An interview with Professor Paris de l’Etraz – Business Education and Entrepreneurship
There is a lot of heat in the industry about the value of an MBA and Business Education for entrepreneurs. IE Business School is surely one of the top business schools that produces many entrepreneurs.
We wanted to know more about what makes IE so successful in producing entrepreneurs. Last year 20% of the IE MBA graduates went into entrepreneurship. For most business schools, graduates who become entrepreneurs represent an average of 6–7%.
We couldn’t think of a better person to chat with than Paris de l’Etraz who is Professor of Entrepreneurship and the Managing Director of the IE Venture Lab. He is also the founder of the Global Mobile Challenge that is co-organized by IE Business School with Quest Ventures. He strongly believes that “the role of education in entrepreneurship is enormous and that it is about opening people’s minds”.
IE has been a frontrunner in rethinking Education and ensure to link Academia to Business. Professor de l’Etraz often stresses “the importance for people to think like entrepreneurs” and this is exactly what we wanted to talk with him about.
We had the opportunity to meet with him in Manila a few days ago while he was conducting a workshop for the Asia Mobile Challenge.
Professor de L’Etraz, in one of your numerous talks you mentioned that “the role of Education in entrepreneurship is enormous” and you talk about “opening minds to have them think like entrepreneurs”. MBA programs were not originally designed to ignite the entrepreneurship mindset. Do you think that MBA programs in general are doing a good job at this today? Would you say that they have well adapted to the rise of entrepreneurship?
Well first of all, I think it is extremely important to note that Education shouldn’t push people to become entrepreneurs. Only 1% of the population is going to become entrepreneurs. However, as you mentioned, I believe that Education has a tremendous role to play in helping people to think like entrepreneurs.
MBA graduates have an inherent problem to become entrepreneurs because of the opportunity cost.
It is not that their MBA didn’t equip them with the required skills. I would say most of the MBA programs would equip you with the needed hard skills to become an entrepreneur. But the opportunity cost is a serious impediment. MBA graduates usually have been working for 5 to 7 years and they have debts because of their MBA. If you look at the United States, 90% of the people that do an MBA want to increase their salary at their present job or similar job. That’s why they do an MBA. To go to another level either in their existing job or join another company to make that leap. That’s 90% of people doing an MBA in the U.S. At IE Business School, 90% of people doing an MBA want a change in the professional life, usually not wanting to go back to their jobs. That changes things.
Let’s talk about IE Business School a bit. We look at the figures we were amazed by the number of IE graduates going into entrepreneurship. If I am not mistaken, 20% of the IE MBA 2016 graduates went into entrepreneurship (when the average for other top business schools is more around 6–8%). Is your Admissions team “tasked” to look for people with a predisposed mindset? In other words, is the “entrepreneurial mindset” of the applicants assessed?
IE has 26 offices around the world. Almost every single one of the office is run by an IE Alumni. When I first joined IE, I thought that it was maybe extreme. But it works. IE is very special in how it recruits. Let me give you an example. Three years ago, we invited 30 Stanford MBA students to spend a week with 30 of our students in Madrid. I did a little study at the end of the exchange. Among the 30 Stanford MBA students, there were 3 Mexican students; top of their class, brilliant students with perfect GMAT scores and everything. They were from modest families in Mexico and they had a 100% financial aid at Stanford. I picked three of our Mexican students. In comparison, those weren’t the “smartest” people from a purely academic standpoint and didn’t have the highest GMAT score but they were business-smart.
They came from entrepreneurial families and had this entrepreneurial mindset that the Stanford students didn’t have, they were Street Smart.
It is definitely correct to say that IE recruit very specific profiles. Nicaragua is another example I have in mind. In one of the most powerful families in Nicaragua with both business and political ties, two generations of Wharton School of Business with the grand-father and father who are both Wharton Alumni had their son choose IE Business School. In the Philippines, our office is leveraging our Alumni network and works very closely with them in recruiting the next IE students. Our Admission process heavily relies on face-to-face interactions with IE Alumni and who are looking for a very specific DNA. So to answer your question in one sentence, yes IE is looking for very specific profiles that fuels our very strong entrepreneurial culture.
Student Hub at IE Business School (credit IE Business School)
You are not only the Professor of Entrepreneurship but also the Managing Director of the Venture Lab. What does IE do that other schools don’t? Can you tell us more about how you nurture the entrepreneurial spirit?
Well it’s done even before the program starts because people are thinking of Entrepreneurship and the Venture Lab when they apply to IE. As I said earlier, we attract people that are usually not satisfied with their existing professional journey and so for them entrepreneurship is one of the most powerful options to consider. They come to IE with very big expectations. What do we do differently? IE has a lot of emphasis on humanities and critical thinking which are full components of entrepreneurship.
Getting out of your comfort zone is critical.
It goes back to what I was saying during my presentation. One of my missions as the professor of Entrepreneurship is to help people becoming more W3 and W4 to embrace uncertainty. Nothing gets you out of your comfort zone more than when you arrive at IE in a class of 65 MBAs and seeing that 55 come from a different country but also professional background. Diversity is the major component of IE that makes a difference. In the United States, diversity means 30% of a class. In IE, 95% of our students are not Spanish. U.S. citizens represent 20% of our MBA intakes (largest group) while Indian citizens account for 12% and we have around 80 students a year from Mexico. 50% of our students are engineers. You can see here that they are looking for a change.
Talking about engineers, we recently hear that more business schools are considering closer partnerships with engineering and computer sciences schools (HEC and Ecole Polythechnique in France for example) to combine the best of the two worlds. Because you have 50% of MBA candidates with an engineering background, I’d like to know if you try to match your students during the process?
We don’t match them We let them match. But we spend a lot of time making them match. It’s interesting that you mentioned those closer ties that some business schools are trying to create with technical schools. When I joined the Venture Lab, my venture capitalist friends back in the U.S. were sceptical. They questioned the fact that IE didn’t have an Engineering school. They couldn’t understand that entrepreneurship isn’t the Silicon Valley only.
The truth is that Silicon Valley is a very small minority in the Entrepreneurship world.
Entrepreneurship is much bigger than Technology and Internet. We are here to provide people with an avenue to express their passion and develop them. For me it’s been a tremendous success.
The reality is that a lot of the people that launch a startup in my school fail. That happens everywhere. Statistics. But most of them come back to me to express how much they learned while failing.
The entrepreneurship experience gives them more value than the MBA experience.
I would say that their entrepreneurship journey is the continuation of their MBA experience.
At IE we are also moving closer to the Sciences, having recently announced the area of Human Science and Technology. It approaches technology from a very “Humanities” perspective. Our goal is that in 5 years IE is identified with Technology. Technology itself has become more of an enabler in many cases than a story in itself as it is with so many new business models today.
Over your tenure you have probably met dozens of successful future entrepreneurs. Aside their ability to deal with the risk factors, do they share some similarities or specific skills?
The biggest thing they had in common was that they were convinced that when they graduate they won’t be looking for a job. And they don’t. I had an amazing encounter the day before yesterday with one of our MBAs who is to graduate in December. She did an MBA to get a corporate job and she came to me to tell me that she just had the most depressing meeting in her life… with our Career services. She was telling me that she looks at the name of the companies that were looking for talents at IE; Accenture, Deloitte, and other similar. She just couldn’t picture herself to go back to this corporate world. That’s how much IE can transform people.
We would like to conclude the interview with a more controversial question. Education is changing. Business schools are redesigning their programs to recreate a link between Academia and Business but we also see at the same time online education (finally) coming up. IE, again, has been one of the first schools to implement blended education. In your opinion, do you think that on the long run, the MBA leadership on education could be challenged by online education?
Yes. Definitely. Business schools will have to change. The whole research area in business education is antiquated. Publishing a paper, the emphasis on research that is in many cases not relevant anymore. I believe research in business schools has to be rethought and this is why for example I am focusing on publishing a book with two other professors because we want to be relevant. I have a PhD myself but I don’t see good reasons in the future to ask people to earn a PhD in order to teach. Because those are two very different things. Teaching is an art. What the world needs now is relevant research that will reinforce the role of Academia with Companies with Technology being a big driver in this.