Jeff Sandefer: Real-World in the Classroom

Interview with Jeff Sandefer, Founder and Master Teacher at Acton MBA in Entrepreneurship, and one of the top US Entrepreneurship Professors as named by BusinessWeek. Sandefer has also founded and co-founded five successful companies and ran Sandefer Capital Partners, a half-billion dollar energy investment fund. Sandefer shares his thoughts on entrepreneurship, business schools, and leadership and provides advice to prospective MBA applicants.

SANDY: I was wondering if you could start off just telling us a little bit about the school and why you decided to start it.

JEFF: We were just concerned over time that most MBA programs are too academic. They weren’t led by true entrepreneurs and weren’t teaching people how to go out and do things. They were teaching them theory, and theory’s fine, but you also need to know how to sell. You need to know how to create. You need to know how to lead people.

We started Acton really to fill that gap. And the other thing that concerned us and another big part of Acton is this whole idea of our “Life of Meaning” course because we saw so many of our very best and brightest students at UT go off and work for Goldman Sachs or McKinsey and those are good organizations but these are people who can really – wanted to start their own business. And they come back to school five years later and they were making a lot of money, they were working 100 hours a week, and they hated their lives. And so we wanted to start a program that can actually help people find their calling; what they were meant to do particularly with running a business.

SANDY: You mentioned that universities or MBA programs are not really prepping students to kind of be effective or they serve as fodder for consulting firms or other types of financial institutions. You also mentioned that curriculum reform really won’t do much to change a situation.

What’s going on with our educational system that it got this way? What advice do you have for business schools?

JEFF: And it’s certainly not for me to give advice to business schools, but really for students looking for an education.

I think the biggest concern is you got a tremendous disruption going on in educational world. So you got the old school, traditional ways of doing school, and you’ve got these new online, in-person, in the world ways to go about whether it’s the 72-hour weekend start-up, whether it’s doing something virtually or in a blended way with simulations. There are so many new ways to learn how to run a business out there that they really overrun the traditional MBA programs.

Now, I’m still leaning toward Harvard. I’m a big fan of the Harvard Business School particularly because they use the case method. That’s as close as you can get to the real world in a classroom. So I’m a big fan of the Socratic method of teaching the patterns of business. But there is no sense in paying $150,000 to go sit in a classroom and listen to lectures anymore. That day has passed. And unfortunately, so many of the schools, so many of the classes don’t look like that. There’d be a handful of great teachers and then a lot of mediocre teachers who would lecture off of 28-year old notes. That’s like reading Encyclopedia Britannica when you go look up something on Wikipedia. It doesn’t make any sense.

SANDY: Are there any other skills or any other trends that you see in the current market that MBA applicants or MBA students should be aware of?

JEFF: The biggest issue is how you can teach people through trial-and-error to learn something.

So, how can I go out and instead of watching a lecture on how to sell, how can I take my iPad in my hand and go out and sell door-to-door if I haven’t got courage to actually go do something that’s difficult than learn about how selling works for real? So, I think the biggest issue is not even entrepreneurship, it’s how are we going to teach hardcore tough skills, and lessons, and principles without sitting in a classroom? Because, that’s clearly where the world is going. It’s going there and it’s going fast.

I think the question for education and the question for students is “How am I going to pick up that knowledge?”

SANDY: A lot of people that are in social media and web they say that this rise of community or social media is really has always been there. It’s almost going back to basic values just in a tech way. So, what you’re kind of saying is that the skills that are needed, it’s almost like kind of adopting them to the modern world, but there are basic foundational skills that have always been there as well in business. Is that kind of right?

JEFF: Oh absolutely. In fact, that’s a very insightful point.

I think what we’re heading back to is very much what American education looked like in the 19th century. So think about then you went to elementary school and you learn reading, writing, and arithmetic. And then shortly after that you went into an apprenticeship. You actually worked with a skilled printer or a skilled silversmith. And you get that until you found your calling – what you’re really good at and then you learned under a master. Very few people went to college. There was no such thing as high school or middle school. So, you learn by doing. You learned character by being around people with character. I think it’s very much a throwback to that day augmented by all the great technology that we have now that keep people connected.

SANDY: What advice would you give to individuals that are kind of trying to become more global? How have you yourself become more global?

JEFF: I actually think the “go global” idea is a misnomer and let me say why. I’m currently guiding or mentoring 15 people all over the world. A couple are in Africa, a few are in Europe. So, in a sense, I’m reaching out globally. But what I’m really doing is I have the ability to connect with individuals with exactly the kind of thing I’m delivering wherever they’re located. They can globally connect person-to-person or small group-to-small group, and study the kind of individual things they care about. I mean if it was silversmithing, it would be silversmithing.

In a sense, I can now connect across time and space to someone individually who wants what I want. But there are also economics that always apply globally. For 2,500 years economic – that’s why economics work so well, it’s why free markets work. But the idea that I can go take my knowledge in America and walk into Russia and use it, I think that’s very context-specific. So, the politics, the local market, the local consumers – they will never go global because it’s always specific to context of the place.

So, you have to be careful when you say global. What is it that applies across places? How does the new technology allow us to link to likeminded people at far distances? And then what are the things that actually are so context-specific that you really have to go live in the culture to understand them?

SANDY: Actually, that’s a very interesting point and it’s true, because while there is this shift for global, there is also a shift for hyper-local, and there’s a shift for kind of more community-based things. You’re absolutely right: understanding what global means is a really good question.

JEFF: I’ve been teaching for 21 years now in the MBA world. What you see are these fads of words that come up: entrepreneurship, and global, and quality. And what you find is the curriculums don’t change at all, what changes are the marketing brochures.

There’s this buzzword that goes through the faculty and the students will come. It’s really not even an understanding of what the term ‘global’ means. How come a group of professors somewhere in the Midwest who’ve never probably traveled internationally teach you about global business? I wouldn’t, for example, teach you about business in South Africa. I’ve never been to South Africa.

So, I think you got to be really careful with these words and buzzwords. They’re more marketing terms than they are reality.

SANDY: Many different types of personalities are effective in the new market space basically. What characteristics would a successful person have to easily maneuver the current landscape?

JEFF: I think those are timeless. I don’t think these have changed for a long time. So, it’s people who are self-starters who are not afraid to fail so they’ll go out and take small risks. At Acton, we always say “I want you to fail early cheaply and often”. So, you want them to fail at little ways so you learn so you don’t make the big mistakes.

So, it’s people that their ego is not so caught up in looking successful but they’re not willing to fail small. They’re not going to be satisfied sitting behind in a cubicle. They are willing to listen and ask more questions than talk. If you want to be the smartest person in the room, you should work your way up to the top at Enron, and then you’re stuck with what happens at Enron. If you’re a person running a business these days, I think you ask questions, you listen, and you have the confidence to try lots of small experiments until you find something that works. And occasionally, you wake up with Wikipedia or Facebook.

SANDY: I always ask schools how they determine what their best fit is. Like how do they determine “what’s the best fit for your school?” I’m going to ask you the same question. How do you determine who’s the best person for you to work with to kind of be part of this philosophy that you’re creating?

JEFF: Well, it’s pretty easy because you have to work a hundred hours a week at Acton. It doesn’t matter how good you were in high school, or how good you were in college, or even if you start a successful business, we’re going to push you to your max, but that’s not really true. We’re going to give you the encouragement, the tools, to push yourself to the max. This is like the Navy Seals, the Green Berets.

We almost always have students self-select. We get the hardest working people who just won’t quit. Once you got that, helping them learn and inspiring them, that’s easy. One of the great things, we’re blessed with people who work very, very hard. We keep winning year after year with the most competitive student award at Princeton Review.

SANDY: That’s awesome.

JEFF: And the reason is that’s the kind of person we attract.

SANDY: Right. It’s really interesting. It almost feels like it feels almost like a family. You know what I mean? It feels like almost like a tribal thing you guys you’re doing but in a very positive way. Kind of ‘Oh, you get it! You’re hard working and you’re very witty. And I want that too so let’s work together.’ You know what I mean? It seems like a very dynamic environment.

JEFF: It’s very close. When people come out of here, they stay in touch. They miss having to work with a team that’s that dedicated because you don’t find that in the real world very often -- people who really work that hard or dedicated to a cause.

SANDY: One of the questions I have as a web professional is technology.

It’s really interesting to me, because from my perspective, the internet came out years ago, and it’s just really interesting that people are now starting to realize that it’s here; that the internet is here and that all these tools are here. And so a lot of companies and a lot of organizations are having a hard time. And individuals are having a hard time adapting because there’s a lot of fear.

How do you guys address that either in the classroom or just kind of as you’re mentoring people? Does that technological fear come up? How do you guys deal with that? What advice would you have for people that are still not sure how to navigate through that?

JEFF: You’re either going to learn to navigate through that or you’re going to be in the stone age. There’s no option. Go find a healthy newspaper these days and see if anybody on the newspaper staff think they shouldn’t think about the digital world.

I don’t think there’s an option of whether you think about. I think the most fascinating thing is what that disruption of the internet and technology is going to do to education. I just think it’s going to turn it upside-down. And that’s a risk often and often you’re going to see, I think, a Wikipedia effect of people who are great coaches and can hold other people accountable and affirm them combined with the greatest in the newest gaming technology.

We were actually at elementary and middle schools as well as in MBA program and the newest game-based technologies for delivering skills are so good, and then you put kids – whether it’s MBA students or younger children – in an environment where we say “Look, we think you’re a hero that’s going to change the world and here’s some real world challenges you have to go out to do to prove yourself, and figure out which skills that you need to master.” And almost for any person it’s a different skill, a different gift, because they’ve got a different gift. And then you put them out in the world practicing that with a guide or a coach looking over their shoulder. The effects of that on education are going to be 100x impact of sitting in a classroom and listening to a lecture. That world is just going to go away quickly.

And the nice thing is this new education is going to cost ¢5-¢10 on the dollar where it costs to get a Harvard MBA or even an Acton MBA. We’re aggressively moving to this new blended world of being online in the world.

SANDY: Sure. It’s so funny you mention that – and I was actually speaking to Kathleen – I mention that the digital tsunami had hit the journalism world, and it seems like now it’s targeting the educational world.

So, the question I had was what advice do you have for administrators? Obviously you touched upon some of the points, but is there anything that you would recommend to them in terms of moving forward? What are the biggest obstacles that you see that they have to overcome to kind of get there?

JEFF: I think the biggest problem is that very few people know how to create courses in this new world. It’s a curriculum-creation. If you take a lecture course - and then you look at a Socratic case method course, those are night-and-day different. Creating a course now using these learning technologies is that much different, again, from the Socratic method.

The real problem is these schools don’t understand how to deliver real world experiences online. I mean they understand how to deliver fill-in-the-blank tests, that won’t get there. You’ve got to actually take this stuff out in the world and use it and report back. The biggest issue is you got to get up-to-speed on how to create these new courses which probably means getting rid of most of your faculty. It would be very difficult for these schools.

I think my other advice is for a school that has a brand, I would be spending that brand testing these new technologies because if you don’t spend that brand, you’re going to eventually go broke with the old order. The old order is just going to go bankrupt. It cannot compete in the new world.

And if you watch what Stanford and MIT are doing, they are really experimenting in fascinating ways to spread the brand. Stanford launched a month ago Stanford Online High School. You can now go to a Stanford Online High School that promises that you will get as good an education at any high school in the country, has the Stanford name, and it’s 100% online. That’s just fascinating to me that Stanford is spreading its brand.

SANDY: I know.

JEFF: They’re going to turn out to be the Google of universities if they can get it right. Now the business school of Stanford is not really doing that. It’s the design school and engineering school.

So my advice is learn in this new role, spending your brand while it’s still worth something to make the jump because you may or may not make that jump successfully, but if you stay where you are, you are doomed. It is over. So you have to try because you’re going to be in the buggy-whip business.

SANDY: I think that’s wonderful advice. And I guess my next question is: What advice do you have for aspiring MBA students? Because you know obviously in the past, the typical MBA student was a lot older. But maybe for people that are a little bit younger that are kind of in their 20s, what advice do you have for them as they’re kind of like moving forward?

JEFF: I always tell 90% of the people that come and ask me “As a successful entrepreneur, should I get an MBA?” I think the answer for 90% of those people is “Don’t!”

So my first advice to anyone who’s seeking an MBA is be very skeptical about whether it’s worth it. It’s probably still worth the Harvard, Stanford, or Wharton MBA for the brand. But, if you go down to the second or third tier schools, it’s unclear whether that’s really worth it. So my advice would be “How do you recreate this apprentice-master relationship in a way that defines your calling and allows you to practice in the real world?” So my number one advice is for MBA seekers is to don’t go there. Go find another way.

SANDY: That’s awesome.

JEFF: We’re radically moving in that direction. I think the old is one is going to collapse.

SANDY: I definitely agree.

Well Jeff, thank you so much for joining us today. I really appreciate talking to you and I’m hoping that we can bug you in the future for another interview.

JEFF: I love it. I look forward to look at the website. Anybody who’s with Wikipedia I’m a fan of, so I can’t wait to see it.

SANDY: Okay, sounds great. Thank you.

JEFF: Thank you. Bye.

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