MBA’s, Ethics, and the Facebook IPO

I’m an educator, so my natural bias is always to assume that yes, education matters. But it is in part because of this bias that it pains me when I see someone who is plainly overstating the case. And that’s the feeling I got when I read the Washington Post‘s Vivek Wadhwa asking, “Would the Facebook IPO have bombed if Mark Zuckerberg had an MBA?”

The answer — contrary to what Wadhwa argues — is “well, probably, yes!” The IPO almost certainly still would have bombed even if Facebook’s CEO had had an MBA. The fate of the company’s IPO depended a great deal on the way it was handled by Morgan Stanley, and on the appetite of institutional investors for the company’s stock. And that appetite depended a great deal on investors’ thinking on a lot of different questions, including things like whether Facebook still has room to grow or not. But there’s little readon to think that the educational pedigree of the CEO would have made much difference on its own.

It’s also worth pointing out that while Zuckerberg doesn’t have an MBA, he presumably has more than a few MBA’s working for him, and he certainly could afford to hire more. It’s pretty hard to make the case that the man himself having an MBA was utterly essential. So, while Wadhwa may well be right that having an MBA would mean that “Zuckerberg would have better understood the rules of corporate finance and capital markets,” it can hardly be argued that there was no one around with the relevant training to advise Zuckerberg on such matters.

Interestingly, Wadhwa twice mentions the importance of ethics in business, and rightly points to the ethics as being of central importance in an MBA education. But it’s far from clear just how Wadhwa thinks that is connected to the Facebook IPO having “bombed.”

Hopefully no one really thinks that getting an MBA is going to make you more ethical. If the ethics course you take during your MBA is a good one, it may do something to enrich and deepen the way you think about ethics, and to help you design and manage the kinds of systems that will help your employees act ethically. But even on the broadest and most inclusive understanding of the word “ethics,” there’s little reason to think that learning about ethics is going to make you better able to shepherd a company through an IPO. Nor is training in ethics any guarantee that individuals won’t engage in the kind of selective disclosure of information that is at the heart of the company’s post-IPO legal woes. The kind of ethics education that goes along with an MBA may well teach you more than you already knew about the nature of fiduciary duties and the importance of fostering trust, but an MBA-level ethics course is neither necessary, not sufficient, to make a business leader ethical.

2 comments so far

  1. Michael on

    Wadhwa’s comments simply do not look at the ecosystem around a CEO. I don’t think Steve Jobs had an MBA, either. Bill Gates might have an honorary doctorate in something though I’m pretty sure an MBA was not high on his list. I’m not really comparing Zuckerberg to Jobs or Gates but illustrating the lack of vision in Wadhwa’s rhetoric.

    If I’m the “Idea Man” why do I need an MBA? If my idea pans out, I’ll align myself with someone I trust who has an MBA.

    Myopic hypotheses like Wadhwa’s are becoming more prevalent in the U.S. especially among the GOP. From local communities to politicians seeking national office conservatives denigrate higher education, e.g. “why should people have to pay for someone else’s education through student loans,” and “only those who can afford to pay for school should be allowed to attend,” or “why do I need college at all? Steve Jobs dropped out!”

    True, Steve Jobs did drop out. So did Bill Gates. A surprising number of business leaders did not complete their educational track.

    To people who argue these points I ask, “Did these people hire other drop-outs? Or, did they hire computer scientists, engineers, programmers, mathematicians, database professionals with degrees?”

    Too often, authors of such statements fail to look beyond a single data point to support an assertion, people lacking critical thinking skills join the mass, and soon a faction is born which negatively affects public policy.

    • Chris MacDonald on

      Michael:

      Thanks for your comment. I think you’re right: a business degree isn’t essential for the CEO, but neither is education to be denigrated! A successful organization needs people with all *kinds* of skills, aptitudes, and kinds of training. Zuckerberg brings a lot to the FB table, and he can (and should) have lots of people with different skills to help him out.

      Chris.


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