Eight Reasons Startup Incubators Are Better Than Business School

Let’s get this straight: If you want to work at Goldman Sachs, McKinsey or General Electric, an MBA is a handy scrap of paper.

But if you’d prefer to bypass the corporate ladder and actually build something of your own, spending upwards of $140,000 and two years without pay is just about the worst way to go about it. Because looming outside those classroom walls is a creature far less merciful than any b-school professor: the market. Customers, you may be surprised to find, don’t give a damn about your degree—and the market will fire you faster than any ungrateful boss.

Want to take the plunge but need a bit of guidance and support? Applying to a so-called startup incubator may be a far better option than business school.


Business incubators have been around since the 1950s. Typically attached to universities, these entities offered a proving ground, with back-office resources, for fledgling entrepreneurs.

Now a new breed of incubator, catering mainly to technology types, is springing up all over the country. These startup hubs offer expert mentorship, resources like office space and legal counsel, and even seed money—typically in exchange for a small amount of equity in tiny (or theoretical) companies. More importantly, early-stage investors are paying close attention.

Paul Graham, founder of Y Combinator, is the father of all startup incubators. (Y Combinator birthed Dropbox, a file hosting company valued at $4 billion, among other newly minted tech stars.) Since Graham launched his incubator in 2005, about 100 more have come on the scene worldwide.

Like top business schools, startup incubators are particular about whom they let in. Actually, they’re stingier: With acceptance rates typically in the low single digits, your odds of getting a bid to Harvard Business School are about three times greater than nabbing a spot in a premium incubator.

For the lucky few, here are eight reasons why incubators beat out business school:

You Can’t Teach Entrepreneurship

The truth is that you’ll never be fully prepared to create a business—and no amount of classroom time will change that. Kathryn Minshew, founder of DailyMuse, a career advice and job placement site for young female professionals, is off to Y Combinator in January. Minshew decided to forego an MBA in favor of starting a company because “I felt like I could learn more by actually running a company and by talking to others who are running companies,” she says. “There were so many other ways to learn the skills I needed and they didn’t come with an MBA’s high price tag.”

Paul Graham offers a different, but equally persuasive, insight: “I’d tear my eyes out in some of the classes they have in business school.”