It’s a serious question.  A day after Harvard Business School’s Cyberposium 18, I remain struck by the concern attendees seemed to feel about what their advanced degree will mean in a tough economy and in a tech business that elevates technical prowess above everything else. After all, college dropouts Paul Allen, Michael Dell, Bill Gates, Steve Jobs, Steve Wozniak, and Mark Zuckerberg all built hugely successful tech companies — Microsoft, Dell, Apple, Facebook —  without a degree among them.

One Cyberposium panelist basically told MBA candidates interested in big data opportunities that they need not apply unless they also had technical chops.  I’m simplifying here, but that was the gist.

Dropbox founder Drew Houston — who does hold a bachelor’s degree in computer science from MIT  – was gentler but still not all that encouraging. Asked what he wanted in an MBA he said … um pretty much the same thing he seeks in any hire. “What we look for in any candidate is that they’re smart and passionate and not just chasing money. We look for a cultural fit,” Houston said in a Q&A session. ”The guy who runs most of the business side [at Dropbox] has a Harvard MBA but what we look for isn’t that different from what we look for in other areas,” Houston said.

The underlying theme was that business skills and teamwork are valuable and much desired. Attitude and a sense of entitlement are not.

Hunter Walk, director of product management at Google (and a Stanford MBA) must be hearing the same concerns. Yesterday, he shared a great post on the topic: “It’s fine to get an MBA, but don’t be an MBA.”

One of his points:

Getting an MBA means you shoot out of school wanting to prove yourself and see what you can contribute to others. Being an MBA means thinking the world owes you something and that your value 10x’ed just from spending two years on a campus.

Given the economic climate, it’s natural for students to worry about the worth of their degrees. And this topic crops up periodically in the sort of “builder versus spreadsheet guy” debates that get heated. Last year, auto executive Bob Lutz’ book “Car Guys vs. Bean Counters: The Battle for the Soul of American Business”  stoked the debate anew. Lutz’ argument, according to the Time Magazine review was: ”To get the U.S. economy growing again,  we need to fire the MBAs and let engineers run the show.”  Harsh, But I would bet lots of people who watched the decline of US industry in the 70s and 80s under the tutelage of MBA CEOs would agree with that sentiment.

Still, promising business students should take heart. Every tech company needs people with business and financial management expertise.  As one commenter to an earlier Cyberposium story put it:

Harvard Business School was where the concept of the spreadsheet developed. Don’t be dismayed … fellow MBAs. Your day will come… Take the Disruptive Innovation courses, and pick up some Advertising while you’re at it.

And, let’s face it,  there are many times when the best technology in the world won’t win unless it’s accompanied by real business savvy.

I would love the discussion to continue, so please post your thoughts in comments below.

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1: Founders who lack co-founders fail.

Okay, that’s overstating the case, but the vast majority of tech startups that go on to massive success have co-founders, said keynoter Lee Hower who, probably not surprisingly, was a co-founder of LinkedIn and is also the co-founder of NextView Ventures, a Boston-based VC firm.

He cited Microsoft’s Bill Gates and Paul Allen, Apple’s Steve Jobs and Steve Wozniak, Google’s Larry Page and Sergei Brin, and, of course, Hewlett-Packard’s, William Hewlett and David Packard as exemplars.

The exception to prove the rule? Amazon’s Jeff Bezos.

2: It’s not just the software, stupid.

People are besotted by the latest and greatest software. But — as we’re starting to learn from the tablet revolution — designing hardware to properly surface all that cool software goodness is critical. And making hardware and the interface to that software that is drop-dead simple is tough.

Orbotix’ Spheros look like a ball to consumers but is so much more.

Orbotix’ CEO and Founder Ian Bernstein told a session on hardware and user interface design that his company’s Sphero “robotic” sphere proves the point. “Sphero is just a ball to the consumer, but what goes on inside is just insane, and making that so simple was really hard.”

As Stacey Higginbotham reported earlier this year, that ball packs in accelerometers and a gyroscope and bluetooth connectivity that makes it handy for controlling games, or perhaps for helping patients recovering from surgery make sure they’re doing the right exercizes in the right way for the right amount of time.

3: People love to love to electronic dance music  (also the Star Wars theme).

One lesson that came across repeatedly on Sunday is that untested assumptions about consumer preferences often miss the mark. For example,  the presumption that electronic dance music is not typically consumed in the home  was wrong, said Gary Liu, global director of ad product strategy for Spotify. A company-sponsored survey of 2,000 Brits showed that electronic pop phenom David Guetta made the top 20 list of music people like to hear while having sex. The Dirty Dancing soundtrack was number one, and the Star Wars soundtrack, interestingly, was number 20. (Respondents were between the ages of 18 and 91, split evenly between genders.)

4: Designers use badly designed design tools.

Sadly, the hardware and interface designers whose job it is to create wonderful, well-designed products use tools that are badly designed. Asked why that was, Mariah Levitt, senior usability specialist at Continuum, didn’t mince words: “One of the most embarrassing things in the human factors and ergonomics field is that software products we use are so hard to use.”

One reason is that the market is small. “It’s too expensive for [vendors] to emphasize stuff just for us,” Levitt said. “We need people to get more into design and to speak louder.”

The problem isn’t confined to industrial design, said Matt Rogers, founder and VP of engineering for Nest, the maker of the intelligent thermostat. “If you look at electronic design tools like Cadence — they’re just s*$%t to run. They’re all really bad and it’s because they’re high cost and take years to develop and are used by tens of thousands of people. I’d love for one of you guys to solve this problem,” he told the audience.

5: Enterprise social tools are great if the culture is right.

You’d think that companies deploying enterprise social networking tools internally  would welcome the sort of give-and-take such tools facilitate. And you might be wrong.

An Le, VP of business development for Yammer, the social networking company Microsoft bought in June for $1 billion, sounded a note of caution.  She related a tale of a friend who worked for a mid-sized company, (a Yammer account) that was acquired by a bigger company (also a Yammer account.) When this person posted a question about why the CEO was paying dividends rather than plowing money back into the company, the CEO, on Yammer, requested her presence in his office.  She was fired.

“That’s not where i thought that story was going,” said Michael Scissons, chairman and CEO of Syncapse.  By contrast, when Microsoft brought Yammer employees aboard, a Microsoft veteran wondered (on Yammer) why Microsoft bothered to buy Yammer because “it’s the same thing as Facebook.”  In that case, the discussion expanded with Microsoft executives — including the head of Office — giving their rationale for the deal. Presumably, no one lost his or her job.

And now for something completely different …

The least surprising thing about the conference was the concern attendees — many of them MBAs — exhibited about the value of their advanced degrees.  Several questions touched on the notion of college dropouts like Mark Zuckerberg, Bill Gates and Steve Jobs founding superstar companies. That being the case, the question is: “What is the value of an MBA?” They were probably not comforted by Cloudant’s Sam Bisbee when his big data panel was asked about how MBAs can get into that burgeoning field.

His answer: “Don’t be an MBA … You need a technical background.”

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The ongoing study, known as the Executive Time Use Project, was carried out by scholars from the London School of Economics and Harvard Business School, and some of its findings were reported recently in the Wall Street Journal. The team of researchers conducted in-depth analyses of the daily schedules of 500 CEOs from companies of various sizes and a variety of countries to find out exactly what they do all day.

As you’d expect, meetings were a big time-suck for executives, with one sample of 65 CEOs spending 18 hours of their 55-hour workweek tied up in meetings. But what you might be more surprised to learn was how many of those meetings were conducted virtually. Forget images out of Mad Men of key players gathered around a conference table hashing out weighty matters, the WSJ says CEOs’ meetings are “often conducted virtually in global companies.” The article offers Rory Cowan, CEO of 4,500-strong technology services company Lionbridge Technologies, as an example:

Instead of spending a lot of time in long face-to-face meetings, however, Mr. Cowan spends more time “doing frequent iterative touches,” either in person or via text messages, instant messaging and video chat—sometimes with “four or five windows open concurrently.” As a result, his meetings rarely last more than 15 minutes, he says.

As Victoria Pynchon writes in a thoughtful consideration of the findings for Forbes, this study “tells us that CEOs’ lives are looking a lot like those of working mothers who are telecommuting, taking advantage of flex-time schedules and conducting much of their business virtually.” And Pynchon feels the decline in the importance of “face time” can only be a good thing for business culture as an understanding of and tolerance for more flexible ways of working seeps down the ranks. “Flex-time will no longer be associated primarily with working mothers nor considered a sign of a mother’s lack of focus on and dedication to her work,” she concludes.

Do you agree that CEOs’ increasing use of flextime and virtual communication tools is likely to change attitudes further down their organization?

Image courtesy of Flickr user DanDeChiaro.

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Instead she founded RockHealth, a non-profit seed-accelerator program aimed at shaking up the world of healthcare by providing health-related tech startups with funding and support. Startups selected to participate in RockHealth will receive $20,000, mentorship, and connections to RockHealth’s medical partners, which include the Mayo Clinic and Cincinnati Childrens’ Hospital.

The US healthcare industry has been slow to embrace technology in a lot of ways, but more and more app developers and startups have been getting into the space. Research has shown that using more e-care could ultimately save the government billions of dollars in healthcare spending over the next 15-20 years, and the FCC and the FDA are working to clear the regulatory path to allow hospitals to use technology like smartphones in patient care. The FDA already monitors new health-related apps like iStethoscope to assure consumers that they’re safe. RockHealth aims to be an intermediary between its medical partners and small healthcare-related startups, using its connections to lower startups’ barriers to entry.

I recently sat down with Tecco so she could give GigaOM readers her elevator pitch:

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Now it’s that special moment that happens ever Saturday at TAB where, after a week of trawling through the latest App Store releases, I hand-pick a few interesting specimens especially for your perusal.

This week I’m looking at Songbird Remote, Slydial, TED and DTESS Aphid Attack.

Songbird Remote (free)
TAB’s Bob Rudis gave the most recent release of Songbird a thumbs-up not so long ago. The desktop app is an alternative to iTunes, managing your music, video and all that entertaining jazz. This app adds to Songbird’s already impressive functionality, incorporating remote control via iPhone. I’m well aware we already have a very robust remote app for iTunes, but choice is a good thing and this certainly makes swapping to Songbird more-so appealing.

Slydial (free)
Ever have one of those moments where you’re calling someone and would really rather go straight to voicemail, cunningly avoiding some kind of an awkward and poorly-worded explanation? For folk are lacking in, or too lazy to use, social skills and tact, comes Slydial – a tool that sends you straight to voicemail when calling someone (U.S. only). There’s something unscrupulous and horridly calculating about this app, nevertheless it’s an interesting (and free) addition to the App Store which some people may find to be an invaluable tool.

TED (free)
The TEDtalks are a wonderful series of live recordings – available on iTunes – from TED, a conference for the world’s brightest and most brilliant minds. The talks themselves are a meeting place for über-smart folk to discuss, deliberate and schmooze everything from arts and entertainment to world politics and artifical intelligence. The TED app takes it all a step further than the podcast subscription, with searching and bookmarking through their vast back-catalogue.

DTESS Aphid Attack (free)
The new Keanu Reeves vehicle, The Day The Earth Stood Still, is currently hitting cinema-houses here in the UK. It’s a remake, where this time the entire world faces off against Reeves as a calm but irate humanoid alien. This is a game promoting the movie where you send nasty aphids (in this case, big alien bugs) to destroy global iconic landmarks. Yes, it’s in ever-so-slightly bad taste. But no, it’s not so great — it could be good fun, but it’s got as much depth as Reeves’s acting. Woah.

Like an iPhone-toting Columbo, I’ve brought you some exciting leads to follow up on, but before I hurry on my way, there’s just one more thing. There have been some exciting developments for iPhone owners this week, one is officially sanctioned by Apple and the other, while not official, is a step in the right direction.

Starting with the former, in yesterday’s Daily Apple post, our very own Darrell Etherington mentioned Apple’s changes to the App Store layout. Setting aside the developers for a moment, the big question for consumers is, “What does that actually mean for us?” 

Perhaps the most noticeable and useful change is that the listing of most popular apps has been split in two, resulting in a separate paid and free top ten charts. This is a welcome step in the right direction for highlighting which apps we should shell out for a few bucks for.

On the unofficial front, another solution for the lack of Copy-Paste on iPhone has arrived. Pastebud is our savior’s name and it works, not as a downloadable app, but a series of Safari-based javascript bookmarklets. It’s a clever solution indeed and we’ll follow this up with a proper posting explaining the intricacies of using Pastebud.

That’s all for this week, I’ll return next Saturday with a cavalcade of new apps to tell you about, in the meantime drop by the comments and let me know which apps you’ve been downloading this week.

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Paul Polak

Most of the ventures Polak has debuted out of IDE have one thing in common: They specialize in delivering low-cost engineering solutions to “micro-businesses” in the developing world. The most famous is the $25 treadle pump: a simple, foot-powered irrigation system that millions of farmers in India, Cambodia, Ethiopia, and Nepal have used to bring themselves out of poverty. Irrigation allows farmers to grow crops irrespective of season. When they can diversify, they are no longer subsistence farmers. They become businesspeople.

Since his customers are the poor, Polak is called a social entrepreneur. But he’s hardly the sort to sacrifice profits for “do-gooder-ism.” In fact, Polak won’t invest in a venture that can’t pay for itself in a year. One year! It’s a high bar by venture capital standards, but Polak says a one-year break-even is one of his top three “don’t bother” rules, along with a market opportunity of at least 1 million customers and having conversations with at least 25 of those prospective buyers.

Polak knows a lot about building successful businesses in dire economic circumstances. It’s a skill set in high demand these days, and Polak often lectures at Harvard’s and Stanford’s business schools. In addition to his three “don’t bother” rules, Polak points the way to success using 12 Steps to Practical Problem Solving, “because business is problem-solving…no matter what market you’re in.”

This week Polak shared his ideas with hundreds of business elites at Pop!Tech. He also sat down with Found|READ to flesh-out his wisdom, tailored to startups. It’s below.

The 12 Steps to Practical Problem Solving:
1. Go where the action is. “Spend significant time with your customers. This is how you learn what they need,” he says. Not hours, days. Polak lived with his farmers for 6 months.
2. Interview at least 100 customers a year. You do it. Not an employee. Listen to what they have to say. “Too many entrepreneurs build the product they want to build — not the one that’s needed.”
3. Context matters. If your solution isn’t right for the context, for example, if it costs too much for the customers you’re trying to serve, you won’t succeed.
4. Think big. Act big.
5. Think like a child.
6. See and do the obvious. Others won’t, which is opportunity for you.
7. Leverage precedents. If somebody has already invented it, don’t do it again.
8. Scale. Your business must have potential to scale. Remember, your market must include at least 1 million customers.
9. Design to specific cost and price targets. Not the other way around. (Celeste: it means — Do not price to your design, design to the price you need to hit to make your product appropriate to your customer.).
10. Follow practical three-year plans. Two years is too short. Ten is too long.
11. Visit your customers again. And again. “Any successful business in this country is based on talking to your customers all the time. A good CEO spends half his time ‘in the field.’”
12. Stay positive. Don’t be distracted by what other people think.

You can read more about these rules in Polak’s book, “Out of Poverty: What Works When Traditional Approaches Fail.”

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I should’ve put Jason’s post, How to save money running a startup (17 really good tips), in Found|LINKS over the weekend — but you’re more likely to read it on a Monday anyway! A few highlights follow. Read the whole thing at Jason’s blog.

I’ve got a bunch of tips on how to [save money] for business. Among them:

1. Buy Macintosh computers, save money on an IT department
2. Buy second monitors for everyone, they will save at least 30 minutes a day, which is 100 hours a year… which is at least $2,000 a year….
3. Buy everyone lunch four days a week and establish a no-meetings policy.
4. Buy cheap tables and expensive chairs…
5. Don’t buy a phone system. No one will use it…
6. Rent out your extra space…
7. Outsource accounting and HR…
8. Don’t [use] Microsoft Office. [Do] use Google Docs.

and for tip #11, the one that got Jason into trouble,
and which he’s tried to amend on his blog (unsuccessfully) …

11. Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or starbucks if you’re not into it you want balance in your life. For realz.

I don’t agree with this one, only because positive reinforcement is more effective than negative reinforcement.

When you fire people for not working hard enough, other of your employees will grow nervous, even fearful, and quit. Maybe not right away, but they will begin to leave — guaranteed. When reward people for working well and others will be encouraged and mimic the behavior. So I’d break with Jason here, and say: reward, rather than punish, whenever possible. This will make you feel better, too.

For more on this topic, also see Mark Cuban’s related post, which followed Jason’s:
A Couple of My Rules for Startups, and this nice digest, on Tom Altman’s blog, Wedia Conversation: Rules for Start-ups
.

Do you have tips for how to prepare for the recession? Send ‘em our way!

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The package is called Sharpening Your Skills: Starting a Business. Sub-links to the essays follow, with additional F|R pieces that address the same topics.

1) Ownership and change of control: Rich or Royal: What Do Founders Want?
See also F|R’s:
Do you Want to be Rich or Be the King?
My Case Against Venture Capital.

2) Striving for profits: Turning High Potential into Real Reward.
See also:
The Margin Manifesto Part I The Margin Manifesto Part II.

3) Resource management: How Can Start-Ups Grow?

F|R, on bootstrapping and economizing:
Startup Math: 1 + 1 = 1/2
How to Bootstrap Your Startup.

4) Legal sand traps: : Top Ten Legal Mistakes Made by Entrepreneurs.
See also:
Question of the Day: Boiler Plate NDAs and Non-competes
The Dangers of Moonlighting
Patents, Why Bother?
Question of the Day: Self-Patenting.

Do you have suggestions for how to address issues like change of control, profits, legal pitfalls and resource management? If so, share them with us!

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“Entrepreneurs are, on average, significantly wealthier than people who work in paid employment. Research shows that entrepreneurs comprise fewer than 9 percent of households in the United States but they hold 38 percent of household assets and 39 percent of the total net worth.”

So writes Ramana Nanda, an assistant professor at Harvard Business School, in his new paper called the Cost of External Finance and Selection into Entrepreneurship, published today in HBS’s Working Knowledge.

It sounds encouraging, but don’t get too excited. What the study really confirms is a long-held suspicion that the rich are more likely to become founders in the first place.

It ought not to surprise you that when market forces make funding more difficult, founders without their own “human capital” (Prof. Nanda means “means”) are more likely to be discouraged, while the very well-heeled benefit from a narrowed field of competition. But apparently, this trend holds even with founders who are above average in wealth — a socio-economic class that is highly-represented in business schools and, therefore, perceived to be potentially very enterprising (i.e.: rich enough to want more; smart enough and well-connected enough to make it happen.)

The greatest relative decline in entry [to entrepreneurship] came from individuals with lower human capital, many of whom were above median wealth. This finding suggests that an important part of the positive relationship between personal wealth and entrepreneurship may be driven by the fact that wealthy individuals with lower ability can start new businesses because they are less likely to face the disciplining effect of external finance.

Worse, he argues, tax incentives or other initiatives intended to motivate the not-so-rich into entrepreneurship don’t really even things out, because even people with deep pockets can to reap the benefits of such programs.

Anyway, you should read the paper. It’s just one more reason to bootstrap your butt off.

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