At 27 Calvin Hunt finally stumbled across his first great opportunity. The Atlanta native had graduated from Florida State in 2008 directly into the teeth of the Great Recession. A shot at a dream job in the corporate headquarters of Hatteras Yachts in North Carolina vaporised as the tanking economy swiftly decimated the luxury-boat business. Instead, for nearly four years Hunt toiled at a Hatteras dealer in Orange Beach, Alabama servicing old boats, struggling to sell new ones. By the summer of 2012, his interest in the marine business effectively scuttled, Hunt had relocated to Austin, Texas, to attend an unusual one-year MBA programme focussed on entrepreneurship at the Acton School of Business. “The goal was not to earn an MBA,” he recalls. “It was to learn to start and run a business.”
That’s when his big break appeared. A month before beginning business school Hunt ran into a friend interested in hydraulic fracking. The technique can require transporting massive amounts of water across miles of open desert, and Hunt and his new partner soon discovered that long, flexible hoses would be superior to the industry-standard 40-foot-long sections of stiff aluminum piping. The problem? Almost no one made hoses with large enough diameters to be useful for the frackers.
Sensing an opening, Hunt swung into action, first locating a manufacturer of fire hoses in Erie, Pennsylvania and then busting his tail to line up enough pre-sales to convince the manufacturer it was worthwhile to retool its factory to produce bigger hoses. By November he had secured an exclusive North American distribution deal, and by April, when the first hoses shipped, his Austin-based Frontline Fluid Solutions had four employees, was profitable and was on track to reach an estimated $4 million in sales its first year.
What he hadn’t done in those crammed and chaotic nine months: Drop out of business school. Incredibly, Hunt had chosen to give cheap equity to his business partner so he could devote himself full-time to finishing his MBA at the tiny 24-student, ten-year-old Acton School. The education, he says, was worth the dilution. “I felt like I needed to finish the programme to run the business effectively,” he says.
Acton inspires this sort of loyalty because of its relentless focus on a single goal: Educating aspiring entrepreneurs. The curriculum discards the traditional MBA silos of finance, accounting and marketing to revolve around the entrepreneurial cycle of creating, growing and selling a business. Courses actually sport names like ‘Opportunity’, ‘Raising Money’, ‘Customers’ and ‘Harvest’, and they are taught exclusively by highly successful entrepreneurs rather than by traditional academics.
These volunteers—none takes a meaningful salary—are entirely devoted to teaching. The current roster of ten professors boasts an alphabet soup of advanced degrees from elite institutions, but they publish no research, and Acton grants no tenure. Instead, the lowest-rated teacher (as judged by student evaluations) is asked not to return the following year. (About 8 percent of the students also fail to complete their degree, a much higher percentage than most top MBA programmes).
“I have found that teachers who have either ongoing business experience or prior business experience—and who focus on teaching, not research—are intensely more valuable to students. Research is valuable to institutions and to society, but teaching is teaching,” says Jeff Serra, a longtime Acton professor and serial entrepreneur. After serving as CEO of oil refiner Philbro Energy prior to its 1997 sale to Valero, Serra founded a renewable energy company that he sold for $125 million, an Austin-based technology investment fund and most recently—and most creepily—Vida Capital, which is in the business of buying life insurance policies from the elderly for their value after those people die.
Inside the classroom Acton adopts the same case-study technique used by many of the best business schools, particularly Harvard Business School, where much of the material was developed. Where Acton differs dramatically from Harvard is in the amount of time its students spend inside that classroom—five months compared with 18—and its cost, $49,500 compared with $127,000.
That’s because Acton students spend their first four months studying online. During this prematriculation period the budding entrepreneurs are familiarised with the case method and learn basic financial skills like reading a balance sheet and discounting cash flows. The time commitment during “pre-Mat” is only 20 to 25 hours a week, allowing many students to keep full-time jobs—and further reducing the opportunity cost of the degree.
The students pay for that relative life of leisure during the second half of the programme, which runs from January to May. Study groups—assigned by the faculty and carefully designed to mix personality types, academic strengths and prior work experiences—meet daily at 6 am sharp at Acton’s headquarters. The students review cases until classes start at 8, when a rapid-fire discussion careens around the room from teacher to student to student and back again. In keeping with the Socratic method, only questions are asked, no answers are given. After classes end at around noon, the prospective MBAs disperse to individually grind away at the next day’s caseload, typically until about midnight. One-hundred-hour weeks are the norm.
It’s much harder sledding than usual for MBA programmes, which detractors often dismiss as “two-year vacations”. And all of that is before the more unusual “challenges”—such as going door-to-door in Austin selling highly marked-up children’s books or negotiating an 80 percent discount for a (not-on-sale) item from a department store—that Acton students must complete or face dismissal.
“I’m just kind of in survival mode here,” says Abianne Miller, class of ’13, during the final days of her spring semester. “This isn’t my life. I’m doing my relationship long-distance. I’ve put everything on hold—this is what I’m doing now.”
It is periodically fashionable to question the value of an MBA degree, especially as the number awarded has rocketed. According to the Department of Education, American universities produced more than 115,500 MBAs in 2011, up dramatically from a decade earlier, and a recently published analysis of PayScale.com data concluded that starting pay for new grads has either stalled or fallen slightly since 2008.
About 13,000 institutions worldwide confer MBA degrees, but only 557 of those are accredited by the Association to Advance Collegiate Schools of Business, an internationally recognised standard setter that dates to 1916. An even smaller subset—maybe 150—are considered of high enough quality to be ranked by one organisation or another, and only a handful of those—perhaps 60 schools—are selective, admitting 50 percent or fewer of applicants.
“The bottom tier of this market is just total schlock,” says John Byrne, a longtime B-school chronicler who now runs Poets and Quants, a popular blog for prospective and current MBA students. But it’s equally clear that the high-end schools—and their graduates—are thriving. Five years after graduation the average salary of alumni of the 25 top schools on Forbes’s ranking of the best US MBA programmes is $159,000—versus $62,000 when they entered school. (Because we evaluate only two-year degrees, Acton is not ranked.)
“People tend to look at the average. Well, we aren’t working with average,” says Paul Danos, dean of the Tuck School of Business at Dartmouth. “You can’t average everything out. People sometimes say high schools in America are terrible on average. It’s not true. There is no average. There are some terrible high schools, but we also have some of the best high schools in the world.”
Danos says that 95 percent of Tuck graduates find jobs within three months of graduation, and some 60 percent typically go directly into high-prestige-and-pay jobs in private equity, investment banking or management consulting.
A little more than 5 percent immediately take the entrepreneurial route. Those are figures that Acton is striving to invert. “One of the reasons we started this place was we saw our best and brightest students going into consulting, investment banking, private equity—and they would come back five years later making a lot of money and hating their lives,” says Jeff Sandefer, who founded Acton after teaching at the University of Texas’ MBA programme for 12 years.
It seems to be working. Two months after graduation 25 percent of Acton’s class of 2013 were either running their own businesses or in the process of starting one. Over a longer time horizon the numbers are even more impressive: A full 50 percent of all Acton alumni describe themselves as entrepreneurs and another 23 percent say they will be running their own company “someday soon”.
In many ways the story of Acton can be read as an elaborate tale of revenge and an extended proof of concept. After studying petroleum engineering at UT, Austin, Sandefer got an MBA from Harvard Business School in 1986 (he would go on to serve on various HBS boards for more than 20 years) and then embarked on a lucrative entrepreneurial career developing and leasing oil and gas properties in the Gulf of Mexico before running an energy-investment fund from Austin. By 1989 he had banked “hundreds of millions” and wanted to go and teach for a year to “clear his head”.
At the University of Texas’ business school Sandefer helped create a course on entrepreneurship, introducing the case studies and Socratic method he was familiar with from Harvard. As the entrepreneurship programme expanded—and Sandefer’s one-year gig stretched to 12—he began recruiting local business people to teach. It was a popular decision. By Sandefer’s account his eight part-time entrepreneur-professors eventually taught 25 percent of UT’s elective hours. At the time the school had 140 full-time faculty members.
A clash and a quickie divorce, which came in 2001, were probably inevitable. “We had built a nationally ranked, great programme, and whenever you do that in academia—and there is money involved—understandably the faculty wants to get back in the game,” Sandefer says. “It was almost like, ‘You amateurs have done a good job. Now it’s time for the pros to take over.’ ”
Since Texas offered a two-year degree, Sandefer felt he had “stranded about half the kids that had come to UT for our programme.” So “just out of good conscience” he decided to offer a single, not-for-credit, 25-hours-a-week “murderous” class the following year. He thought that 10 students would show up—130 did.
The following year 27 students convened in a classroom that Sandefer borrowed from a local Catholic school, each paying $37,500 for the privilege. The Acton School of Business was born.
Or nearly so. Sandefer’s enemies weren’t quite done with him. “We didn’t know we needed to be accredited,” he says, “Never did. Then we got a phone call one day—and that might have been triggered by someone at our former employer.”
Fortunately for Acton, Sandefer’s great-grandfather had been the president of Hardin-Simmons University, a small, Baptist school in West Texas, for 31 years. Sandefer jumped on a plane to Abilene, Texas and told the current president “I need an accreditation within 24 hours or I am out of business.” He got it. To this day Acton operates under the auspices of Hardin-Simmons.
“We are in a big battle between increasingly hollow prestige that costs a lot a money,” says Sandefer, “and performance.” Going forward, the biggest challenge for Acton is scaling the experience. Roughly 900 people from around the world have paid $300 to go through the school’s online offering—the awkwardly named myEJ.com (for “my entrepreneurial journey”). There is a sister school in Guatemala, and Acton licenses portions of its curriculum for a nominal charge. But the school’s secret sauce—it’s hyperexperienced and ultradedicated faculty—is tough to replicate.
“You can’t franchise it,” says Miller, who now works full-time at her startup, Cat Spring Tea. “But there is enough here that if you can get other people who really do want to share this mission, then yes, they will do a lot to make that happen, to help them get over the first hurdles.”Click Here to see the list of Best Business School