Kyle Bean for Fortune
By Dan Mitchell
June 30, 2014

The argument that it’s not worth it to pursue an MBA is fast transforming into a truism, whether fairly or not. So it’s no surprise to see some desperate straw-grasping from people who have a stake in the degree’s future.

On Monday, Scott Rostan, a business professor, offered an MBA apologia resting on the idea that if Snapchat CEO Evan Spiegel had only earned an MBA after graduating from Stanford, he’d be in a much better position today. He’d be more able to evaluate the insensible deals being thrust at him, such as Facebook’s $3 billion offer last fall, which Spiegel rejected. Soon after, the company was valued at $2 billion after a $50 million financing round.

Rostan wrote:

While it’s easy to understand why founder Evan Spiegel (holder of an undergraduate degree from Stanford University) wanted to retain majority ownership, passing up that additional $1 billion when Snapchat currently has no revenue surprised a lot of people. (Of course, it’s too early to tell whether Spiegel pulled a Groupon.) Negotiations for an acquisition involve lots of game theory, but understanding the science behind the analysis and valuation can promote better-informed decisions.

So Snapchat has no revenues and no known plans for how it will ever draw any revenues. Is it worth $3 billion, or only $2 billion? Or is it worth, perhaps, $0 billion? Or $100 billion? Your guess is as good as Spiegel’s. Or Rostan’s. But Rostan thinks that the “science” of valuation would supply Spiegel with the answers and help him decide which offers to consider and which to reject. After extolling the benefits of the real-world case studies that make up much of the MBA curricula, Rostan offers no real-world examples of an MBA-holding CEO of a startup getting a great deal for him- or herself after running offers through spreadsheet analyses.

Rostan writes that, “at the core of any startup is its value, which is based on a set of financial principles and metrics (cash-flow generation, earnings, sales, etc.), rather than an emotional feeling. Understanding these basic business principles allows an entrepreneur to make decisions with his head rather than his heart.”

And that’s true, to a point, for companies that have cash flow, earnings, sales, and “etc.” But Snapchat doesn’t have any of those things, unless the “etc.,” comprises millions of time-wasting teenagers sending millions of vaporous photos and messages to each other, and who knows how many creeps sending who knows how many distasteful selfies. In the absence of information for his brain, all Spiegel has to go on is his heart, such as it is.

But surely there are better examples — startups with measurable revenues and solid business plans that lend themselves to formal analysis? Of course there are. But one of the arguments against MBAs — not addressed by Rostan — is that many students learn all they need to know about this stuff as undergrads. If you want to be a financial advisor, investor, or analyst, maybe an MBA will be valuable to you. (Or maybe a CFA would be far, far better.) But American business history, both recent and long past, is filled with stories of owners with little or no formal business training either getting great deals for their companies or holding on to them and managing them to great success. And all kinds of young owners without much formal training have hired experienced executives to manage their companies. Google (GOOG), Facebook (FB), and Yahoo (YHOO) come immediately to mind. Spiegel could do the same if he wanted.

And anyway, when was Spiegel supposed to have gotten this degree? He’s 23 years old, and has been working on Snapchat since he and his backward-ballcapped buddies were living in the dorms at Stanford and trying to come up with a get-rich-quick scheme.  He graduated in 2012 with a degree in product design. Had he taken two years to earn a postgrad degree, he’d just be returning to Snapchat right around now. Even if he pursued his MBA at night at Bob’s Upstairs Business College, it would seriously stalled Snapchat’s momentum—and momentum is really all Snapchat has. The product might turn out to represent some kind of business breakthrough, but for now it tastes like the flavor of the month. Timing is everything with companies like this.

Given the lunatic atmosphere of the startup scene at the moment, Rostan’s argument comes off as remarkably tin-eared and out of touch. CEOs of hot startups don’t care about your stinking case studies, they care only about their bank accounts, their egos and—maybe—the products they’re selling. Rostan’s plea is a little like when Chicago sportswriter Rick Telander infamously wrote in 1994 that, if only Nirvana frontman Kurt Cobain had participated in organized sports as a youth, he never would have killed himself. Which might be true, but he also never would have founded Nirvana.

An earlier version of this post incorrectly identified Snapchat’s CEO as Eric Spiegel. It has been updated.


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