From the Classroom to Startup Experiences: Entrepreneurial Lessons from my MBA
By James Dunseth
Innovators & Entrepreneurs, November 2024
My journey through the MBA program at Yale’s School of Management and my time interning at a startup were eye-opening in more ways than I anticipated. I went in expecting to learn about business strategy and management, but what I walked away with were real, hands-on lessons about innovation and entrepreneurship that textbooks simply can't teach. These experiences showed me that building something great isn’t just about having a killer idea—it’s about listening to your customers, staying flexible, making data-driven decisions, and sometimes even diving into the technical details yourself. This article is a reflection on those lessons—personal stories and practical insights that not only shaped my MBA experience but will continue to guide me in my career. Whether you’re dreaming of launching a startup or just looking to inject some fresh thinking into your current role, I hope these lessons resonate with you as much as they did with me.
Lesson 1: Listen to the Voice of the Customer
“You’ve got to start with the customer experience and work back to the technology. You can’t start with the technology and then try to figure out where to sell it” – Steve Jobs
During my MBA program, I took a great product management course, interned as a product manager at a startup, and worked on my own mobile app. What I learned from these experiences is to resist the urge to rush off and build what you think is best for an imaginary customer and instead take the time to talk to current or potential customers.
The companies that build the best products are constantly talking to their customers, and often kick off a new product by conducting deep user experience research combined with market and competitor analysis. User experience research is a process but generally starts with qualitative need identification through customer interviews aimed at understanding the full set of customer needs.[1]. Next, quantitative tools like customer surveys may be used to group and down select the full list of needs to a set of primary customer needs. Lastly, customer needs are segmented and prioritized to identify the right target for a new product or feature. This is the point where the focus can shift from need identification to designing a solution to meet those needs.[2]
Conducting good user research is not necessarily intuitive. A great book for those interested in learning more about how to learn from their customers is Think Like a UX Researcher: How to Observe Users, Influence Design, and Shape Business Strategy by David Travis and Philip Hodgson. One example of a best practice for a customer interview is to ask open ended questions to encourage storytelling and avoid asking a customer directly what they want. Another surprising best practice is that fewer interviews are required than what you might expect. The magic number of interviews is five,[3] at which point studies show that there is an 85% chance of finding a problem that impacts one-third of users. One last thing to keep in mind during conversations with customers is that they are very likely different from you, and you will need to listen carefully to understand their unique needs.
Call for actuaries: One takeaway for actuaries working in product development or pricing is to get some experience in user research (i.e., meet some customers). According to Jared Spool, the most effective development teams participate in two hours of user/customer exposure every six weeks.[4] A softer takeaway for actuaries, regardless of what project they are working on, is to take their time to better understand their audience or stakeholders before spending too much time developing a solution.
Lesson 2: Flexibility and Iterative Progress are Crucial for Fostering Innovation
Agile methodologies are a set of principles and practices designed to enhance flexibility, collaboration, and customer-centricity in software development and project management. Originating from the Agile Manifesto, these methodologies emphasize iterative progress, where projects are divided into small, manageable units called sprints. Each sprint typically lasts two to four weeks, during which specific tasks are completed and reviewed. This iterative approach allows teams to adapt quickly to changes, incorporate feedback, and continuously improve the product. Key practices include daily stand-up meetings, where team members discuss their progress and challenges, and regular retrospectives to evaluate what worked well and what can be improved.
Central to agile methodologies is the focus on delivering value to the customer. By prioritizing customer needs and involving them throughout the development process, agile teams ensure that the final product aligns closely with user expectations. Collaboration and communication are also crucial, with cross-functional teams working together closely to solve problems and innovate. Tools like Scrum and Kanban are commonly used to manage workflow and visualize progress, making it easier to identify bottlenecks and optimize efficiency. Overall, agile methodologies promote a dynamic and responsive approach to project management, enabling organizations to thrive in fast-paced and ever-changing environments.
I first learned about Agile methodologies in the classroom and then experienced them as a product manager during my internship with a startup. Designers, developers and product managers worked closely together to launch product features in short sprints and frequently reprioritized a backlog of features based on feedback from user interviews.
Call for Actuaries: As an actuary and working in finance, Agile methodologies can be harder to implement than for software development as financial balances and projections coming out of models can be meaningless if they’re half baked. However, Agile themes (e.g., establishing frequent feedback loops with stakeholders or customers, cross-functional teams working closely together in “pods,” frequent reprioritization after accomplishing small chunks of work in “sprints”) can still be applied. If you’re interested in learning more, you can reference a SCRUM guide like this one.
Lesson 3: Getting a Bit Technical Goes a Long Way
In the rapidly evolving landscape of technology and innovation, possessing some degree of technical skills has become increasingly important, especially for roles like a co-founder of a technology startup, a product manager, or anyone working closely with developers. During my MBA, I realized that having a solid understanding of technical concepts not only bridges the communication gap between non-technical and technical teams but also empowers you to make more informed decisions and better recognize opportunities for innovation. This includes being able to assess the feasibility of product features, understand the challenges your developers face, contribute meaningfully to problem-solving, and in the case of the co-founder, roll up your sleeves when necessary and help build.
Even if you don’t have strong coding skills, there are thankfully a lot of good resources for helping to build a solid foundation. For example, I took Harvard’s legendary introductory course to computer science (CS50), which is free and open to the public. I also used Dash to learn the basics of web design, and A Tour of Go to learn this high-level back-end language.
Call for actuaries: Actuaries generally shouldn’t be coding anything except for actuarial models, and some would say that actuaries should only develop requirements for actuarial models. However, having a solid understanding of technical capabilities can help actuaries work more effectively with IT/enterprise technology functions, better identify opportunities to automate the quarter close process, and build models from scratch in languages like Python when necessary.
Lesson 4: Use Metrics and Choose Them Wisely
Another key takeaway is the importance of using good metrics to drive business decisions. In the entrepreneurial landscape, where resources are often limited and uncertainty is high, metrics serve as a crucial compass for guiding strategy and assessing progress. Well-chosen metrics allow entrepreneurs to objectively measure the success of their products, understand customer behavior, and make informed decisions about where to allocate time and resources. Without good metrics, it’s easy to lose sight of what truly drives value, leading to misaligned priorities and wasted effort. Metrics not only provide a clear picture of current performance but also help in setting realistic goals and benchmarks for future growth.
A key distinction I learned in the same course referenced in Lesson 1 is the difference between product feature metrics and product growth metrics. Product feature metrics are concerned with how an average customer interacts with a given feature and helps make decisions related to feature strategy and prioritization. During my internship, I looked at onboarding funnel conversion rates to identify which onboarding steps may need to be redesigned. On the other hand, product growth metrics are critical for assessing the broader impact of the product on the company’s bottom line and help with strategic decisions regarding acquisition and retention. These metrics generally depend on the total number of new customers.
One of the most effective frameworks for understanding and applying product metrics is the AARRR framework, also known as Pirate Metrics, developed by Dave McClure.[5] AARRR stands for Acquisition, Activation, Retention, Revenue, and Referral. For example, in a mobile app, Acquisition might measure how many new users are downloading the app, while Activation could track how many of those users complete their profile or make their first in-app purchase. Retention would focus on how many users return to the app over time, Revenue might measure the average revenue per user, and Referral would track how many users are bringing in new users through word-of-mouth or referral programs. The AARRR framework provides a comprehensive view of the user journey and helps entrepreneurs identify which stages need improvement to drive overall product success. This framework emphasizes that growth is not just about acquiring users but also about ensuring they find value in the product, stay engaged, and advocate for it.
Call for actuaries: Actuaries obviously use metrics extensively in their work to monitor product financial performance, set and review assumptions, make risk management decisions, and determine new product features. Actuarial leaders may further find it beneficial to apply metrics to their own teams and initiatives to measure success, in the form of Objectives and Key Results (OKRs). OKR’s are a goal-setting framework that starts with a clear qualitative goal along with measurable outcomes that indicate progress toward the goal.
Lesson 5: Use a Leading Indicator to Cut Through the Fog and Achieve Product Market Fit
A major lesson from my MBA studies is the paramount importance of achieving product/market fit. This concept, which entails aligning a product or service with the specific needs and desires of a well-defined target market, is often cited as a make-or-break factor for startups (90% of which fail[6]). Despite its level of criticality, it can be hard to measure, or even formally define.
Marc Andreessen says “You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
“And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”[7]
Based on this description, an entrepreneur can only know whether they are at point A or B (no product market fit and product market fit respectively) but not track progress from A to B. Thankfully, Rahul Vohra, founder and CEO of Superhuman, offers an actionable and measurable approach to product market fit[9]. You can read about his full methodology here, but a few key concepts are:
- Use a leading indicator or metric to estimate how your product is resonating with users. Rahul Vohra leveraged the results from Sean Ellis’s customer development study[8] which prompts startups to ask their customers, “how would you feel if you could no longer use the product,” measure those that respond “very disappointed,” and compare against a benchmark of 40%.
- Segment customers, based on survey results, and focus on the feedback of super users and “on-the-fence” customers.
- Strike a balance between continuing to develop what has made your product successful so far and pursuing new features to expand appeal.
Following this approach, Superhuman was able to increase their product/market fit from 22% to 58%.
Call for actuaries: If you are working in a product development function at an insurance company or as a consultant in a management consulting firm, understanding product/market fit can help make sure that your new product exceeds sales targets and that clients are signing up for your new service offering. It may not be as easy to iterate on products as it is in the software industry, but setting the right north-star metric and properly segmenting your market can help you create a product or service that sells.
Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.
James Dunseth, ASA. James can be contacted at james.dunseth@gmail.com.
Endnotes
[1] Alex Burnap, “Class 4 - Feb 1 - Customer Needs 1: VOC - Qualitative” (Yale School of Management, Feb. 1, 2023).
[2] Alex Burnap, “Class 5 - Feb 6 - Customer Needs II: VOC - Quantitative” (Yale School of Management, Feb. 6, 2023).
[3] David Travis and Philip Hodgson, Think Like a UX Researcher (CRC Press, n.d.).
[5] Product Plan, “AARRR Pirate Metrics Framework,” Product Plan, accessed Aug. 16, 2024, https://www.productplan.com/glossary/aarrr-framework/.
[6] Sean Bryant, “How Many Startups Fail and Why,” Investopedia, June 24, 2024, https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp.
[7] Mark Andreessen, “Part 4 The Only Thing That Matters,” Pmarchive, June 25, 2007, 4, https://pmarchive.com/guide_to_startups_part4.html?ref=review.firstround.com.
[8] Sean Ellis, “Product/Market Fit Study,” PMF Survey, n.d., https://pmfsurvey.com/?ref=review.firstround.com.
[9] Rahul Vora, “How Superhuman Built an Engine to Find Product Market Fit”, Review, accessed Aug. 16, 2024, https://review.firstround.com/how-superhuman-built-an-engine-to-find-product-market-fit/