself as having an MBA.

    This will vary with your personal goals in life. For some, an MBA or any degree or form of certification is an end in itself. The “real world” approach favors those who see these “items” for what they truly are: a means to an end.

  33. Hi Tim,

    thanks for this amazing post. It is awesome. I am in awe at your achievements. I believe I can do it all, and I keep testing muses, unfortunately I seem to continously make errors, years are passing by and I am not getting anywhere. I dont want to settle for less than what I am capable of, my motives like most other people are often towards wellbeing of others rather than ourselves, I want to pay back my parents for all the opportunities that they gave me. But I am getting punched so many times, and every time just to get back and make that little money to try again, takes ages. What recommendations do you have?

    On a sideline, more mundane note, with regards to testing muses and outsourcing, one point I am often stuck is the quality of the work – you outsource a task, a spreadsheet for example, and then how do you check that it is not full of errors? I am always given back the complete work and I am asked to check that there are no errors, I would like them to do it. Shall I get a second outsourced resource to check the work?

    Many thanks Tim. Keep up the awesome posts.

  34. Educating yourself through different routes than the traditional uni system has massive benefits!

    I have done both and find that it is cheaper and more efficient once you find a good mentor to see returns on education investment outside of the university environment.

    Robin

  35. Thanks for the post Tim.

    QOD: Bootstrapping vs. Investing – presumably one would bootstrap rather than invest in order to provide some illusion of control, though I’d like to see your comparison of the 2 approaches (lets assume bootstrapping = developing & funding your own idea into a moneymaking venture and Investing = funding another person’s idea in hopes of the same result)

  36. Great Post!

    QOD1: what are your own criteria for investing in startups? (I am sure you put it elsewhere but want the fresh update if any)

    QOD2: do you invest in European based companies?

    QOD3: if not, what could still be a power reason you would still invest in a far far away company?

    QOD4: on the QuantifiedSelf/selftracking space, specifically on DailyBurn, can you tell us what worked, what did not work (why they did not go “thunder lizzard”?)

    ** Wish I read your post 10 years ago: started an MBA (partly sponsored by French Army/BSPP thanks! 🙂 then dropped out 4th semester to join startup in Mill Valley … I will share your post with my MBA friends 😉 **

    Thx for this sheer business hacking advice

    Btw/evernote do you Snaptic? Love these guys.

  37. Hello Tim and other readers!

    This topic is really important! Unfortunately I decided to leave school at 16, but since then I`ve worked in and participated in many startups. Many of them who died for several reasons, bad management, wrong marketing focus etc. Of the ones succeeding, one of them succeeded by being flexible and switching over to their (in their past unknown) Bi-Product as their main product (technology company) and thus generating the necessary cashflow.

    For me it has been important to write down and organize my experiences so I can rehearse these.

    I have to ask about another aspect of your Real-World MBA:

    Instead of hard-cash as investments. Many of us have liquidity in personal knowledge and contacts that are valuable to many start-ups. For those who doesn`t have the 120k (yet) to invest, this might be a great way to get involved and learn lot`s at the same time you are rewarded with stock options.

    I´ve been approached to be an advisor for several companies recently, but I`m unsure of how much time I should exchange for how much percentage?

    Is there requirements you recommend to be set?

    Grateful for any answers or suggestions to models of doing this!

    Best regards.

    Bendik L.

    NORWAY

  38. I totally agree that an MBA is a waste of money for most people, but it is a nice holiday from the “real world”.

    One thing that you should talk about is to get the legal documents done properly, don’t just give someone your money 😉

  39. I love this.

    Tim, you might want to cover a bit about what makes someone an Accredited Investor in your next post, Obviously not everyone has $120,000 to invest, but those that are tempted to put anything into a startup by this post should also learn a bit more about if they’re allowed to invest. Here’s a description from the SEC: http://www.sec.gov/answers/accred.htm

    Also, for entrepreneurs who are looking at getting an MBA, I personally think the current replacement are incubators. Instead of applying to Harvard, apply to Y Combinator, TechStars, etc… Friends of mine who are alumni of those programs have always had a HUGE leg up in the startup world, just like MBAs typically have had a leg up in the normal business world.

    I admittedly made the mistake of attempting an MBA program and quit 1/2 way through because I didn’t think it was worth it. A $50,000 mistake chronicled recently here http://bit.ly/bUOB13.

    Thanks for this post.

  40. Having done 2 degrees in German (planning to become a prof) and then switching tracks to do an MBA instead while also working as a “screener” for an angel investing group, I agree with a lot of what you are saying, Tim, but I would want to put it in perspective to anyone that I would pass this on to. I believe that MBAs are vastly more valuable for people, who would otherwise be completely out of their element and potentially not have the abilities to chart a direction or build their own plan of study, than they are for people, who already have some mind for or education in business. In my case, I was 100% focused on the liberal arts, teaching language and history, etc, etc. While I might consider myself smart, I lacked either the ability or the wherewithal to structure my own real-world MBA. Thus, I made what I believed to be the smart choice of going to an MBA school I could afford. While a lot of what I learned could rightly be applied to investing, I believe that the one of the greatest benefits of my education there was that I was exposed to a different set of decision-making criteria than I had been previously. Yes, 90% of it may have been theory, but I did not have access to (or did not know how to get access to) people and resources to learn the same things in the real world. All in all, I felt it was very valuable for a person with my background, but I would only recommend it for people with very specific backgrounds, intentions, etc.

    As far as your investing track record goes, I haven’t looked into it in a few years since I’ve been out of angel investing for a while, but I believe the stat in 2008 was that 1 out of every 10 angel investment breaks even after 10 years, while only 1 out of every 30 returns double or more. Screening applicants for my group, I had to keep all of that in mind of course and then make recommendations on who the group should actually hear. It sounds to me like you’re pretty far ahead of the game there.

  41. Tim

    this is the post i have been waiting for and bugging you about so,

    firstly thank you so much

    secondly my question:

    i have been trying to design my own study program to understand business architecture so far i have decided to photo read and take notes on all the Harvard business review books and analyze and synthesize them into some set of principles or as you would say “follow your own rules” along with that i have decided to absorb in as much as i can and have any questions i have answered by these sites:

    http://selfmadescholar.com/b/self-education-resource-list/

    http://www.jonasblog.com/

    and you of course

    and invest in:

    http://inventright.com/ (ur recommendation which is great for my architecture and inventor background)

    http://www.onlinebusinesspuzzle.com/Earning-Extra-Income.html (to catch myself up to speed since i am a caveman when it comes to the internet and computers, its my attempt to catch myself up to you in computer savvy)

    also the products that David De Angelo (who you did an interview with funny and awesome by the way) under Eben Pagan on marketing and Entrepreneurial business.

    so finally the question, are their any 80/20 insights that come to mind if you think about the hierarchy that exists, for example how learning math makes physics and chemistry and biology easy but not the other way around because at the top of all the western sciences lies math in a smaller domain the science of business architecture i was told it composes of marketing and sales, i wanted to know your thoughts on that and if you believe that’s true, and if not why and if so how you personally would go about investing your time and energy trying to master both from the angle of passive low maintenance cash flow architecture, since that’s ur specialty, and also angle investing

    so basically how would you explain what you know now to you in the past when you didn’t have any cash and didn’t want to waste time making all the unnecessary mistakes that you don’t mention in your books

    god i hope u can read between those lines because i am at a loss of words trying to describe it

    ur long time fan

    -josh

  42. “One teacher spent 45 minutes on slide after slide of equations that could be summed up with “If you build a crappy product, people won’t buy it.” No one needed to prove that to me with differential calculus”

    I find this a bit narrow minded: The reason why there is such a mathematical focus in finance, as you know, is to have a common language that is testable instead of a lot of ambiguous bla bla. This is actually one of the good things about theoretical finance courses that they teach you how to to transfer your own questions into a mathematical context that you can test.

    Obviously, if you are interested in investing in startups, a course about the latest findings in option theory will not be very helpful 99% of the time. You might be better of taking rigorous classes on corporate finance and then try to get (historical) data from as many start ups as possible to find what makes or breaks them. If you have no business contacts a top university can be extremely helpful here.

    As far as the theory itself is concerned, everyone can check out the Open Courseware stuff that is online (MIT for example) and you should quickly get an idea how appealing that is for you…

  43. Nice post, here are a few thoughts from a math ph.d. who rolled his own university for a few years, and has also done angel investing:

    – I rolled my own first 2 years of university (with help from my parents, i was 13 then), where I wasn’t a student anywhere but was sitting in on classes unofficially at local universities and also doing classes through other programs. If you want to roll your own MBA (which is preferable to paying the $$), remember you can include sitting in on classes at the best universities and/or auditing classes, and you can pick and choose, as part of your mix. So I’d encourage one to consider the opportunities to roll your own MBA outside of angel investing. You can move to a city with a great university. You can also spend money on some interesting conferences for the networking component of the mba.

    – Even if you don’t have a strong network at first, you can focus on building that before jumping into the angel investing.

    – For those interested in angel investing, check out the info on accredited investors, fyi.

  44. Tim, what about a “listener pass” for certain courses that you’re interested in? (i.e. Entrepreneurship and VC)

    I think a 500 or 1000 Dollar which are wisely invested if you pick the right courses. Same goes with books (maybe recommendations by other business people?)

  45. QOD: How did you discover these angel investing opportunities? You had mentioned much of it by way of networking but what about the first few, before your name and the popularity of the 4-Hour Work week? Also, what do you do to analyze opportunities (after the first $50k one!) to know whether or not it’s a good investment?

    Thanks for the post.

  46. QOD:

    I would like to know why you suggested to learn creative writing? is it because it help to create your own marketing campaign and self story telling?

    1. Just an example, but a personal one. It’s a fantasy of mine, so it was the first to pop to mind 🙂 I do think storytelling is powerful, though, and Gary Vaynerchuck would agree.

      Tim

  47. Awesome post, Tim. This is some really inspiring stuff. While I’ve decided I won’t go back to school for my MBA, the idea of “creating my own” is very intriguing.

  48. Hi Tim,

    Contacting you seems a bit daunting, but here it goes! If you visit the URL, you will see the product my partner and I are wanting to produce. We have our first 5 samples taken care of via trade ($1000 worth), but are considering an angel investor for production. If you’re interested, please contact me at the email address provided.

    Thanks for reading! I enjoyed this post on education – graduate school seems to be taking a more societal role than a genuine pursuit of knowledge…

  49. Just a heads up about the site http://personalmba.com/best-business-books/ – They’ve been around for a few years with a list of top business books to give yourself a MBA without attending school.

    Perhaps you could do a book list like, or append, the above – a “Real World MBA Book List”, I’m sure Seneca would feature on that list as well as some other books that you’ve found valuable to your Business “career”.

  50. I got my MBA at a nearby state university. Part time – no need to quit my day job, but it took 3 years and during that time my evenings were busy. ($60,000+ per year? Really? Wow. Mine was less than a tenth that much in total.) The information and networking were very valuable, especially from one particular entrepreneurial class. The total cost in both money and time were reasonably low.

    But I have to admit that I’ve learned a great deal more just by running a small craft business. Make some stuff, sell it at local craft fairs, and see what happens. The lessons about dealing with taxes, paperwork, logistics, accounting, inventory, and regulatory interference have been better than any formal schooling.

    In general, I found that what they teach in most MBA classes assumes you’re going to turn into a corporate drone soon after graduation. Or that you’re going to hire an expensive team of lawyers and accountants to handle all the details. Thus the material isn’t always appropriate for two-guys-in-a-garage startups. Something to think about.

    This summer I’d like to get started on some biz ideas that can be fully automated 4HWW style. The education continues.

    Question about non-angel investing: How do you invest in AAA bonds? Is it part of a bond mutual fund? A professionally managed account? Somehow I don’t think you’re the type to stay up all night worrying over every single bond…

  51. Hi Tim,

    QOD: How did you meet all of the power players that you wound up getting advice from? I’m thinking in terms of beginnings- like when you were first gearing up to promote the book, etc. and then maybe later too when you were meeting the mentors that guided you through your improvised MBA?

    I’m particularly interested from the point of view of someone who has entrepreneurial experience in a different field and just moved to Silicon Valley to find a point of entry into the startup community.

    Thanks!

  52. Q’sOD: Do you think one can profit from angel investing if they are not based in Silicon Valley? What are the advantages and disadvantages of being outside of SV? How small of an amount of money can one start to build an angel investment portfolio?

    Interesting post. Made me think.

  53. Very cool post! I just graduated from Chicago with an MBA. It wasn’t cheap, and it was indeed full of 3-hour powerpoint lectures three to four times a week for two years.

    That said, the classes helped me a lot at the beginning, but mostly because my undergrad degree was not in business (it was in computer science), and because I was 22 when I started and I was done at 25. If you have even a few more years of work experience than me, you will probably not gain nearly as much from the curriculum as I did.

    The one thing I gained that is harder to gain via other means (like writing a NYT bestseller) is an incredible network and a “pass/permission” to do certain things that I couldn’t have done without the degree.

    I agree with Tim though, if you can circumvent this tedious check from your list of things to do to get where you want, your money is better invested elsewhere, and you can probably learn a lot more by choosing your own curriculum rather than following something set by an institution.

  54. Great article Tim!

    With open course ware from these prestigious schools such as Standford, there are multiple “free” avenues to learn all about entrepreneurship without having to eat the cost.

    I think what is valuable about this though is realizing that all the schooling in the world can’t make up for actually going out there and experiencing and learning from people who are already in the trade (if you are so lucky). Living in a small town such as my own (in canada) offers up some limitations to finding people who are actually worth being mentored by. Looking for a valuable mentor is difficult but as you’ve said in the past, all it takes sometimes is a phone call and making yourself vulnerable to a complete stranger who has the entrepreneurial skills and traits that you would like to learn.

    Any thoughts on owning and renting real estate? You seem to have traveled all of the other paths (entrepreneurship, and angel investing (investing)).

    That’s got to be next for you…

    Anyway thanks again Tim! Very insightful.

  55. Tim, I’ve had my business for 4 years and realised within the past year that I have no business savvy whatsoever! However, I began my business because I love what I do and want to keep doing what I do. It seems that in business the way to make money is aiming to make enough profit to sell my business and do something else. Do you think that being passionate about what I do and, therefore, emotionally attached to my business will prevent me from ever being distanced enough to make good business decisions?….

  56. I’m still seriously considering getting my MBA from a top institution in the country. Not so much for the knowlege but for the challenge of-one, getting in-raising the money without borrowing and just to enjoy the feeling of accomplishment that I’ve become addicted to.

    Didn’t you mention in your book that you created an audio book on how to get into the Ivy Leauge? I’d buy one of those, actually.

    Digg this post Tim, great as usually.

  57. Hi Tim,

    These are all very interesting ideas that I would definitely pursue… if I had the money to do so !!!

    The sums of money you are talking about are HUGE for me as a PhD student with 13000 GBP a year of income, so I was wondering if you had any idea for poor people like me :P. In particular, how would you go about building a network of fellow entrepreneurs if you actually have no more than, say $500 to spend on you business idea ?

    Thank you, keep up the great work.

    1. Here you go:

      Create a “meet up” group or otherwise secure an audience of 100+ people, then invite business icons nearby to be on a panel. Give the speakers a nice private dinner beforehand, which you organize and preside over.

      Problem solved!

      Tim

  58. The concept of creating a self directed, time AND monetarily invested project on your own terms is excellent Tim! It’s all about creating the projects and self guided path towards a lifestyle that scratches your own particular itch…

    Loved rule #1 and truly enjoyed hearing you describe your own breaking of the rule… Gotta love the live and learn concept. Just stings when they’re costly on the ole piggy bank!

    Cheers to this post Tim!

    Patrick Hitches

  59. Tim,

    Great post, as I am currently planning to return to school for and MBA in the next year or so. I was wondering what your thoughts are on risk, and the differences between school and your real-life MBA. I understand your circumstances, but what if I don’t have an extra $120,000? For school, it is easy enough to get loans, as the promise of a future well-paying job will entice lenders. Is the same true for angel investing? As you said, you cannot expect ROI for a good length of time, and private loans generally need to start getting paid back immediately.

    Supposing you do receive or have money to angel invest, how does one go about getting business acumen? Should this be by way of testing one’s monthly muse? In this case, it may alleviate the lack of funds problem, for at least a few months. Even in this case, I’d imagine some background in business would be helpful, do you have a place we should start?

    Thanks for everything,

    Brian

  60. To anyone thinking about an MBA,

    I currently am in an expensive, midwest, top-tier part-time MBA program while I work a good job related to the kind of career field I will likely continue on in once I finish the MBA program. First off, I actually have wanted to go to this program for quite a few years, so making it into this competitive program actually fulfills one of my big-hairy-audacious-goals such as Tim recommends we all do from time to time in his book. (which I do enjoy, although it’s not the end-all-be-all book, nor should it be) And yes, it’s costing me a small fortune in tuition and books.

    I think Tim is just trying to provide an alternative solution to MBA school for those of you who are driven in different ways than simply “book smarts.” In my program, the same problems exist as what Tim describes seeing at Stanford: real-world and academic winners teaching right alongside real-world, academic losers – winners and loser in the sense of how much anyone can actually learn from these professors. However, I still am really glad I’m investing my money in this manner. I have found I need this kind of structure and team environment to push me along since while I am a self-starter, I am motivated much more to excel by surrounding myself with other self-starters. Enter MBA school.

    Honestly, it was reading Tim’s book about 2 years ago that really got me over the hump of hunkering down to study hard for the GMAT so that I could achieve this goal of getting into and attending this MBA program. But if your goals are to provide well for yourself and your family and you know that going to MBA school isn’t what you want, then don’t do it! There are as many ways to get from here to there as there are people on this planet. Find yours.

    1. Hi Jeremy,

      Thanks so much for the comment.

      I want to clarify one thing for all readers: I DO believe MBAs can be valuable. It depends entirely on your goals and resources. I know many studs and studettes who kick ass in the trenches and have “MBA” at the end of their names.

      Just think hard about your motivations and desired outcomes.

      Tim

  61. This post could not be better timed for me personally, since I recently decided to look at my first entrepreneurial endeavor as my own real-world MBA. I already partly blamed you and The 4-Hr Workweek for this decision (since you basically removed all of my excuses), and then you write this…

    But enough about me. Here are my questions:

    QOD: Caveat #1 for angel investing was “access”, which I assume is also a problem for startups as well (i.e. access to expert advice & feedback). Was this an issue for you when you first started BRAINQuicken? If so how did you deal with it.

    QOD II: Since you now have access to the best and brightest in Silicon Valley, what is one of the key differentiators in talent you look for when trying separating the wheat from the chaff? You mention Alexa ranking (a form of traction) not translating, so I’m curious what is now at the top of your list.

    Thanks again!

  62. I like the beginning of this series. I’m currently creating my own MBA as well. I think your first rule should also include the value of a SUCCESSFUL mentor. Right now I’m breaking even on my education by not making a living and working for a start up with one condition: the founder (mentor who has had 26/28 successful businesses) teaches me about business. This opportunity was all luck. Since starting my ‘MBA’ in February I’ve learned and practiced so many things that an MBA doesn’t teach.

    Side note: my mentor has a fund in escrow towards Wharton. If Wharton wants the money they have to change their MBA program to actually teach business.

  63. Tim, I love your approach to personal learning. Education is like the workforce, we think we *have* to do things a certain way because they are the norm.

    But many times, going with the norm means not going with one’s intuition, out of fear. That’s something that has to be unlearned.

    Your personal MBA program is a great example of taking control of one’s life and learning and that’s a powerful practice. Once again, thanks for sharing your journey! -Jesse

  64. Great post Tim,

    Thanks for putting on paper what a lot of people are thinking including myself. I if I ever opened a business school the final exam would be to create a successful muse. The educational system will have to change as it’s not preparing us for the real life.

    All the best with your investments, Mat

  65. Understanding that your stated goals here are/were to develop new business skills and a better business network, and that starting a new company may be an inferior way to accomplish those things as compared to angel investing/advising… How tempted are you to start another company of your own? How does starting another company compare in your own mind to being involved in other people’s companies?

  66. First time poster; Tim’s books/posts have been really enlightening and encouraging. On this post though, I used to think along these lines until recently. I’m 32 and have put off MBA for the last few years in order to maximize my learning in the real world the best my finances will allow. If I could do it over, I would have started MBA coursework about two years ago.

    Tim’s methods are more applicable and better suited to prepare someone; but at the end of the day you don’t have the piece of paper, the accredited degree.

    It’s kind of sad, but it’s the rules of the game if you go the non-silicon valley or non-entrepreneurial route (I’m a Midwesterner). I got tired of seeing people with half my ability getting ahead because they simply furthered their education. Even if it meant qutting their jobs.

    My prediction for the future; If you’re not an enterpreneur or an attractive female (who will soon be taking over the entry/mid levels of corporate America) then you will need an advanced degree.

    Great post though on the alternative.

  67. Ferriss, another breakthrough. This is by far the most valuable stuff you have put out since the first book. Seth Godin’s views on MBA’s are excellent and similar to yours. .And, of course,Taleb is essential, even critical. I just finished “Black Swan” for the fourth time. I’m still learning from it. It seems you have been drifting in search of your next big book. Drift no further. You’re right on it. Warning, if you see an “expert” economist in a suit and white shirt, RUN!

  68. Great stuff once again. I know you were searching for a topic and you found a good one here.

    QOD. Almost all the advice on this subject is geared towards the Startup to IPO make a lot of dough in a couple of years model. So many of us “entrepreneurs” are looking to develop a successful, highly profitable business with no intention of going public. Would love to see how the “Superpreneurs” would approach the private vs. public model.

    Thanks Tim…

    1. Hi Lon,

      Much more coming on the “muse”-specific model soon. I just wanted to write on something a little different to expose y’all to the opposite model.

      Thanks for reading,

      Tim

  69. I really enjoyed the testing the muses idea. This is something we can all do to some extent and I can personally say I have learned a lot with a few e-commerce sites I have started.

    Great Post-

    _ Jose Castro Frenzel

  70. this is guerrilla education, learning hands-on in the jungle not the state sponsored classroom. But how come it took a genius like Ferriss so long to figure it out? – i mean i left school at 15, regardless, Tim continues to demonstrate tall forehead thinking….and acting!

  71. Tim,

    US is a Entrp friendly economy, yet despite all the mature support , you had a succesful exit in 1 out 15 investments , this is certainly some thing to think about.. If you had been in a place like India ? I wonder what will happen?

  72. QOD

    Hi Tim,

    Firstly, I found this post very “MBA Version 2.0” from something that I wrote about my first 6 months as an entrepreneur: http://alturl.com/sqp5 (feel free to delete this link if it doesn’t follow your blog rules).

    Going into 100K+ debt to learn business theory in college is unnecessary when you can put that money into your own muse ventures.

    QUESTION:

    On the subject of business debt:

    I come from the school of thought of not taking in any debt…but I understand the power of leverage.

    What is the gist of your philosophies on business debt?

    Do you avoid business with too much debt? Or, have you ever recommended a business to take on debt? If so, why? Where do you define and draw the line?

  73. Wow! This article definitely was an eye opener. So many people see the value of putting money into schooling, but never consider that the money (or a good portion of it) could serve even better purposes with real life learning experiences. This really got me thinking….

  74. Wow, I read the title on my RSS and I couldn’t wait to read the post…

    I had decided in 1999 to pass on a JD/MBA program for a well paying job and then again passed on it in 2004 to start my own company. Millions in gross revenue later, and I’m still not rich, but what an education. After 4HWW I removed myself from the company, (thank you TFerriss), it still generates a return, but I find myself unfulfilled.

    I think having your own business is like a real world undergraduate program, and necessary prior to a real world MBA or angel investing.

    Question: What other activities, aside from angel investing and constant reading, would you recommend to develop the next skill set level for someone who has built a successful business?

    -will

  75. Love the viewpoint of this article…

    Much better in my mind to learn “in the real world” than “resort to the protective womb of academia.” (haha love that line!)

    I especially like the idea of investing a portion of your salary to create a “muse” or small business instead of a degree.

    I was thinking about this the other day, for me, I started my business early 2006, 4 years later, I’m making WAY MORE than any of my friends who went to college …

    Did I miss out on anything?

    — Was I poor like a college kid through most of those 4 years? Yup.

    — Did I drink like a fish through those 4 years? check

    — Did I live off Ramen Noodles? Oh yeah.

    — Relationships with many women? You betcha!

    Looks like my own ‘College De Caleb’ worked pretty good 🙂

    Later!

    Caleb

  76. Tim,

    I have yet to read your book yet (it’s next on my list)… but am fascinated by what I’ve seen so far on your blog. I look forward to learning from you.

    QOD: Everyone says that you can start out small – with “nothing!” – and make it in this world, right? Well, I’m a broke, just-married college student with practically nothing to my name… except an entrepreneurial itch that I cannot get rid of. I have aspirations for starting my own businesses, but seemingly no way to do so. …how would you advise a young, aspirational, broke college student to pursue his entrepreneurial dream?

    Thanks a lot man!

    1. Samuel,

      Welcome to the party! Few resources just mean you need to be more clever in your testing. I don’t say it often, but I’ll say it here: grab the book and check it out. At least half of it answers your question exactly.

      Good luck 🙂

      Tim

  77. Tim, I have long been working towards what I called a “working-man’s MA” in fields that interested me, from religion to astrophysics to literature. Basically the best of graduate school is found in reading great books, discussing them with smart people and volunteering/interning with relevant organizations. Total cost: Library past-due fees.

    You add the element of investing, and I think it is an important one. Great insights.

  78. Hey Tim-

    First, QOD:

    A few summers ago when I was still in college (undergrad), I had the opportunity to work at a prominent Angel Fund in the LA area. I learned a ton about what makes a good pitch, what makes a sound investment, how to properly articulate a deal at every stage of the negotiation, and many other things. The one thing I had trouble with however was valuation. So you have this start-up company, with none to little revenue, but a seemingly gang-busters idea. What is that worth now, and what is it worth in 5 yrs? This is necessary to negotiate the value of your investment as an investor.

    Take for example investing in an unproven web-startup (aka YouTube) vs. investing in a manufactured goods company (aka Method). Both have exteremly different markets, buyout processes, etc. The “YouTube” had no revenue at first, but the “Method” company probably did. The “Method” company will most likely show revenue earlier on with steady growth because they have a proven business model. This is easier to determine the current and projected value of the company, and thus your investment. However, an investment in a YouTube would be much more speculative, thus yielding higher value in your investment. So how is value determined on a speculative business model such as a YouTube?

    And yes, everyone says, “these numbers are a conservative forecast…”

    Second, MBA:

    After recently graduating from undergrad, I’ve been considering the MBA path. But after being in the working world, along with working on 2 muses, I am leaning towards the strategy you mentioned. I recently interviewed a successful CEO who graduated from HBS in the early 2000s. He said the most valuable asset from his HBS MBA was the connections, which ultimately lead to creating a very successful business. Other than that though, you can learn the curriculum from books and meet successful mentors (aka would-be professors) through persistence.

    Regards,

    Kai

    1. Hi Kai,

      Thanks for the comment.

      Valuation is pure alchemy. For ages I couldn’t get over the “WTF?? Did they just make that up?” mind-set for valuations of unprofitable start-ups. Let’s be clear:

      The valuation is what is negotiated. Nothing more, and no more based in objective reality, at least when dealing with unprofitable companies.

      How do you negotiate? Using comparables, which were equally made-up or based on other comparables. It’s a house of mirrors, but if you understand that, you can play within the rules and make more informed decisions.

      A start-up in the geolocation space, if valued during a period when such period are “hot”, might get a Series-A 10-million post-money valuation, whereas they might get only 3 million if the next hot thing is making the rounds.

      It’s an dance from Alice in Wonderland. As always, reality is quite negotiable. No one gets what they “deserve” — they get what they and their lawyers can negotiate.

      Check out Bebo for a great example of selling at the right time. Ditto for FlipCam.

      Tim

  79. Great outside of the box thinking. But still, I would not recommend your approach to most people (even if all your criteria are fulfilled). This is also the reason, why schools shouldn’t close their doors yet.

    The majority simply isn’t capable to keep the necessary commitments. Putting social pressure and society approved career paths aside, most people simply cannot educate themselves (especially over an extended period of two years). Education for most people needs a tight corset of restrictive rules and schedules enforced by an evenly strict faculty. For Petes sake, most students I know cannot even keep simple appointments or deadlines for ten pagers (I was a faculty member for quite some time). Trust me. After the first failed investment, the first sessions in writers club, the first books or the first lame muse, it is just to much for most of us.

    I know all your readers are successful men and women that know how to keep grand personal commitments. But for all us less self controlled schools offer a far better ROI on our money.

    By the way, there are other examples that you would never do, but that makes sense for most of us.

    – You don’t pay a personal trainer for training you, but for kicking your butt.

    – You don’t pay Weight Watchers for their ridiculous point system, but for putting peer pressure on you.

    -You don’t pay hundreds of dollars for a Tony Robbins seminar, you do it to increase the perceived value of the information he provides so it has greater impact on your behaviour.

    – You don’t pay tuition to get educated, you pay it so they force you to do something you can not do alone.

  80. Hey Tim,

    I have an MBA from a top-3 MBA program in the US, and I wholeheartedly agree with your post.

    During my MBA program I met some amazingly smart individuals, developed lasting friendships, and had an opportunity to learn fascinating things from rockstar teachers. The school brand name opened the doors for me to work at pretty amazing places. And yes, I sleep better at night knowing that I have a safety parachute which will allow me to land a well paid job if all else fails.

    But if I was to do it all over again, instead of getting an MBA, I would take 2 years off and do series of 5-8 internships /apprenticeships, working for free if necessary. And I would travel the world the rest of the time.

    I think that’s another creative option for someone who doesn’t have $250K to spend on investing but wants to do something more practical than sitting in classes for 2 years.

  81. Awesome post dude!

    QOD: I would like to learn more about the networking side. How do you go about building relationships when you dont have the experience of running a successful business or living in an area where there is lots of talent/tradeshows/events/meetups like SV.

    More so, how do you screen the people you do meet to know if they are going to be a correct fit in your network in terms of your goals. If you live in a less happening area, or are say a nomad like myself, its difficult to know how to meet people that are aligned in their values and goals.

    So, how you identify, screen and build relationships with mentors/peers that will help you develop your MBA/Start up.

  82. QOD: I’d like to hear more about how you sold Brain Quicken. Since you have that under your belt why not write about it. I think it would help people starting their muses to hear about one mans end result of his muse. The article could come from a couple different angles; the man behind the muse, if you would have been an angle investor looking at B.Q. as a start up, and also from the angle of the buyer who now owns it.

    Good luck and I look forward to your next post!

    Cheers!

    Lacey Scott

  83. Noted on 3x ROI.

    Ok, fair point – empowering 1,000 millionaires is not an unreasonable target for you.

    But I hope you will keep the extra-ambitious among us interested, by continuing to scale the orders of magnitude of wealth you teach how to create.

    1. For me, 80% the first, 20% the latter, if that. If you can build a good prototype or beta product, you have figured out a decent market in most cases. Not true vice-versa.

  84. Tim Tim,

    You imply that you chose angel investing over business school because you didn’t think Stanford GSB was worth your time. Certainly, however, failing to gain admission to the school must have influenced your decision. Rejection to an institution of that caliber is nothing to be ashamed of, but you mislead your readers by conveniently leaving out that tidbit. If you actually did have sufficient merit–intellectual and otherwise– to be accepted to Stanford at the time, I think it’s much more likely you would have done like the masses and attended comfy business school.

    In short, your deviation from the rest of the pack–what you perhaps like to call innovation–is much more out of necessity than of courage.

  85. I think this article has some very interesting ideas. Though I imagine you could replicate the results on a smaller scale, I appreciate seeing the ratio of investments that were profitable v. otherwise.

    What I don’t really understand is why not do both? It seems that too often financial advisors (Padawan or Jedi) recommend one option over another. If we vary our time spent on one project as juxtaposed by another, let’s say taking classes and investing seed money, we can reap a potential rewards from either end. This way you can learn from the CEO’s teaching at GSB and then apply what they taught to your own circumstances.

    This position also reduces risk, for obvious reasons.

  86. QOD: Hi Tim, ultimately you don’t know if a venture is going to succeed or fail, you can only analyse the information in front of you and make a decision. What makes the difference between a marginal no-investment and the one you do go for? Just instinct/intuition?

    Excellent post by the way – going through the resources mentioned now!

  87. Hi Tim

    Impressive post!

    QOD: How about the process to follow if you have a company, a small startup that’s doing OK (not great, but OK) and you want to sell it? Where can you find potential buyers? What’s the process to follow?

    Thanks!

  88. Nothing teaches like experience, and I like how you focused on the intrinsic value over the market value in designing your own school of hard knocks.

    QOD – How to pick among all the different customer segments and choices of experience to focus on — and analyze market opportunity, tech opportunity, value, and differentiation? I think differentiation is the key to dominance and value is the multiplier.

  89. Hey Tim:

    I think what you’re saying makes a lot of sense in terms of so-called “practical degrees” like an MBA (assuming you want to become an entrepreneur) or creative writing (assuming you want to become a novelist). However, I think it likely has less utility for most other fields.

    For example, if you wanted to make up your own course in engineering, or political science, or law, or scores of other fields, you would be hard-pressed to get the same education or contacts, and whatever you did on your own time wouldn’t replace a Masters, or even give you close to the same level of recognition for it. Unless you want to work for yourself, you need the Masters as the credential of your knowledge, skills, and abilities.

    Why would you not want to work for yourself, you might ask. Well, there are plenty of reasons. If you are working towards some sort of cause, a non-profit, government, or foundation career is probably the best choice, and you’ll not get your foot into that field without a Masters degree, or at least be able to advance past a certain point. That’s just the name of the game. Ok, so start your own NGO, right? Well, that’s unfortunately what everyone thinks, so you end up getting dozens of NGOs working towards the same thing but competing for scarce resources and often impeding one another’s progress.

    Your posts and writings on the importance of minimalism in a business model are very, very important and spot on, and I think there are applications for the public sector as well, but I think it’s important to make the distinction between an organization with a profit incentive and an organization with a goal that has public benefit. In the latter case, teamwork isn’t just nice, it’s often necessary. In a private business, you always have the option of a publicly-traded company where your responsible to shareholders, where in the public sector, there are always stakeholders, and you don’t have that choice, in fact you’re entering the field because of those stakeholders. So if you’re a psychologist, or a teacher, or an economist, or an engineer, society has a real, vested interest in you completing a Masters degree. I agree that universities often get in the way of education, in that they encourage students to focus on the wrong things, or to move at a slower pace then they are capable of, or to embrace dogmatic ways of thinking, so auto-didactism isn’t a nice addition, it should be a sine qua non of education. However, the reason that those who serve public goals need a Masters degree is because society needs assurances that professionals who will work towards those goals have had the requisite training, and putting scattered coursework on your resume isn’t quite the same thing. It may be just another hoop to jump through for many, but it’s partly about showing your commitment.

    That having been said, I think one drawback to “making your own MBA” is that there has been a real backlash against top business schools like Wharton and Stanford in the wake of Enron and the financial crisis because it’s been alleged there is little attempt to teach ethics or social responsibility in business schools, and a lot of school are starting to take that criticism to heart. The truth is, as a businessperson, you’re not just making profit for yourself, you’re contributing to a good to society, and therefore society has a stake in how you conduct yourself, whether or not you pollute, whether or not you create a equal and beneficial work environment, etc. I think that revamped business schools would have the opportunity to instill a sense of social responsibility that is sorely lacking in the business world, and that “making your own MBA” wouldn’t afford one that opportunity.

    I would guess that programs like Stanford’s Center for Social Innovation (http://csi.gsb.stanford.edu/) are a case in point.

    But again, you have very strong ideas that nearly all organizations could benefit from and as usual my suggestions are on the margin. Keep up the good work.

  90. Tim, you should do yourself a favor and go for the MBA for at least five solid reasons:

    1) You’re overestimating the costs and underestimating the benefits. Re-read pp. 271-72 of David Schwartz’s “Magic of Thinking Big.” Even at $120,000 in tuition, there are ways for people even of modest means to make it happen financially. And even if you have to pay full-freight, that’s still chump change when the average MBA graduate will earn $4 million + over the course of a working career.

    2) The MBA is faster than trying to learn on your own. Do you want to spend years trying to master the intricacies of accounting/finance/other hard disciplines in “the real world?” Or would rather get that out of the way in the 10-15 weeks it takes to complete a course? I’ll take the latter.

    3) It’s not mutually exclusive with your angel investing activities. You can take courses on the side, etc. You don’t have to take the time off. And b-schools are incubators of new businesses—are you missing out on a big project a la PayPal (launched by Stanford students)?

    4) B-schools are great for finding mentors. Based on my multiple readings of 4HWW, it sounds like you wouldn’t be half the man you are today without having met Professor Zshau at Princeton. Are you missing out on the opportunity to meet someone who can transform your life like that again?

    5) You don’t know what you don’t know. I’m doing an MBA program right now (as you might have guessed), and it has introduced me to at least two entire fields that I didn’t even know existed before enrolling. You can’t hit a target you can’t see—and no amount of discipline or self-study would have allowed me to fill gaps like that in my business education.

    Tim, this post resonated for me because I have been there (on a much smaller scale)—I spent years reading one book after another, experimenting with the stock market (complete with losses in the thousands of dollars!) in an effort to get the “real world equivalent” of an MBA. Ironically, it was your book that made me realize that all this activity was just an excuse to not pursue a goal that I viewed as too big and too far outside my comfort zone to complete. But trust me, Tim, if you have the itch, it will gnaw at you till you do it. Quit deferring your life and your dream and go for it, man!

  91. Perfectly spot on. Wish I had read it years ago.

    When I went for my Stanford MBA, I already had a degree from the top US engineering school, had lived in Palo Alto for years, had worked in early stage VC-backed startups, and had made VC and industry contacts. I honestly did not realize how well positioned I already was. The MBA, though interesting and fun, was an extremely costly distraction from real-world experience.

    MBAs are a necessary condition to get those high-salary, long-hours jobs at investment banks, management consultancies and Fortune500 firms. There’s a place for that. But those folks are not Tim’s audience, are they?

    Tim, in support of your argument, don’t forget to include the opportunity cost of the MBA. If someone is earning $100k before b-school, then he loses $200k (pretax) while inside, on top of direct expenses. This probably didn’t occur to you because you are so successful at generating passive income.

    1. This is a great point and one I neglected to underscore. Thank you. To emphasize your point:

      “… don’t forget to include the opportunity cost of the MBA. If someone is earning $100k before b-school, then he loses $200k (pretax) while inside, on top of direct expenses. This probably didn’t occur to you because you are so successful at generating passive income.”

      This also doesn’t even include the likelihood of increasing your annual income over that period of two years. Like you said, if an investment bank or other institution requires it for a promotion, so be it, but this isn’t the case for most.

      Tim

  92. Tim – enjoyed the post. Completely agree with using your cash to fund your own muses as opposed to “business in a box” grad school. I read some negative comments to this post about people using debt to pay for grad school, and how that makes this post unrealistic. My only response to that is that 99% of people using debt to get their MBA are probably doing it to gain a high paying job and/or advancement within a company. These probably aren’t the people thinking about how to start their own business and/or invest in others.

    QOD: Angel investing has become a “buzz” term and investing technique over the past decade. To me, most startups should be able to find a way to bootstrap their way off the ground. If you have a business idea that requires 7 figures in infrastructure, my advice would be to start smaller… Onto the question – what’s your input on this? Why seek angel investors when there is likely a way for you to do it yourself with your own cash and resources?

    Thanks in advance.

    1. Hi Adam,

      If you can bootstrap, and the money is for you (i.e. the goal is not to sell the company or have an IPO), there is no need for outside financing.

      If you want to sell for some outrageous fortune in 3-5 years, that’s another story. Then you often need rocket fuel (money) to grow right on the border of out-of-control. Not an approach I suggest for most.

      Tim

  93. Tim,

    Great stuff! you’ve shown that actions speak louder than ‘mba’ on a CV…

    You probably do not need the reminder, but we’d still love to hear about the process of selling BrainQUICKEN and how ‘it need not be complicated.’ http://bit.ly/cdidCa

    Further to some of the comments above, i submit my QOD: What is another way to get into Angel Investing [specifically in web startups] short of picking up and moving to Southern California?

    Thanks again for sharing all of your valuable insights!

  94. Tim,

    This is something i’ve always wanted to get into down the road. If i was to read a book on venture capitalism or angle investing what book would you recommend? Thank you.

  95. Tim

    Interesting how we are so quick to slap down a tonne of money to get an education and come out with a LOT of debt. When we can take the courses offered in the school of life and learn the same information and make the same mistakes for a LOT less. The ROI from the latter I believe makes it more profitable in terms of absolute dollars one can receive as per the academic world.

  96. Yeah Tim!

    I’m living as a guest at Stanford right now, but I’m spending my days here working on my business, biking around the campus, and plotting my next adventure up the coast.

    My business mentor never finished high school, had a drug and alcohol abuse problem, lived on the streets for 10 years, cleaned himself up, started his own business with freeing himself in mind, and now, he’s retired at 35.

    I lived the opposite – finished engineering school, passed on MBA offers due to financial shortages, and held a steady programming job until meltdown. Now that I’m running my own business, I feel like I’m getting a real-world MBA and I question traditional education. I plan on writing about this in-depth on my website, though I have to a certain extend already.

    Ki’une

  97. Let me add some real world examples: In Sarah Silverman’s autobiography, The Bedwetter, she mentions that after her freshman year at NYU, her father took her aside, and offered to pay for her apt and food for the next 3 years, if she dropped out of school and concentrated on comedy. It would be admirable if more parents could pure heartedly support their children’s dreams, without insisting it come in the form of a certificate. The other big achiever is Robert Rodriguez (who did go to UTA film school), but has consistently called for people to learn by taking the leap

  98. Hello Tim,

    A timely post for me. I am developing a few sites that capitilize on my experience in the entertainment production field. I have also read the four hour work week. I recently have been approached with an angel investing opportunity which brings me to my QOD question

    Generally speaking , what protections on my investment should I be thinking of when crafting the deal?

    In short I would be investing startup money to an individual to launch his own business web services company. He has been successful working for another company already. This investment would cover salary and expenses to give some runway to establish the company. I would have a 25% stake in the company for a 30k investment. There are other details but I wanted to know your thoughts

    Regards

    Kyle

    1. Hi Kyle,

      For angels, you generally don’t have much protection. It’s the nature of the beast, as you usually have options that convert to common stock. If you want to look into “liquidation preference”, you can do so (Google around), but it’s not common in seed-stage angel investing.

      To build a long-term good rep as an angel, you don’t want to bruise the start-ups on onerous terms. If the start-up fails, unless they have a lot of inventory or hardware, there will generally be nothing for anyone, so there’s no use in beating them down too much.

      Tim

  99. Right on Tim. I could not agree more. Real world experience seems to always trump theory. The question is if someone is too afraid to leave their Work for Work’s Sake job to get some “experience”, do you recommend they do a real MBA?

    As for me, I am up for option one. In fact each year I dedicated about $3k to continued education/development whether it’s a negotiating course, Tony Robbins workshop, public speaking seminar or social media marketing training. Then I spend the rest of the year applying them in my business and personal life.

    In fact this year, my muse test is writing online (and marketing that business online) and building a following based on simple life improvement actions and understanding how to leverage social media marketing for this project and future ones. I have allotted a few thousand dollars this year and so far the return I’ve gotten has been amazing with the people I’ve met and the things I’ve learned that are very scalable to other muses and situations.

    Sometimes people are so averse to spending money without a direct understanding of the return. But once you put it in the context of real world education and experience, it becomes such a valuable way to invest. As long as you’re willing to learn and act on what you learn, the return is right in front of you.

    This has gotten me even more excited to test new muses!

    Many thanks Tim,

    -Scott

  100. 3 QOD:

    What are your top 5 criteria for deciding to invest in a company?

    What is your target ROI for each investment?

    How are you paid your profits (ie. stock, cashflow, buyout?)

  101. Tim:

    Amazing post as always; hold people accountable for their own education in every sense of the word.

    As much as I respect your edgy, authentic writing style and persona, I feel that one topic you seem to shy away from addressing directly is the completely bogus, and useless nature of the 4-year college education. Although you have never explicitly discussed it, I intuit that you agree with me on how the complete system (I won’t go into it, I try to be brief) is built upon false precepts, and shaky intentions related to socialization.

    Q: Many students have started outsourcing their essay writing work online, as well as buying hacked versions of instructor textbook manuals online. Good or bad development?

  102. Tim, I love the idea of designing your own educational process. Sadly, I actually did go back to grad school in 2007 for a 2-year “vacation.” I can’t say I learned anything really practical to my profession that I didn’t already know.

    However, during a particularly horrible summer internship, I realized that my profession just wasn’t for me anymore. I found your book and got hooked.

    I started my own muse a few months ago. I’m still getting off the ground, but I’m happier than ever.

    Thanks!

  103. Tim, thanks for this post. Even though I don’t currently have any interest in Angel Investing, you gave me a couple slaps in the face that I needed.

    First, an MBA is something I’ve been considering ever since high school. The plan was to go to a good college and get my Bachelor’s in Computer Science (which I did) and then immediately follow that with Business School (none yet). Toward the end of college I was getting this nagging feeling that I don’t really NEED an MBA for anything, it just seemed like a good idea. A guy with a BS in CSC and an MBA can work anywhere he wants, right? And there’s the rub. I don’t want to work for anyone. I’ve been doing it for 2 years now, and even though the company is great, I’m realizing more and more that I am not meant to be an employee. Which makes me think “I should start a business”, which inevitably leads to “maybe I should go get that MBA…” And then I read a post like this, or a story about some guy with nothing more than a GED who figured out how to fully automate his income and live a comfortable happy life which makes me realize: I don’t need another pile of acronyms to tack onto a resume, I just need to grow a pair and start something.

    The second slap was at the very end of your post: “Learn to confront the realities and rewards of the real world, rather than resort to the protective womb of academia.” It is similar to something I have read/heard before (I think either from you or Steve Pavlina…) and still completely agree with. While trying to figure out my ‘muse’ or whatever you want to call it, I have read all sorts of books and articles. I could probably teach a class on affiliate marketing or outsourcing. Currently I’m becoming an expert on patents and trademarks. And that’s where I’ve been for over a year now: constantly learning, but never applying.

    Anyway, enough ranting, I just wanted to thank you for reminding me to go DO SOMETHING.

  104. Tim,

    This is a great article. I went back to school in 2009 in order to get a masters degree in accounting and get enough credits to sit for the CPA exam. To me this was a smart decisions because:

    1) The school I went to get my masters paid me to attend, by offering a good scholarship in exchange for me doing research

    2) The job I was able to find after finishing the one year masters degree is paying me 33% more than my last job, which means that I will recoup my investment in 3 years or less

    3) I increased my network of contacts, while I still was able to work on what you call muses, and what others call alternative income streams. At the same time I had fun although school is not really a vacation 😉

    Anyways, I did enjoy this post as I am always interested in investments ( be it starting companies or owning individual stocks).

    My personal portfolio i invest in dividend stocks which have sound fundamentals and have strong recognizable brands, (or Moats/strong competitive advantages as Warren Buffett would call them).

    These companies that I look for have been able to increase profits and then increase dividends to shareholders for over a quarter of a century each. You are familiar with those companies. Some of them include Coca Cola, McDonald’s, Procter & Gamble (PG), Johnson & Johnson (JNJ), etc. As a result I am able to build a totally passive income stream, which is rising over time as well, as most of my stocks increase dividends one an year.

    Best Regards,

    D.S.

  105. Hey Tim,

    Just a quick stop to say I really enjoy your post and the way you answer to some of the comments in the post give me a deeper understanding of what you’re trying to express in the post (not that you need to).

    QOD: how can I get to know some of the key players on my industry? and How can I find a mentor?

    Thanks.

    1. Thanks so much, Betol.

      Just a quick answer or idea to the mentoring side: take a look at SCORE in the US, which matching retired veterans in different industries to newcomers. As old-school as it seems, the Chamber of Commerce in your closest large city can also really help.

      Tim

  106. Love this – you’ve saved me $12K/year 🙂

    I’ve sensed that there are big opportunity costs in pursuing an MBA – and not just in terms of the loss of income. There’s the loss of time that could be spent accumulating real-life experience, good and bad, not to mention the tenuous connection to real-life consequences, financial decision-making, and other nitty gritty. Likewise, I think there are opportunity costs in pursuing an MFA – and, for me, pursuing an MFA b/c I want to be a writer is like reading the owner’s manual for my camera, cover-to-cover, with great attention to detail – if I want to be a photographer. I might pick up some useful tips, but nothing beats just doing it and learning from my own mistakes.

    The flip side of your post is understanding that well considered *investments* in my dream shouldn’t be nickel and dimed to death. Thinking of expenses as potential investments and evaluating them from that perspective changes the thought process from “minimize all costs” to “does this expense advance my ultimate objective?”.

    thanks for the insight!

  107. I didn’t go to university, I trained as a nurse. Ten years ago the qualification enabled me to start my own business in a field that extrapolated credibility from that same nursing qualification. I have often hankered after an MBA, feeling it might take me places I couldn’t get to without it.

    Over time I have become disabused of this idea, I now think that the MBA has become devalued and is most useful to the corporate climber and someone who works for the man.

    I have no intention of working someone else’s schedule ever again, so have come to believe that my real world learning is serving me better than an academic course. Unlike JB I am unmotivated by vast wealth. Enough for comfort and lifestyle motivate me. I care not about your personal wealth Tim, I am much more interested in how you are making enough to enable the lifestyle you want and how you are having fun with money surplus to that.

    I will keep investing in me, both to increase my knowledge and to support my mental wellbeing.

    I’m going to start some KIVA investing once my business sale goes through next week ( selling to a network “friend” who I just happened to suggest buying to over a coffee ;-D). Zero return on monetary investment from KIVA, but huge feel good in helping a motivated individual get a foot on the ladder. Not quite on the scale of angels, but fun in my book never the less.

  108. Meant to say, I have a friend who lectures on a UK MBA course, he left school at 16. In the USA he wouldn’t have ahd enough credits to graduate. All his knowledge is real world and from reading around.

  109. Tim,

    Great post. I am an freshman undergrad right now and already I feel the pressure to work pointless internships, attend classes and seminars that I know will be pointless. I’m trying to come up with ways to maximize my dollar and time investment and practical work far outweighs any kind of theory. This post hit the nail on the head. Thanks.

    Matt

  110. Tim,

    You mentioned that you made fatal mistakes that made it impossible for you to sell BRAINQuicken. Although it wasn’t that bad, as you sold your company later.

    What are the steps one should take in order to set up a business with a view to exit few years later ?

  111. What’s the dumbest thing a startup can say to a potential angel investor – something that would make that invester run for the hills, even though the startup guy(s) probably really do have a good forecast for success?

  112. Subscribe to two years of Harvard Business Review. You’ll learn all the latest business thinking and theories from the leading thinkers for a fraction of the price of an MBA…

    …after two years stop – you’ll notice much of the material is the same thinking being recycled….

  113. If you take away the boom years in the economy (1995-2003), you don’t hear about people w/ MBAs becoming rich. Personally, I think the correlation is most likely incidental. I do think many people that have MBAs are motivated, but that’s something you develop from childhood.

    I don’t tell people “don’t get your mba.” First, I ask them “Why?” If it’s to get a better paying job, I tell them to forget about it. The wages lost from 2 years, plus paying back the debt may never pay for itself. An MBA does not guarantee a better paying job.

    If you want to network and start a business, going to a great MBA program will get you around other people that can help make that happen. Or you can write a book like Tim. 4-Hour Work Week is incredible.

  114. Que bola asere!

    Ya me canse de ver “Hi Tim”, pues decidi a cambiarlo un poco. Espero que te guste.

    English now:

    I’ve been a straight A student my whole life. However, I must admit, I have learned 1000 times more in my undertakings as a business owner than I have in my scholastic studies. What really irks me is how people draw a line between learning and entrepreneurship, as though the two were separate, which every and any business owner knows to be a fallacy. Both require learning, but entrepreneurship is action + learning, and not just any action, but measurable action. What do you focus on and how and how can you quantify the results and ultimately, make money? I love school, had a blast at university, but don’t ever think I could return to a place where so much thinking and so little action occurs. We’ll see.

    Angel investing is out of the picture for me right now, but I’ll take you up on some of other suggestions

    As always, un placer amigo.

    Ciao,

    Lauryn

  115. Tim,

    Thank you for the post. I think it speaks more to the relevance (or irrelevance) of traditional MBA programs today, than to the quality of education. This is especially true for people who want to have a more meaningful career/business rather than a higher paid job. Case in point, a new kind of MBA taught by a top ranked art and design school http://www.cca.edu/academics/graduate/design-mba rather than a traditional university. It combines some of the core MBA disciplines with a completely new approach to teaching entrepreneurship and innovation.

    Whether or not it works remains to be seen, but it’s a testament to the fact traditional MBA coursework alone doesn’t matter as much anymore; challenges that put your ideas to the test do.

    Disclosure: I am starting this MBA program this coming fall, so I guess I’ll find out whether it delivers on its promise.

  116. For what it is worth: I am attending an MBA program that will cost me less than 15k dollars the whole program. I think that Ivy schools MBA programs are overrated and a bunch of their graduates got us into the mess we are now.

    If you want to learn about investing: grab a couple of books and experiment using paper accounts available on the internet. Learn without the risk.

  117. Hi Tim,

    I have just a question, how do you balance academic knowledge and pratical knowledge?

    Pratical knowledge like you said is the key but to build it you need academic knowledge.

    So how do you mix it?

    Thank

  118. Thanks Tim,

    QOD: I’d love to start a business but one of the obstacles I see in working for myself is that I’ll have noone to bounce ideas off. Do you know of startups that do well from starting individuals or is there a criticial mass in the number of staff needed?

  119. Evening Tim,

    I’m reading this post from the side of a start-up. VERY apt timing as always!

    When seeing friends struggle through their MBA – trying to balance study with work, I was kinda glad I hadn’t chosen to continue in academia.

    Just how much could I get out of a programme when being torn between learning and earning? However upon friends graduation and seeing them on MBA salaries, I started to think I had missed a trick. I still have always wished I could have the business education that I simply couldn’t afford.

    In place of this I have tried to earn but learn in my spare time in the hope it will come to use down the line in my own business.

    Fortunately I was recently asked to pitch my idea back at my old University, to the Business School & Enterprise Centre. Thanks to my continued learning and help from your book and posts (in particular the post – “Public Speaking – How I Prepare…”

    I have now been fortunate enough to be accepted on to the Enterprise Fellowship Scheme where I will be attending a year dedicated start-up business lectures – for free!!!

    Learning along side 5 other start-ups, which presents the ultimate networking opportunities :O Not only that but they’re providing a business grant of around $16,000 to fund the business in its first year!

    This turns the lure of a traditional MBA on its head! My own personal MBA paid off. I’m getting the education and the business opportunity at once.

    I’m SO glad that I persevered in the continued learning as I would have never got through the application process and pitch without the knowledge I have gained to date.

    Who knows, maybe in 2 years I could be one of the 1000 millionaires that you have helped to create :o)

    Cheers me dears!

    QOD – From the POV of a start-up, what is the best stage to seek funding? Is it best to try early or develop then search?

    What stage is more appealing to the investor? E.g. Making a small investment in an early-stage start-up, consisting of the “two engineers with a prototype” that is relatively under the radar, OR giving a larger stake in a start-up that has had time to grow but it is clear what problems it faces.

  120. Great article. Lots of great comments too. It’s a bit late, but I’ll throw my two pennies in.

    I dropped out of an MBA program not long after beginning. I found it incredibly boring and completely lacking any sort of ‘real world’ skill building (or any indication that would happen later on). I lost $12,000 on that unfinished MBA. Safe to say I would have been better off putting that $12K to work in almost any investment, but at the very least I got the desire for an MBA out of my system…I had been back and forth on the decision to go for a number of years. So at least it only cost me $12K to realize I don’t need an MBA. 🙂

  121. Hey,

    Very interesting. I tend to believe that MBAs are not the kind of people that would do angel investing. This is a diploma you do to work for a big company and look for conformity and avoid risks.

  122. Great post and seconding Brendan’s earlier point on how reputable startups typically need to raise their rounds of investment from accredited investors.

    Hence, you only “get to play” if you can individually meet certain capital requirements. Sounds a lot like certain limitations in Monopoly.

  123. Tim, thanks so much for this post!

    I’m currently studying in a master’s programme and you’re right you can teach yourself a lot – I do support your thesis, however from my experience I would not want to miss the past year, simply because of the people I’ve met. And this point is probably the richest experience I could take from this course – nevertheless, I’m not studying at a business school but a British university, so my cost is much lower than USD 120,000.

    QOD: How do you secure that the people don’t screw up your investment? Say you have a great product, a great marketing strategy, but the people mess up the process, miss important meetings, loose control – consider all the consequences of moral hazard. Do you get to know every decision maker on the team? What if the people turn out to be incapable ex post at one stage of investment (do you turn it into stages or do you pay everything at once)?

  124. QOD: Interacting with Angel Investors. For instance, how should one go about contacting? Setting up a meeting? A pitch? A beginning to end guide to “selling” your idea to an Angel Investor.

    Great post Tim! Keep up the good work–it’s inspiring.

    – Chris

  125. Also, @Helen,

    You should check out the book Growing Local Value, how to build business partnerships that strengthen your community. There is a ton of stuff on investors and some quality information to get you started on how to build a business with a triple-bottom line (stakeholders are more than just the owners).

    Ciao!

  126. This is great advice. I studied things that I didn’t enjoy for years and I understand the suffering. But what about studying something that you do enjoy? What about the arts? Learning how to draw and paint, how to make a sculpture? You don’t even necessarily need the credentials, just someone that knows more than you about the subject matter. If you do want to walk the path of the majority, you may need the MBA, but if you are really about exploring life and enjoying the limited time on this earth, you may want to try enjoying what you do. I know this from first hand experience, I am know learning how to do this, thus having to unlearn pretty much everything that is “main stream”. Tim, I like how you look at things from different angles, you are very talented in deconstructing reality and putting the pieces together to make reality fit your own way.

  127. Tim, was this post written by a rogue VA or something? Normally I agree with nearly everything you post…but strangely I find myself in disagreement over what I consider two Mack-Truck-sized holes in your argument:

    1) Is it really fair to suggest that people not go to b-school because a couple of the courses might suck along the way? Isn’t that kinda like saying, “I didn’t like (least favorite author) in high-school English so I’m never going to read another book again”?

    2) Isn’t it a bit irresponsible to suggest that people drop five figures for the purpose of “gaining experience” without making a comparable investment in the education to get started? Isn’t that like telling a 15-year-old that he can skip Driver’s Ed and learn to drive simply by experience? Or telling a college senior interested in the legal profession that he should skip Yale Law, go commit six to twelve crimes, and then serve as his own counsel in court (with JD tuition money as a backstop to cover fines, penalties, and other screw-ups)?

    Hope the VA’s haven’t staged a palace coup or anything, because I want the old Tim Ferriss that I can agree with completely to come back! Any chance you will spend some time in Part II engaging the numerous shortcomings of self-education?

  128. QOD1: Exit strategies, what role if any, do potential exit strategies play in deciding which start-ups to fund?

    General comments:

    From what I understand according to the rules, one would need to be a successful entrepreneur AND have liquid assets exceeding $1M.

    However, it doesn’t seem like the vast majority of MBA applicants are in that position. I think I am unclear about what’s being communicated here (although I am excited about the general direction of Tim’s idea).

    Is the suggestion to focus on the Muse to build up enough liquid assets and acquire the requisite entrepreneurial experience to make oneself a good angel investor?

  129. I love your concepts Tim.

    I can relate clearly to this, as I am a qualified Structural Engineer, and everything I have learnt the relates to being one, has come from after University. I know of people that have started out working (instead) of going to school and not only is it a financial reward. as they are 4 years ahead of everyone else, but it is a time reward as well…as it fast tracks the knowledge.

    Not having “base” knowledge that traditional education teaches us, makes us more uncomfortable when learning and doing in the real world. BUT, when we are more uncomfortable we learn at an accelerated rate (to make us comfortable again)….so this is really also a big time hack.

  130. Tim:

    I have been waiting for a post like this so thanks for writing it.

    QOD: I was having lunch with a serial entrepreneur who does a lot of work with social entrepreneurship and we started talking about the idea of micro-finance for people with small business ideas in America. I know it would just like really small angel investing, but did not know if you had any input?

  131. Hey TIm,

    Let’s not forget that a good portion of people who go for an MBA do it so they can get the letters after their name, or so they can move up in their career faster, not to mention that their companies subsidize the cost as well. In these cases, the letters MBA are far more important than the education.

  132. Hey TIm,

    Let’s not forget that a good portion of people who go for an MBA do it so they can get the letters after their name, or so they can move up in their career faster, not to mention that their companies subsidize the cost as well. In these cases, the letters MBA are far more important than the education.

    Ergest.

  133. Brilliant post! I was worried you were getting soft on me w/ the last guest post 😉 I finished my MBA 1 1/2 ago in Sydney, Australia. One of the best decisions I’ve ever made… still living in Oz and surfing as much as possible. I didn’t get an MBA to impress anyone or for my ‘career’ (despise that word) but just because I felt I lacked a formal business background. What it gave me was confidence in myself by learning the MBA lingo and being able to see through the massive smoke screen perpetuated by all the shite people spew in the corporate world. The most valuable class I took, believe it or not, was Philosophy (worth the price of admission alone)… the prof laughed and made fun of us for spending so much money on an ‘MBA’ and proceeded to call all of us illiterates. He was of course being provacative but he was right and was able to make a strong case for his point. He was a subversive and introduced us to Hume’s Fork (David Hume – British Empiricist) which basically is a tool to dismantle language and sift through the enormous amount of bullshit that is fed to us on a daily basis. I never looked at anything the same way again… I used this tool and others to attack all my other profs and challenge the ‘models’ and supposed paradigms they provided us. The short of it was that my MBA ended up being an invaluable experience but not for traditional reasons. I’m proud of finishing the program and I refer to my experience often but I whole heartedly agree with your conclusions not to get one for yourself. Mate, you continue to be an inspiration.

  134. P.S. Can you do something about the email notifications? I always get it a day late after everyone has made the bulk of comments. Cheers.

  135. I love the tips you’ve shared here Tim. I’ve been working on my MBA for years but it’s not a college degree it’s a Massive Bank Account…. 🙂

    I’m not quite there yet but with implementing many of your tips I’m sure I’ll get there sooner than later.

    Thanks for all the great content.

  136. These are the ‘core’ units that I have completed,in my own personal MBA over the last 5 years:

    Product Creation, Manufacturing, Sales, Marketing, Accounting, Web site Creation, Web 2.0, SEO, Graphic Design, Warehousing, Stock Control, Wholesale Distribution, Taxation, Networking, Advertising, Time Management, Human Resources, Import/Export, Shipping, Intermediate Chinese Language skills (which is certain to now turn into a personal Phd),

    Chinese business culture / relations …. etc etc the list goes on and on.

    These core units I believe would have constituted maybe 3 MBA’s through a traditional route and probably taken 10yrs to complete.

    Interestingly enough I have returned ‘very’ part time to Uni to study Chinese which I love but have found that my own personal study is running at

    four times the pace of that at Uni .. I am too far ahead ! I have done this by maximising my business trips to China – every day I have my own personal

    Chinese University lecturer visit my hotel room for 1.5 hrs and at $10ph compared to $50ph back home it saves huge $ and best of all I have completed my next terms Uni work in the space of 2 weeks freeing up time later this year for other important projects or even faster fast track language study.

    I invested $12,000 (33% share) from my draw down mortgage on day one, repaid within 6 months and have not borrowed a dime since.

    I am NOT wealthy but am extremely wealthy with the real life experience that a personal MBA has given to me., both through fast track learning

    and life experience. I love my job and the real world wealth experience that is constantly evolving … and best of all it has allowed me to follow my passions

    while I work – language and travel.

    QOD – If you are an ‘idea thinker’ like myself, how do you detach yourself from the constant desire to be hands on when looking at angel investing?

    i.e How much hands on exposure does the Angel Investment Co allow you .. or is that part of negotiations? Is there the need to step back, become passive and allow them to make

    all the important decisions?

    Great post Tim !

  137. Great article. I, like you, thought about returning to school for my MBA last year. Then, I thought about how useless the BA degree was. LOL Real life = Real experience = Real wisdom.

  138. Tim, love the way you live your life as if it were a game 🙂

    2 major QODs:

    – Once you perfected the method by building BrainQuicken, why did you choose to angel invest, rather than repeating the process? If I’ve $50k, should I build a company myself or angel invest? What are the top 3 pros and cons?

    Some international problems me and my fellows are facing:

    – Angel investing (investing in general) is theoritically protected by law in many 3rd world countries. But the law isn’t implemented. So in case there’s a problem, legal cases takes decades to resolve.

    Should I then angel invest in law-abiding countries like the US, etc? Is it necessary to visit and personally meet the founders, etc – or can it all be done online through an intermediate company? Am I protected as a foriegn investor and would have the same legal rights as a local over there?

    Keep rocking!

    1. Hi Shariq,

      I find angel investing less stressful than building companies. For investing, you don’t need to be “on” as much.

      For US vs. non-US, I have only invested in the US and Canada at the moment.

      Tim

  139. Hey Tim, another great post. However, I am a bit disappointed as it’s obvious you got your idea from this topic from the late Rodney Dangerfield, who demonstrated this idea back in the great movie Back To School! Either way, I agree that experience is far more important in today’s world rather than the letters after your degree (BA, BS, MA, PhD). I DO think that education is extremely important, but really think the value of experience outweighs the $$ invested greatly!

    Any release date set on the upcoming book?

    All the best,

    Ron Turner

    Living the Dream in China

  140. Thank you for the advice, Tim…. I just had a “Duh” moment and realised that my Uni has a kick-ass student entrepreneur society. And they do exactly what you suggest: meet up and invite cool entrepreneurs to speak.

    Sometimes I suck at just seeing the obvious….:P

    thanks again for your kind (and quick) answer. You’re awesome.

  141. I think the most interesting aspect of Tim’s investing strategy is the “barbell” approach. If he invests in enough small startups, he is very likely to invest in a startup which goes on to produce 80% of all profits. The point is that we can NEVER predict these things, but we can open ourselves up for lady fortune to smile on us! (Most MBA students are convinced they can predict such things…)

    I think the message for students like myself is to save 10,000 in cash and then spend 1,000 in high personal risk activities (the risks being social humiliation or personal failure rather than financial risks – I always get over the former, but I am not sure about the latter).

  142. Your article is dead on in my opinion. Learning how to run a business in business school is somewhat akin to getting sexual counseling from a catholic priest – who, if true to his calling, can provide only academic instruction without the benefit of actual experience. There is simply no substitute for doing.

    Keep it up

  143. BRILLIANT!!!! Take the money you would otherwise spend on an MBA and actually DO something with it?!?!!? What a revolution!!!

    There will be universities all over the world after you now, Mr Ferris.

    In Australia, it is still VERY trendy to do an MBA, particularly if you are in “business” (not actually running a business) – I like your concept a lot better… although I may skip out on the “Angel investing” for now.

  144. Tim,

    There is one huge flaw in your advice to other people regarding the “self-taught” method. For others trying a similar strategy they will have the glaring weakness of not being you- and not having the networking abilities or existing network that you have.

    Most people don’t know a single big hitter like your lunch friend that grew a company to 250,000,000.

    Stanford and Harvard can help make introductions to people like that. If you already know those people, than that eliminates what in my mind is the most valuable thing that business schools have to offer. The network.

    Enjoyed the post.

  145. Hi Tim,

    Great post, I actually have my MBA, but I really agree with the idea of learning by actually doing. It was a real eye opener for me, when sitting in the pub with one of my profs. we asked for some stories from his working days…never had a real job he tells us! Other then consulting, he had no actual working experience, he only dealt in thories!

  146. I think that having an MBA is really not all that it is cracked up to be either. I was always told at the company I worked for that if you wanted to get ahead you had to have that piece of paper that stated you got this or that degree. Whatever carrot they wanted to dangle at you during that time period.

    But most of what I really learned was from doing the the job, the actual day-to-day living the work. No one asked me when I got those promotions if I even used any of that class information on my job. Mostly, it was common sense and real life learning that helped me move forward. But those were the rules…

    QOD: Now I have another question and I am once again learning the lessons of life as I go along. I invested much of my own money into a currently launched web-based software product. Now I am in need of some investment capital to gain market awareness and sales revenue. What would be the best way to find an investor for a small start up that doesn’t require a huge amount of investment to begin marketing and sales, brand awareness, SEO, etc., etc…..

  147. Hey Tim,

    I finished up an MBA program last year and I now find it to be a costly mistake. I went to a top 10 school but the education I got was very poor. Some of the classes were exceptional but most of them were taught by famous names with very little practical knowledge.

    My favorite examples are the global econ professor (A noble prize winner no less) who told me that outsourcing will never take off (I work in the tech industry by the way) and the market theory professor who took 3 hours to explain to me that in the short term, all market movement is random.

    While I did get some valuable information and connections out of the program, it was not worth the price tag. I could have done better using other avenues of learning and meeting people.

    Oh well, you live, you try, you learn, you try something else. 🙂

  148. Tim,

    Here’s the short article I wrote on “real schooling” a few months back. You might like the documentary too. It’s about a Japanese teacher whose only goal for the year is to teach compassion.

    http://www.risingbean.com/2009/09/children-full-of-life-and-real-schooling/#more-135

    I’m glad I passed on the MBA. Under pressure from typical Asian parents, I would have gotten it for ego and CV boosting. I still don’ t know exactly what an MBA is 🙂

    Ki’une

  149. QOD:

    Didn’t see it covered in the comments, but I skimmed prett fast:

    What do you look for in a company that motivates you to invest? What’s the most important thing you want to see that entices you to pull the trigger?

  150. Great post Tim, and looking forward to your next one.

    My QOD: how do you know when a company is ready to sell? And what are some of the best ways of calling on contacts to help generate interest in the company?

    Keep it up!

  151. Hey Tim,

    That was riveting reading… looking forward to more, maybe in the form of another book. ( I know you mentioned you plan a break from writing after the launch of superhuman)

    I think the details of your past two years in reference to adventures in Angel Investing could read similar to a Ben Mezrich novel. Count me in for a copy.

    Keep up all the good work.

    Jeff

  152. Great post. One minor comment. Until you’ve practiced it, EVERYTHING is theory and that fundamentally just means structured ideas – there is nothing more energizing than that – for most people your book provides just that – theoretical ( for them because they haven’t practiced them) ideas. But in the MBA program you can get the interactive network with whom you can act quickly on these ideas. The same reason you live and work in Silicon Valley when it comes down to it. As others mentioned if you don’t have this network already that is one way to get it, and it’s a network that continues to pay dividends much further down the road. YMMV.

  153. Hi Tim,

    Your suggestions for building your own Masters in Creative Writing and Poli Sci are spot on and could easily apply to many other fields. It’s about making the time and finding creative ways to do something you’ve always wanted to.

    As someone who has worked in the nonprofit realm for many years, I gained mountains of experience from volunteering, serving on boards, and being a part of making things happen within several organizations. Eventually I was lucky enough to attend business school through the Bolz Center through Arts Administration where all students are fully funded so they don’t graduate with a pile of debt. In that program each student had a 15-20 hour/week real world internship where they work for a local nonprofit. At the time only one other program of the 13 centers had an internship requirement – in my experience, the networks and relationships built from real world interaction were much more valuable than those forged in the classroom.

    Recently (after a 15 year hiatus) I’ve gotten back into writing – first taking a class and then joining a group. The experience has been invaluable. Scheduling time to write just like a work meeting or a doctor’s appointment and treating that time just like one of those activities (something you can’t blow off or postpone) has made a world of difference. On a side note, a friend has done the same (taking workshops, being part of writing groups and book clubs) for the past 5 years and just landed a two book deal – sure it isn’t the common outcome but it is possible.

    In terms of angel investors, my only experience has been as someone who founded and runs a nonprofit and has worked in the field. Generally angels in the nonprofit sector are those with personal relationships with the staff and/or recipients as the dividends are not monetary. With the huge drop in grant funding (government and foundation) due to the economy and changing models, nonprofits are now more dependent on earned income and individual donors. Angels (whether writing checks or donating a lot of labor and skills) will play an increasing part in which organizations are sustainable.

    On a final note, I discovered your blog this weekend. Thank you for your thoughtful and interesting posts and ideas. Looking forward to reading more and challenging my own perceptions of how things are and should be.

  154. I’ve wrestled with (and been tormented at times by) this decision for a few years now. Many friends and colleagues have gone back to school for their MBAs – and the peer pressure echo chamber can get to you after a while.

    I should note that I’m a high-performing business professional at a Fortune 50 company – so the expectation is not subtle.

    While I share Tim’s not-hating of MBAs in general, I agree with his arguments 100% and those of some earlier commenters. I’d like to add a few of my own:

    First is one of rank…sad to say.

    If you cannot get into one of the elite programs (top 10 at most), then I feel the ROI of your time/money/energy/opportunity cost investment really drops. As Tim argues, there are some fantastic professors in the elite programs, but you are still left to contend with an entourage of less-stellar, less-innovative, less-inspiring teachers. I believe (based on accounts from friends

    mostly in a wide variety of programs) that the balance of awesome-to-average professors is a non-linear degrading curve the lower in the ranks you get.

    Mind you, there are and shall always be linchpin professors in an program at any institution. My argument here is merely one of ratio.

    Second, I feel like the majority of MBA programs reinforce the old-guard of business, which (if you are to believe Seth Godin) is a dying “factory” model. The businesses and “linchpins” of the future will be born of entrepreneurial, real-world experiences without being force to think in a box.

    So, it could be argued (though subjectively), that Tim’s $120K personal MBA experience provides a more enriched “culture of learning” that prepares for a likely future instead of fighting to protect the present (aka status quo).

    ###

    Ultimately, any accumulation of new knowledge and experiences is good and should be encouraged. MBAs certainly have their place, and if life had been different I probably would have gone for one.

    But given current economic realities, projections of future innovation/business, and the plain cost-benefit comparison between “traditional” MBAs and “real-world” MBAs, I think the choice is clear – at least to anyone who would dare to create and become a Purple Cow.

    Cheers!

    Matt

  155. Tim,

    Great post and very intriguing, especially for someone like me who is an undergrad student and hearing lots about MBA programs. It seems like MBAs are the gold standard these days (at least at universities), but obviously that doesn’t need to be the case. I always learn something when I visit your blog!

    I have one question, however. If you sold BrainQUICKEN, shouldn’t your ROI be higher? It just seems like that would be the case since the company has been so successful. I know that is not the main point of the post, but it just struck me as odd.

    Thanks for your help, I first read 4HWW two years ago and still go back to it every chance I get!

    Alex

  156. I don’t know, the application of calculus to business dynamics sounds pretty fascinating to me. The whole point of such courses, as I see it, is not to prove that you you will lose money on a crappy product, but to look at this idea in higher resolution. Naturally, this has the corollary that you could also see the dynamics of success in an equally high detail. Which would be useful.

  157. I will do my best to become one of the 1000 millionaires that you are looking to create, I have a job, run a small business and have hired a web designer (from India) to build a site to test my first muse, should begin testing within 10 days. I clearly do not work only four hours a week, but that is my goal. I do my best to squeeze the things that i want to do, currently watching a lot of soccer and trying to increase my vertical enough to dunk.

    I tip my hat off to you.

  158. Tim,

    Thank you for talking about this concept in such a clear way. I have been doing something similar this past year in college (still undergrad) by taking fewer credits and spending the money that would have gone towards another class on taking a class on internet marketing (well worth it) and meeting interesting people in the area I go to school.

  159. QOD: If you’re on the other side – starting a new business model – how do you write a kick ass business model and attract angel investors? What are the benefits/fallbacks of inviting an angel into your business?

  160. Tim – no offense, but this was a silly post from you. The MBA at GSB or HBS is all about the network and the connections. Many folks have very limited such connections with future global leaders.

    Nobody goes to the MBA to “learn” from a classroom. The real world lessons you learned, most all MBAs also learn in the real world, not in the classroom. Your post could have easily been “how MBAs should complement their business school experience with real world education.” Again, easy for you to write a post like this since you already have 50x the personal brand and the connections of most pre-MBAs so naturally 100% of the MBA value — brand and connection — you have in your back pocket.

  161. Tim,

    I want to learn a boxed model for getting from prototype/idea phase to cash flow to exit. I feel once i make it to that level i can purchase, create, or license ideas’s.and fit them into a structure then streamline and duplicate. I want to be an angel investor because as you said you learn so much and have so much expose to multiple bussiness models. You get to see the good the bad and the ugly ones. Thanks for all of the great posts. I am re reading the expanded 4 Hour Work Week book currenly and am in process of working on my Muse.

  162. QOD

    Hi Tim,

    Perhaps I’m lazy, but, instead “attending” my own personal MBA, are you planning incorporating more of what you learned into future blog posts, or maybe a new edition of your book?

    In particular, I’d love to learn more about the subjects you listed in the following quote, especially about rapid product design:

    “The goal of this “business school” would be to learn as much as possible about start-up finance, deal structuring, rapid product design, initiating acquisition conversations, etc. as possible.”

    Thanks,

    Josh

  163. Tim,

    I’m a big fan of 4HWW but this post left me slightly disappointed. It was nothing more than a twist on the age old question of book smarts vs street smarts. A question which I’ve resolved long ago that you probably need a bit of both but the scales tip slightly in favour of street smarts.

    It reminds me of one of my favourite scenes from Good Will Hunting, when Will says to an MIT student:

    “See, the sad thing about a guy like you is in 50 years you’re gonna staht doin some thinkin on your own and you’re gonna come up with the fact that there are two certainties in life. One, don’t do that. And two, you dropped a hundred and fifty grand on a f*ckin education you coulda got for a dollah fifty in late chahges at the public library.”

    For most people, I would imagine dropping $120k of their own cash (i.e. not company sponsored) on anything, angel investing or otherwise, would significantly boost their IQ on the topic. And I would have guessed if you were in a position fortunate enough to angel invest you probably don’t need an MBA.

    A couple of points on the other aspect about investing:

    1. Not investing in public companies because you think you don’t have the same access to information as the professionals is a fallacy. Why is it then 80% of fund managers (there’s your Pareto again) on average underperform the benchmark in any typical year, despite them having better access to information than most? I subscribe to James Montier’s school of investment where more information only leads to overconfidence, rather than improving accuracy.

    2. While his texts are necessary, I think the focus on Nassim Taleb has become a bit too overrated. His books are basically a long-winded way of saying “Past performance/events doesn’t equal future performance/events”. Your local fund manager could have told you that. I don’t disagree with using 10% of one’s liquid assets to hedge outlier events but I would probably find better places to stick the other 90% than AAA bonds.

    Anyway, if you haven’t guessed already I’m with you on action – not academia.

    Tim, why not take this one step further and question whether kids need a college education at all and direct the funds instead to building muses?

  164. @ Scott R. – In my experience the shortcomings of self-education are almost without exception never as bad as the shortcomings of supposedly classical education.

    Beyond High School (and it is really important to go to a good one of those), travelling the world a bit (which I was lucky enough to have done from a young age), learning at least one or two new languages and starting up your own businesses are far more useful (and fun) than sitting in auditoriums for 3-4 or even 5 years or more.

    @Tim – Any ideas for what to do when you’re a lame cripple for 3 months after totally rupturing the Achilles’ tendon and having undergone re-attachment surgery?

    Muse-wise I’m going with writing so far…but not sure if my money will run out before I finish the books (I have 3 going) and still not sure how to get them marketed properly, though I have some ideas (but not able to put them in practice while a cripple).

    Would be nice to have a really fast muse to get some basic life-needs money coming in…but I guess if that was easy everyone would be doing it.

    Great post anyway.

  165. Awesome. The thing I love about your ideas and tactics is that the are probably at least 5 times more effective than doing the normal or “accepted” thing. My muse is up to $1000 per month automated income with no customer service hassles at all. Keep the insights coming!

  166. Hi Tim, Informative article as usuual. It reminded me of that part in Good Will Hunting where Matt Damon’s character says to the jumped up Harvard student who intellectually bullied his friend that he could have obtained his education just as easily from a public library. I have learnt far more since I finished University and Business School from reading books by Godin, Gladwell, Anderson and by working with bright people in places such as Dyson. I think in this day and age with so much information available online you can get an excellent education without having to fork out a kings ransom for tuition fees. Also with the cost of setting up your own affiliate site being so low in this day and age you can get an excellent education by just taking action and setting up your own business that way. Rant over. Gareth

  167. QOD: What is a the best reading you can recommend on how to pitch VC’s and angels?

    What is the best way to put together a team if you are a solo-prenuer?

  168. QOD

    How do you know if you have found a good investment? Are there any signs that clue you into “this is a bad idea?”

  169. Tim…

    QOD

    I found the part about practicing losing money at a casino interesting. It mentions basically having emotional control over something which you have no physical control.

    Could you explore more deeply some specific emotional control techniques regarding money? Other ways to practice giving up that control? Other actionable ways to strengthen your emotional muscles?

    Thanks!

    -Dan

  170. QOD (What would I like to learn specifically about angel investing?)

    2 questions actually:

    1. Is it possible to develop criteria and/or methodology in which to increase the success-rate of angel investing, or is destined to be forever gut-feel and experince?

    2. Is it wise/better to stick with a field of expertise (or that with which one is kowledgeable or familiar) than to jump at anything that seems like a ‘goer’ and meets your criteria?

    Cheers Tim!

  171. This IS the starting point of dealing with now(reality) and fast changing opportunities ahead(future).ACTION LEARNING instead of theoretical classroom

    learning!Brilliant Tim!A real brain-based coaching advice.What`s next?

  172. Scratch my above comment…still needed a bit of editing. Tough to do this on an Ipod Touch. =D

    Yo Mr. Ferriss, I need some clarification!

    Who specifically are you referring to with the term “professional” in the blog entry where you are talking about investing in public companies?

    Like Analysts who work for the big banks? Hedge fund managers? Somebody else?

    I need to know because as of recently i’m no longer working a job and my only source of income is from my full-time private investing investing in public companies that are micro to nano market-cap sized…and if “professionals” have routinely better info than me, i need to get working on doing whatever i can to try and get access to the same info they tend to get. 🙂

    1. HI Patrick,

      I’d say all of the above, but the opinion is mostly from experience just watching friends in I-banks and trading positions move the market with huge purchases and leveraging. The book “Liar’s Poker” also helped.

      Now, in practice, it could be like poker: you play the other “normal” masses, not the pro’s, and you just have to beat the majority of investors. I don’t think I’m clued in enough to pull it off, but I also have friends who love investing in public companies and do well. Just not my DNA, it seems!

      Tim

  173. This is very interesting Tim. Like you I have thought many times of doing an MBA. But I’m convinced that unless you can fund a top school, then it’s probably not worth the cost.

    I have since drawn the same conclusion and I’m putting aside 10% of my income this year to fund a few interesting short courses at London Business School and some other real world experiences.

    I get the benefit of the school on my CV and I also get to expand my network.

  174. Hey Tim – great post, I’m itching to read the next one.

    I’ve been looking at this for a while and I always have to defend action against theory in our business – and to be honest I was just thinking that I need a guide to Angel Investing (for myself), and then this post came through! Synchronicity!

    Take Care,

    Minesh

  175. I would love to learn more about the actual legal issues for both parties, the investor and the startup. Things to avoid, things to know and look out for. Legal part is what I haven’t seen much talked about.

    I enjoyed the “Creating Your Own MBA” part.

    Thanks Tim

  176. For Mac devotees out there who want to follow Tim’s example and get their feet wet by funding some startups, you might want to consider a concept that we developed last year. A summary can be seen at macpreneurs.com.

    The idea is to find an entrepreneur with a promising idea and essentially provide him/her with all the latest tools necessary to get off to a running start. The assumption is that they already have a product (preferably a digital one) and are ready to test the market. The key to the whole thing is that you would be both a major investor as well as mentor and would be able to check the progress – in terms of sales etc. – from anywhere at any time. The chances of success are likely to be considerably higher than with other startups while providing the learning opportunity you seek (hopefully along with profitability).

    We expect to roll out the program ourselves by the middle of next year so thus far it is but a concept, but I thought it might be helpful for those of you looking to get started sooner.

  177. QOD: This may sound pathetic but here goes. I need $7,000 to begin producing a drink mix I contracted a manufacturer to make. For my wife and I this is going to take nearly a year to save up. For such a small amount of money (in the big business world), who can I approach for help in getting this into the hands of people? Is there a minimum that Angel Investor’s will invest? Honestly, if I had more than 7k, I could bring the initial price of the product down by more than half, allowing the company, in theory, to make more per box. Should I aim high and provide projections or just get the bare minimum to make the idea a reality?

  178. First, I want to thank Tim for writing his book and and putting the bug in my ear for the last year and a half. I have finally fully extricated myself from my office environment where I worked in the office 8-10 hours a day. (Well I wasnt really working the whole time) Not only am I out of the office but I am moving from Chicago to Scottsdale AZ, where at the most I will work 2-3 hours a day from home, That will give me time to find my muse, automate a business and really have time and money. Thanks Tim

  179. Tim-

    The topic of creating your own MBA is hugely important. Some of the responses (especially those against) make it clear that this is a potential paradigm/game changer.

    Why not create a contest of some sort to illustrate the possiblities and promote the idea. I’ll put up 500 dollars of my own money towards the prize pool, as I believe wholeheartedly in the concept. Maybe do it as some sort of specialized angel investment for readers? I dunno, but it could be alot of fun and very educational.

    And greetings from my family’s first mini-retirement in Panama!

    PPC4

  180. Hey Tim, what about Warren Buffet’s number one rule? Never Lose Money? haha I know it’s for learning purposes but surely you could figure out how to do this without losing the money right?

  181. I love this post. Not so much because I have any interest in angel investing, but because of the testimony to educating yourself. If I’ve consistently been anything over the years of my life it’s a practitioner of self education. Of course that’s been mostly out of necessity. 😉

    Still, I feel strongly that wherever one’s interest lies, developing and guiding your own learning can be a major key to success. For one thing you discover how much passion you really have for the subject. For another, you can pick up whatever skills you need along the way and avoid spending valuable hours of your life learning useless crap that for some reason always creeps into the formal education channels. If there is something that is dogging you, or you find a hole in your self-made curriculum that you’re having a hard time filling independently, you can seek some education on just that.

    Nice article, and cheers!

    P.S. I liked the Nassim Taleb reference. I picked up ‘The Black Swan’ after you mentioned it in the last Random episode. Fascinating as hell!

  182. Tim,

    Don’t listen to all the haters in the comments here! I think your work has been fantastic and the path your book has lead me down the last few years has been truly great.

    People often forget that you are merely offering a different point of view. They can either choose to accept or reject it however, it is a way of allowing them to see possibilities they may/may not have heard before.

    Personally, I have found that my Bachelor of Business Entrepreneurship in Australia has been good for networks and experience (I ended up the GM of one of my lecturer’s companies for two years and had a ten% stake) but the actual knowledge taught was useless in 80% of the classes.

    Another possibility for people wanting the education more than the piece of paper could be to enroll only in the classes that interested them. This way they could take the 20% of classes that give them 80% of the networks, knowledge, etc. While saving them from spending a full two years of their life doing the full degree.

    QOD: knowing what you know, if you had to start again today in business and Angel investing, what would you do? (thanks in advance)

    Keep up the great work. Your blog and book have done wonders for me and are some of the recommended reading I suggest to everyone I speak to in relation to business and lifestyle design.

    Kind regards,

    Josh Moore

  183. “He played a lot of chess, and read a lot of books, and otherwise arranged for his own higher education, as all smart people do.” = Michael Herr on Stanley Kubrick.

  184. Tim,

    This comment will probably be missed (you have soooo many excellent comments), but I’ll share my thoughts anyway…

    It’s funny, because I too do the “I’m thinking about getting an MBA.” I started a part-time executive MBA program way back in the early 1980’s. I completed about one-half the program, then my job disappeared and I moved on. Yes, I returned to University full-time and completed an advanced degree (you can call me Dr. Rob). Oddly, maybe it is my “biological” clock ticking, but I often wish I would complete the MBA.

    My DNA is about selecting a challenge, learning all I can about it, and completing the challenge. I think something is bothering me about not completing a challenge…Truthfully, I have no real reason to get the MBA, in my opinion it is a badge of honor for the corporate world, and I’m not corporate material.

    Thanks for readling through my discourse…

    CaptRob

  185. What an excellent article on MBA’s. I think the need to lose money isnt kinda right as i have learnt numerous lessons through using less money rather than splashing £120,000 on an experiment. If i had a couple of grand spare to throw around i would definitely do this.

  186. For those who do not have large amounts of money to spend in the first place, the attraction to traditional College/University qualifications is the fact that there is funding available in the form of student loans making that option accessible to most people. At least in the UK anyway!

    Although designing your own personal development curriculum sounds very exciting the reality is that it is only a realistic option if you have a large pot of cash initially.

  187. Like the article, but have some problems with the theory/math bashing. I’m a PhD student in Operations Management at a business school, and much of what we do is math modeling and theoretical, but in the end anything that’s worthwhile, or published in any decent journal leads both to understanding of underlying processes and informs practice. I agree that much of MBA programs are fluff, but mainly because they aren’t analytical enough and don’t truly explain the underlying mechanisms of the market. Even work that confirms intuitively “obvious” things has value in the explicit confirmation and quantification of the obvious result. Almost every decision made in big business today is underpinned and improved by serious mathematical models and decision support tools. Look at what revenue management has done for the airline and hospitality industries or inventory management modeling has done for supply chain management.

    Sorry for the long post,

  188. Think it’s been covered in the comments above, but….

    QOD: As as angel investor, what are my options for the exit plan? How do I take profits (or losses) and bail out?

  189. My QOD: like @harscoat asked: what are your criteria for investing in startups? In particular, did you develop any new criteria. Or are you still waiting for more results, so you can develop those criteria?

    Crazy Idea of the Day: once you have those criteria, can you outsource the angel investing work?

    In particular the task of finding the right companies to invest money and expertise in. Of course the expertise you’re investing is yours, but would it be possible to outsource even that?

    Once that’s in place, you could open the Tim Ferriss Fund to more investors and experts with time. Then you’re on your way to being a billionaire *and* creating a thousand millionaires.

  190. Angel investing to me seems very similar to learning poker in a cash game, you can always leave, risk aversion is a huge part of it, and success wont make you better. Also you can normally outdo anyone who is theoretical by getting a grasp of what actually happens normally. IE I would rather play a pair of 2s then ace/king, despite the odds being slightly better, because I know I have something with one and the other one is hoping for something to happen because it looks promising and ruins my risk aversion much like the first company in Tim’s example.

    It’s kind of like realizing that theres a huge number of statistics that can tell you that playing a 2/7 hand is probably not going to help you win, but if you needed a large equation and some calculous to tell you that because its unlikely to make any decent hand you probably shouldn’t play with it, you most likely arent meant to be sitting at a poker table.

    So basically theory is important but its often impractical compared to actual experience. This coupled with the high costs of degrees right now its impractical to go for post graduate degrees unless you intend on being a doctor, lawyer, researcher, or teacher.

  191. Hey Tim

    Loved your post and your book. Hopefully Ill be able to write a success story in the next year or so.

    I’m 23 and just finished my undergraduate studies. I started a business a year ago (before reading your book) that makes and distributes baked goods to coffee shops and cafes in Mexico City. It has been a great success (though not a muse at all, since it requires quite a bit of time for now). We currently distribute 60 cafes and will easily double that in the next six months.

    The business is cool but I want time to travel and move. I’m a physical guy. I’ve trained gymnastics and capoeira for several years and also did a two month retirement in Rio de Janeiro to immerse myself in capoeira and JJ.

    I recently went to a couple of business incubators/accelerators and showed them my project (we need funding cause we have big plans). They were very impressed and asked me for business plan. I’ve been writing one for the past three weeks but i have no idea of how deep/specific to go (I’m at 30 pages so far).

    I come from an academic background and have tried to be very specific and accurate about what I say, but in my experience, business men don’t really care how you’re going to do stuff, they just want to be sure that you know what you are doing.

    So my question is this.

    How can I convey this? Is a BP only another credibility indicator?

    How specific/detailed does my plan have to be to be credible but not reveal important info or take to much time to write? Where can I find business plans (not how-to guides) of successful start-ups?

    The company is growing fast and so are it’s complexities. To capture them in a BP would take ages, and I see no point taking 4 weeks to write a 6 month BP.

    Thanks!

    Pablo.

  192. Hey Tim,

    Great stuff. This could easily be the topic of your next book (or two).

    What are your top books, online videos, people, and other resources to learn more about this stuff? Also, if you could interview on your blog some of the CEOs, VCs, and angel investors you’ve made friends with and learned from, that would rock.

    Thanks.

  193. Another option is to hire a good coach. You can get your education in the real world, as noted here, but also have an experienced person to use as a sounding board and second opinion, and also to help you with your analytical skills. Best of both worlds!

  194. Tim,

    Many thanks for the information. When I click on the blue links on your blog posts ( ie; linking to amazon et cetera) and get through the relevant data on that site- I am then unable to hit the “back arrow” on my screen to get back to your post – hence my only option is X’ ing out completely and logging back to your site and start from the beginning of the post.

    I am wondering if anyone shares this irritating experience or it is just a function of the settings on my Lap top?

    Gracias,

    Evan

  195. I love the idea of taking a day off to write and become proficient at it. thats one I will try to do this year.

    Angel investing is tough if you’ve never ran a business yourself, what would you recommend as far as investments if you’ve never been in a leadership position within a large organization?

  196. QOD My specific question is, what do the business plans of these start ups look like? Are they similar to other small business plans or do they include grand exit and selling strategies?

  197. I have been researching this a lot too. Did you write this after Seth Godin decided to do an alternative mba program?

    It seems like MBA programs are virtually worthless if you have an undergraduate business degree or so I have heard from alot of people. An MBA is really useful only for the connections that you make.

    Also, the payoff is horrible if you have under six years of experience. So if you are at the stage in your life where you dont feel like you have the equivalent of 6 years of experience its probably much better and cheaper to start a few businesses first.

    Thats my two cents.

    MC

  198. Wow, great post Tim! Thank you. Though I have one, I think an MBA is extremely overrated. That doesn’t necessarily mean I don’t recommended getting one, but you should really know why you are getting it. I love the angel investing idea, and I admire your openness in sharing your process. Well done guy.

  199. Hi Tim,

    Nice to know your book “The 4-Hour Workweek”.

    It seems very interesting, I plan to read it.

    Will let you know my comments after read.

    Sophie

  200. We take to be true what we prefer to be true…

    I have tried to start several businesses and am currently getting an MBA. My advice is this;

    MBA=curriculum+brilliant professors+concentration of resources X (network+brilliant classmates)

    What you do ultimately depends on your objectives and the alternatives available to you. The only time you should eschew getting an MBA from a good school if you have the opportunity to go is if you are in a Bill Gates or Michael Dell type situation with VC funds available…in sum if you are running a successful business that has future promise you would still benefit from an MBA but you would incur too great an opportunity cost by not focusing on your business to make it economically rational…but then again that may not be your only objective.

  201. This is probably out of place, but here goes:

    Hi Tim,

    I came to know about BrainQuicken through your blog.

    I am interested in buying it, but I have a question.

    It says the capsules are gelatin based for ease of swallowing.

    Do you know where the gelatin is derived from.?

    Do you know which animal the gelatin is derived from?

    I contacted the distributor bodybuilding.com, but they didnt know. I contacted the number on the brainquicken website, but it redirected me to bodybuilding.com’s support line.

    Thanks in advance.

    Koorosh Vahabi

  202. I hate to say this but Tim you have forgotten the true perks of school. School is the best place to find a wife/ husband, its the number 1 not quantified dating agency in the world !!!!. Look around you, how many of your married friends found their love in school ? Chuckles*

  203. “I find angel investing less stressful than building companies. For investing, you don’t need to be “on” as much.”

    Lol. Tim, you shoulda said this at the beginning of your post. I’d have been on board 100%.

    One problem of building wealth is finding something productive to do with it. Especially if your passions have low capital, high time requirements.

    But is angel investing really an effective wealth dump? I wonder.

  204. @ David

    You said “Almost every decision made in big business today is underpinned and improved by serious mathematical models and decision support tools. Look at what revenue management has done for the airline and hospitality industries or inventory management modeling has done for supply chain management.”

    That’s true, but we’re kind of talking apples and oranges here. It seems to me Tim is talking about entrepreneurship and early stage investing. You’re talking about using sophisticated math to squeeze out more money from huge, mature companies. Being successful as an entrepreneur and as a supply chain expert in a massive company are two completely different skills sets, and I don’t think it’s possible to really learn the former in a classroom.

  205. Similarly…

    I learned in 2007 how to acquire massive credit card credit. I’ve used $180K to travel and live on over the past 3 years. I didn’t know how I’d make it back; I believed I’d learn and change enough as a person from traveling that I’d become someone who could earn it back plus much more. I’ve changed in most of the ways I wanted to and have had wonderful experiences. I believe I’ll succeed in my endeavour.

    I have an extremely high risk tolerance and desire to live a life I want….

  206. @Nicholas,

    You CAN do this with law. As a law school grad I counsel nearly everyone who tells me they want to go to law school to reconsider and usually grill them on why they want to go, for many reasons…

    However, I do offer the caveat that if they want to actually practice, they should find a state that allows apprenticeships in law (like Virginia). The idea is that you work under an attorney while studying a prescribed set of coursework. After a set amount of years, you can take the bar. Once you pass, you don’t even have to practice in the field you apprenticed in. If after a year of the apprenticeship you decide you don’t like the practice of law, well you have no loans to repay, plus a year of experience and some connections under your belt.

    There are a thousand ways to skin a cat.

  207. @Alexa

    Agreed, but he seemed to be knocking math-based MBA courses in general, and I think that it’s dangerous to knock “big words and equations” because we think we already know what they end up telling us. This leads to the know-nothingness and anti-intellectualism we see all around us, and I think is not a good thing at all for our society. Obviously there is a place for math and analytic models, and there have to be people trained to use those to make better decisions, but I think a quantitative analytic approach to business is a good thing in many cases and shouldn’t be so easily dismissed.

    Then again, I’m a future “PhD theoretician” so maybe I’m biased.

    -David

  208. Hey Tim

    I just read your book. Your advice is on point! I took a 10 year vacation traveling the world every music festival , fashion event , island and the connection , experience, the ability to learn how people interact and live has made me have purpose maximization. Now i am working on getting back for where i was to where i need to be. Great advice from a good person hope we can meet or chat one day! …

  209. I’m on board!

    I agree and think more school just fosters more structured thinking. Usually it’s professors teaching what they learned years ago. Education is too large of an institution to move with these fast times.

    I will continue to let books, conferences and mentors/entrepreneurs be my MBA.

    Thanks Tim!

  210. I’m doing this right now. Well, my own version.

    I got accepted into my top choice business school last year, INSEAD, but passed on it to start my longtime dream company, an automated personal training service for web and mobile. All of my closest friends are at top MBA schools right now, so I am really bucking the trend. But when I talk to them, it’s clear they envy what I’m doing — they tell me they’re reading cases about ‘people like me’ in their classes at HBS, Stern, Michigan. The payoff hasn’t come yet, but I’m learning a ton! And I still have spent much less money on the startup than an MBA.

    The kicker: it’s too bad startup funding is not so easy to obtain as an MBA loan!

  211. Now your life hacking an MBA. The key is to get yourself in front of these high profile business rockstars. Not an easy task, but possible.

  212. Tim,

    Only the top MBA schools “matter”. The two reasons that one attends an MBA program is: 1) for the alumni network and 2) for the chance to recruit at ‘elite’ companies.

  213. Love the lessons from your book and other writing and presentations. My husband and I repeat the audio book every couple of months. One thing I appreciate about 4HWW is the emphasis of starting a business or automated income that requires no outside investment, which is how over 90% of new businesses start. That would be a great application of MBA knowledge.

    I believe there are a handful of business models that anyone could plug in a product or service idea and start a business without feeling petrified or that they are betting their life savings on. When leaving my corporate job to start a business last year, many thought I was so brave to take the risk, but I have never felt it was a risk because it doesn’t require our life savings or the threat of bankruptcy to test the business and learn if it will work.

    BTW – I love your practical MBA approach. The field work or practicuums of MBA programs have become the most popular part of the curriculum and of most interest to employers. I have to say, theoretical or not, my MBA from the ’90’s earned me a 40% pay increase after one year (accelerated MBA program) just to have those three letters. For an entrepreneur, it is all about the skills and new knowledge. For an employee though, the letters of the degree definitely help.

  214. Someone once told me, “Those that can, do. Those that can’t, teach.”

    I believe there is another step… “Those that can, do. Those that can’t, teach. Those that won’t, listen.”

    I believe Tim is pointing out that it is better to “do”. Those that take action succeed.

  215. Hi Tim,

    Nice Post. Here is my question:

    How do you approach negotiations for the amount of stake you are buying in a company? I imagine they are selling each % for some made up dollar amount, based on the idea that they have a blockbuster idea. How do you handle those negotiations and do you use some sort of formula to decide how much to invest and how much stake you want for your investment?

  216. Tim,

    I completely agree. Sometimes more can be completed in the real world than sitting and learning theory. I have my B.S. degree in marketing and would not trade it for anything. But I have learned more building my business, imcomfy.com, than any MBA could have offered. Besides there are many great books out there including your 4HWW, Rework, Good to Great and the podcasts from Stanford entrepreneur leasdership, that can help much quicker than an MBA and much cheaper. As far as build relationships while in business school, people have plenty of connections if they just put themshelves out there.

    Great work Tim!

  217. I love your way of thinking, often you learn more from the mistakes you make than through anything else. Really interesting and imaginative post

  218. I’m a b-school professor who teaches MBAs (at one of the nation’s top entrepreneurship b-schools), but I do work with a lot of entrepreneurs and thus much appreciate your way of thinking. Great read. found it via twitter.

    @profpjm

  219. Tim, you have something more to say here.

    My father, who does not have an MBA, has started four successful business based on one single business course he took at a community college. It was a basic, fundamental course in business and he has based a bit of his success from this course and the rest from learning from people.

    He copied other successful models ( that does not take an MBA), worked hard to grow each business and worked to create what he calls a “fountain of money.” That visual stimulation, I bet, does not exist at the MBA level. All of his “MBA” learning comes from people — working with, selling to, buying from, and watching people behave in good and bad times.

    He did surround himself with other successful business owners at the early stages of his business in the 70’s and 80’s. — a key issue in forming a ‘mastermind” group who support your business with comments and insights into seeking more revenue streams.

    It is amazing when I come across recent MBA grads who have 100K loans to pay off for an education that does not even eek out a single dollar of income for them. I would be more impressed if 10% of that price tag was for a business that generated an income stream upon graduating with the MBA. Maybe that makes more sense if this is a business degree and students now carry more personal debt, but no income streams except for a single income from a prospective employment. If that is the case — then colleges should rename the degree as MBE : Masters of Business Employment. What a farce — they do not own a business and they spent 100K for the diploma.

    Can you do it on your own. Of course. Can you capture success. Sure.

    You are right on the money — you can create your own MBA program. But call it what it really is — Masters of Business Creation or something more accurate. Administration of Business is just that — admin. You create business, — income streams, or as my father loves to envision it, you create a “fountain of money to drink from every day, it nourishes your life just like water and the sun.” I just love that line.

  220. Hi Tim,

    First time poster here. I’ve been involved with a couple of startups, and have a couple of thoughts regarding your post:

    1) In an MBA program, contacts will be your most important take away. It’s who you know, more than what you know. Networking and introductions are critical to success. Having contacts is critical for: bringing on board a topnotch management team and complimentary partners; hiring quality employees; building an advisory board or mentors; finding investors and obtaining funding; locating potential clients; sourcing your legal, accounting, and banking team.

    2) When investing in a startup, be prepared to completely lose all your money.

    3) When looking for investors for your startup, you better be able to have more than technical engineering expertise. You’ll also need an in-depth market analysis and detailed financials. And don’t just take any money offered to you – educate yourself about the process, and find a good fit. When you’re a small startup, the wrong investors, or employees, can bring you down.

    4) Learn about the importance of intellectual property – and protect yours.

    5) Bootstrapping is great, but to get critical mass quickly you will need outside investment money, and you will have to give up a portion of your company. But, in the end, owning 10% of a 10 million dollar company is a lot better than owning 100% of a $100,000 company.

    The world of angel investing and issuing startup stock is exciting, ruthless, and complicated – not to be taken lightly. If you don’t take the time to educate yourself, you will most likely be taken advantage of and lose your money, or your startup business.

    I enjoyed your post. Thank you.

  221. I have an honours degree in Business Enterprise and can honestly say that tim’s book is far more usefull, just try stuff from it, it really works.

    Buy the book, leave it around your home, browse it now and then, it really really works !

    Thanks ever so much TIm, for writing a great book !

  222. btw, love the way google ads show you mba courses, on the right, when you look at this topic in the blog listing

    mba = a course that someone will sell you, which has value, but is over priced so just do not bother 🙂

  223. Tim,

    First of all, great post! I recently decided not to attend business school for a formal degree. Instead, I’ve chosen to start my own company and take business courses at a local collage on a part time basis (two or three courses a year). Your article has is brilliant, and confirms what I already know but only recently have come to fully understand: You dont need a formal MBA to succeed in a business venture. Most of the people I know who live fullfilled and successful (financialy and personaly) lives don’t have MBA’s or any other business degree. They developed business acumen by, well, doing business.

    I am in the middle of reading “The 4-Hour Work Week” for the first time and your insight and advice on both business and lifestyle are inspirational.

    I’m a step closer to personal liberation

    Thank you

  224. Hi Tim, I would love for you to have you come out to Navajo Nation in the next six months! While I live in South Dakota, I still have strong ties to the Navajo Nation (family still lives there). Your philosophy (now mine) needs to be heard among my Navajo relatives who have been “oppressed” for many centuries. Contact me so we can chat!!

  225. Hi Tim

    Interesting post. Love the idea of investing small amounts of money into start up companies.

    Could you provide some advice on how someone who’s network doesn’t extend to the level of yours would go about;

    (a)finding start up companies to invest in and,

    (b)What factor above all makes you pull the trigger and invest in a company

    Cheers

  226. Tim,

    The more I read and hear from you the more your view of learning and life is pulling me in. About a month prior to this I started thinking why we are so willing to spend money on an education but are not willing to spend the same amount of money or less trying a business idea which you could learn from.

    Josh Bulloc

    Kansas City

  227. importequoi Moi Je me suis Lancé sans savoir OU j allais esseyais n ‘ . Intérimaire des Nations Recueil des Jours J « Vous pouvez tisser des Lins UNE

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  228. This is very dangerous and renegade idea. If this education system Tim Ferriss is suggesting is followed to the letter, corporate America is not going to find employees to work for them. We are all going to become creators and a world where everyone is his/her own employer is a bad idea. We send kids to school from grade 1 -12 and then four year colleges not to be creative but to be duplicators. We want the majority 99% of them to be workers who produce widgets designed by the creative 1%. To ensure this process mature took long time to achieve and undoing it is tantamount to coup d’état. Why do you think we have high school diplomas, multitude of degrees, SAT, GMAT and all the things in between? To make sure people go through this pre-built tunnel that leads to production of uniform widgets. People like Tim Ferriss and John Taylor Gatto should stop disturbing the peace, before we end up with bunch of Bill Gates or worse Steve Jobs.

  229. Enjoy workin for the man buddy…. I’d be Steve Jobs over Employee 1568 every day of the week.

    BTW, I’m sure he explained in the beginning this isn’t for everyone.

    A good point none the less… but lay off Bill and Steve.

  230. I sent a copy of the book to a friend in New York, he fired half his staff, doubled his profits, he loves the outsourcing idea !!!!

    India is the future, americans are lazy.

    rock on the 4 hour work week 🙂

    🙂

  231. Hi Tim,

    Right before you posted this I signed up for the GMAT b/c I feel like an MBA program will help me develop the skills I need to learn how to help businesses and social change organizations do their work better and in a more sustainable fashion. I’m very interested in the Presidio Graduate School of Mgmt in SF as they seem to have a great, forward thinking and innovative biz program aside from Berkeley and Stanford.

    A few questions for you:

    Have you heard of the Presidio school, if so, what do you think?

    While I’m sure I can learn many things on my own, is the value that comes from the contacts that you make in these programs (that lead to jobs, project opportunities, new companies) worth the investment in an MBA?

    Thanks for your great posts and the hard thinking they encourage me to do.

  232. Thanks for the kick start, Tim.

    This really got me off my feet to start my own business, and I’ve learned more in a week going through the startup process than…well, I’ve learned a lot more than theory.

    I guess the best case study is your own.

    Look forward to future posts.

  233. I’ve been meaning to post on this article as soon as I read it, but better late than never.

    Personally, I agree with the fact that academia can be very non real-life, with little or no tangible applicable. The same things you were thinking about the MBA program caused me to take the shortcut route to my MD. I was in my undergrad and kept thinking- how many tests do I have to write before I do anything useful with my life, anything real? How many 100%s would I have to grind out before the madness would stop?

    So, I went against the crowd. I wrote the MCAT out of first year, and learned most of the background material myself. Nearly all medical schools in Canada require 4 years or at least a bachelors degree to apply. One university still lets you apply after 2 years of undergrad, and even better, it is a three year instead of a four year program. I applied, and was accepted. Even better, it is one of the most hands on programs out there.

    Like you’ve said many times before, “cut the fat”. I streamlined my way to getting into the MD program, in a way by harnessing the “superstar effect”, discussed in another one of your blog posts. I was competing against PhDs, law degrees, physiotherapists and other older, more qualified people. I will be 22 when I graduate- likely the youngest graduating canadian MD.

    Your book was a big eye opener for me. Thank you for writing it. Here’s my

    QOD:

    What strategies would you give to a student in a hectic 3- year compressed med school program, to cut the fat and lessify, to 80/20, so as to have time to enjoy life with friends and family, pursue a few muses? Feel free to send me an email.

    Thanks for your reply,

    Mario

  234. Hi,

    Help me! I can do things that doctors(MDs, DOs, Orthopedic Surgeons) cannot imagine. I could save a Major League Baseball team hundreds of thousands to millions of dollars every year by keeping their players off the DL with energy healing. No, I’m not a mystic, I’m not a psychic, I’m an energy healer; and I specialize in sports-related injuries.

    How can I get the attention of an MLB team’s(preferably the Yankees) front office when what I do is viewed as extremely unorthodox in western society? And without having to go through the Personal Resources Department?

    Any ideas or advice is greatly appreciated.

    Thanks!

    Eric

  235. Yeah – I don’t get why anybody with as much gold as you have would buy an MBA. To me, the MBA gives you the paper cred necessary to get your foot in the door of prestigious places — whose salary you then invest in furtherance of your own ideas.

    But if you’ve already got the plata — then you just pursue your ideas, period.

  236. Two disadvantages of schooling yourself:

    1. No fancy letters after your name, hence it’s harder to get a job with your skills.

    2. Your family and friends won’t take your self-study seriously. Get ready for a lot of, “Are you in school or something?”

  237. Tim,

    (QOD)

    I hope this reaches you, as I have recently stumbled across your blog and may have read this one to late to generate a response. I must first say, I am very intrigued with your blogs and quickly becoming a huge fan.

    I would like to know, from the stand point of seeking angel investors as opposed to investing in start-ups, What do you look for when deciding if and when and how much to invest in any given start-up? I am an entrepreneur at heart and always developing new business ideas, none of which have gotten anywhere due to the lack of funds to launch idea/business. So my question for you is, how would someone go about seeking out angel investors to launch a start-up and what type of things should I be prepared for, in terms of offering a business idea/plan that would draw attention from potential investors?

    Any advice would help and thank you very much in advance!!

    -vince

  238. Tim and all,

    I encourage you to check out an MBA program that is a startup in itself called Acton. It was founded in 2003 by several successful entrepreneurs who felt the world was missing a realistic MBA for entrepreneur-minded people. It’s a completely radical curriculum that meshes classes with names like “People,” “Life of Meaning,” and “Launch,” with real world simulations. Teachers are required to be full-time entrepreneurs and only teach part-time! It’s completely using the Socratic case-study method.

    It’s only a year long to get us in and out of there in a year (because our time is a huge opportunity cost). We do about 300 mainly Harvard cases over the period of nine months compared to HBS doing 400 over two years. The downside is that means we have 90+ hour workweeks for the nine months.

    As an entrepreneur who has started (and mainly learned through failure except for some recent success which I attribute to the 4-Hour Workweek) I can honestly say I wish I had this program before losing my own $50k and $50k from family on my first startup.

    But don’t listen to me, listen to the Princeton Review which ranked Acton as the #3 most competitive students, #3 best professors, and #2 classroom environment.

    I met your friend Stephen Key a few years ago and convinced him to come speak in March. If you would ever be interested we’d love to have you come speak – I know we have several 4-Hour Workweek fans in the class.

    Thanks,

    Bryan Daigle

    4-Hour Workweek Success Story

    President, Acton Class of 2011

  239. Tim,

    I’m newer to your world than many, and lately I’ve been catching up on some of your older posts, like this one re: creating your own MBA. I like very much these ideas! I am an engineer by training, but have developed interests in public policy issues, so . . . perhaps I’ll use your ideas to dive deeper. A question in response to your post – Do you believe your “create your own” strategy applies to undergraduate studies?! This question is expanded below, as I’m trying to convince my brother to attend college (he’s only graduated high school) but am waring out my own “wisdom.” Might I tap yours?

    Thanks so much,

    Caleb, in Virginia

    P.S. – Sorry about the volume; it’s more of an e.mail than a blog comment. I guess I’m getting desparate for my brother – I’m risking really irritating the snot out of you! Perhaps it’ll help to know that I promote your books to all I know; even my very 9-5ish dad is going to borrow my audio copy of 4HWW!

    *************************************

    When my brother graduated from high school in 2007, he said he’d not attend college; he was the only of his close circle of friends NOT to. At the time, he rebuffed multiple attempts by multiple relatives and friends to convince him otherwise. We live in a city with a major American university and he’s been part of a youth outreach group since 2007 that has kept him close (in both proximity and friendship) with several guys attending this top-tier school. Through all of these college-attending friends, my brother has clear pictures of what college has and has not been for them. He has continued to live with my parents (smart, given the circumstances) and has earned money from a combination of 1) a lawn care business he started as a teenager and 2) selling insurance with my father’s business. He has become increasingly interested over the last 18 months in big-dream sorts of entrepreneurial pursuits. He loves reading SUCCESS magazine and being motivated by people like John Maxwell. His original objection to attending college was that it “just was not his thing.” However, his friends’ experiences (classes, internships, and job prospects) have forged a belief that much of college is irrelevant to actual jobs and life. All of the traditional reasons to attend college I and my wife could think of when he was 18 remain ineffective. We also have a good local community college, so he took a macroeconomics course in the fall of 2010 (unfortunately, it sounded like he got a HORRIBLE teacher; nice . . . !), but his response was that it bored him and he thought it irrelevant to his job preferences. I tried to get him to attend college years ago, but I relented in order to prevent from ruining our relationship over it. Then, I started encouraging him in the entrepreneurial path he was trying to forge so as to not just keep raining on him with condemnation – whether explicit or implicit. I figured, “Hey, just b/c I’m not doing that doesn’t mean I should keep forcing this on him.” In the last year, I’ve started having my own regrets about risks or challenges I avoided by opting for a traditional 9-5 office job path. So, I’ve arrived at the point where I want to not only strongly encourage his creativity, risk-taking, and entrepreneurial pursuits but also strongly encourage him to attend college to ensure he has that base. I’ve seen recent articles about majoring in entrepreneurship in college, which I was previously unaware of, so I wonder if this would be a good idea. But more generally, I request that you share your belief about college in the modern era as it relates to both the job market at large and successful entrepreneurship. Are there litmus tests you recommend to help folks make a decision about attending college?

    Thank you SO much for your consideration and time; if you recommend resources other than your own/staff’s answer, those would be most appreciated, as well,

    Caleb

  240. Great Post Tim!

    The application of calculus to business dynamics sounds pretty fascinating to me. The whole point of such courses, as I see it, is not to prove that you you will lose money on a crappy product, but to look at this idea in higher resolution. Naturally, this has the corollary that you could also see the dynamics of success in an equally high detail. Which would be useful.

  241. Hi Tim,

    I read your book the 4 Hour Workweek and really enjoyed it! I have a money/investing question. Your statement, “contact someone important and do something uncomfortable each day,” is ringing in my ears. I have found that I really enjoy day/short term trading. I have also found that I hate losing money. My question to you is do you know any short term/daytraders out there? I have read countless books on daytrading but have not been able to put it together with my own trading. I just read in this blog that you don’t invest in public companies because the pro’s have more information that we do. Who are the pro’s? Can you lead me to a daytrading mentor please? Thankyou.

  242. A Real-World MBA sounds enticing. Unfortunately, unless you plan on becoming a serial entrepreneur or full-time private investor, how do you translate a “Real World” degree to something that is marketable on your resume for those who seek to advance their professional careers?

    It seems like MBA programs are virtually worthless if you have an undergraduate business degree or so I have heard from alot of people. An MBA is really useful only for the connections that you make.

    Thanks

  243. Hey, Tim.

    Was reorganizing some shit in Evernote and came across this old post.

    I think it’d be interesting to revisit this (either now or some time later this year) since you estimated you’d have “a more complete view of the ‘Tim Ferriss Fund’ two-year portfolio by 2013.”

    Take it or leave it.

    Cheers,

    Dave

  244. Hi Tim,

    I have learnt a lot from you. Im from Mexico and I bought your first book out from what I think was merely coincidence at the “Last BookStore in LA” ( Used books ) and since then I have followed your published content, including your next books…

    So I really havent been able to create muse but I had already my own company thugh , so Im stil trying to spend less time on it; I lost 25 pounds by reding your second book and now I just started to read you 3rd book… and guess what ? Im applying it to study for the GMAT =O !

    At the end, the point that I want to put into the table, is the following: What if I would apply the 4-hww concepts to detach from my business but instead of going to argentina and learn to dance , I would rather to go to Stanford to learn a bit, relax ( yes , relax!, kind of vacation ) plus trying to get and live the silicon valley experience ( connections!

    some facts:

    * Im far from being wealthy. My business gets me to live well but not enough to accumulate wealth at least at the moment. Trying to switch to product business model , since Im on the services side of IT.

    *I will have to get into debt in order to go.

    *Why not investing that money into a muse?, Because I dont have it, and its way easier to lend money for education ( some could be granted) than for anything else, at least here in Mexico.

    The way I see it is this: My ultimate goal is to be a high impact entrepreneur in the enterprise software space and I feel a MBA in the valley could help me to achieve that, but if that fails or just takes longer than expected, well I could have a good salary which actually is going to be more ( at least 2x ) than what i get from my business know.

    what do you think ?

    I would really appreciate your comments here. Im not trying to convince you at all to recommend me to go for it.. Im just trying to explain my circumstances to you and see what would you do ??

    Abpo

  245. So, Tim? How’d you make out on the Twitter IPO. Let’s assume you owned <1% of outstanding shares totalling around $250M. Not too shabby.

  246. Tim, thanks for the lessons learned. I am interested on how you made out on early investing in FB and Twitter. FB stock was trading at around $28 after it came out and is now above $70. An investor could have almost tripled their money through normal trading had they timed it right. So was early investing in FB worth it for you or would you just play the market if you did it again? Also, about how much is an angel investor expecting to get in ROI when they hand money over to a startup (if the company does well)?

    Thanks again for all of wisdom on this website. I’ve been very inspired over the last few years.

  247. Enjoyable read, I changed template on my blog and after that

    the serps had a huge slide

    You are now part of my reading bookmarks, keep up the interesting posts