A long time ago, I had to make a really tough choice: invest in an MBA from New York University, or make do with my bachelors. I was newly married, had a child on the way, and didn’t have much in savings. The degree would set me back tens of thousands of dollars and take years to complete—especially if I did it part time. And I couldn’t imagine doing anything but programming computers for a living.  So why learn finance, marketing, and operations management, I wondered? Well, I decided to enroll because my understanding of the business world lacked depth, and I harbored a deep-rooted desire to get the best education possible. My wife and I moved into a small one-bedroom apartment in North Bergen, NJ, and we made do with what we had. For a couple of years after getting my degree, I wondered whether I had made the right choice. Even though I scored a great job at CS First Boston in its IT department, I was just writing code and designing systems. Yes, I started to enjoy reading BusinessWeek and the Wall Street Journal; but had the financial sacrifice and time away from my family been worth it? It didn’t seem to have been. Over time, I started rising through the ranks in IT. I went from being a programmer to becoming a project leader and then a vice president. I found that I could communicate effectively with user departments and my bosses; I could deliver projects on time; I knew how to manage and motivate employees; and I had the confidence to present business proposals to managing directors and board members. I was even able to help persuade IBM to make a $20 million investment in the technology that my team had developed. We spun off a startup called Seer Technologies, and I became chief technology officer. And that’s when my education really began to pay big dividends. In the startup world, it’s simply survival of the fittest. You have to involve yourself with almost every aspect of the business—and use all skills. I would find myself having to develop and manage budgets; help market and sell; hire; assist in setting corporate strategy; and review legal contracts. As well, I still had to develop technology and deal with all the uncertainties and failures that come with a startup. My MBA classes seemed to fit our business needs like the pieces of a jigsaw puzzle. Even obscure topics like corporate finance came in handy, in IPO discussions with investment bankers and later, in raising capital for my own company. So I have no doubt that my MBA was the best investment I’ve ever made, and my education helped me achieve success.  Which leads me to the reason for this post: a Twitter debate with Guy Kawasaki, Managing Director at Garage Technology Ventures. Kawasaki argues that MBAs are not needed in the startup world; in fact these provide negative value. He insisted that I was “ in denial ” when I challenged a piece he had written in Forbes several years ago: What is the value of an MBA these days for young college graduates who want to start their own company? Probably about a negative $250,000. (I have an MBA, and I was once a young college graduate.) I don’t think an MBA matters very much for starting a company. A much better educational background is an engineering degree. You can always hire MBAs, but if you don’t have the ability to conceptualize and deliver a product, you’ve got nothing. In email exchanges, Kawasaki explained that his issue with MBAs is that they are “taught that the hard part is the analysis and coming up with the insightful solution”. In other words: implementation is easy and analysis is hard. “But this is the opposite of what happens in startups. Implementation is everything in a startup.” Kawasaki believes that MBAs aren’t a good fit for startups, and engineering graduates are. I agree that engineering degrees are important. They provide a level of technical depth and analytical capability that is invaluable in the tech-startup world. But not everyone needs to be an engineer. You need smart people coming up with creative marketing campaigns; managing finances; and selling your products. And the CEOs and CTOs need to master all domains. In my experience, the most successful entrepreneurs have been those with a strong technical background who have been through some sort of “finishing school”. (I am not talking about college dropouts such as Bill Gates and Steve Jobs—I consider them to be outliers). Engineering degrees can be very technical and can actually narrow one’s horizons. To innovate, you need to understand customers and markets. To build a successful product—one that actually sells and makes an impact, you need to understand distribution and finance. So even in the lower echelons of technology, a broader educational background is a plus. Is the MBA the best degree for engineers? Maybe not. Programs such as the one I teach at Duke may be a better fit. The Duke Masters of Engineering Management program is a one-year program that teaches students marketing, finance, intellectual property and business law, and management. It’s like a mini-MBA. Engineers don’t need to learn how to price an option with the Black–Scholes Model, for example. They certainly don’t need to learn how to create new types of financial products. There are also many other degrees that can provide the needed balance to engineers. These don’t have to be tech or management oriented; even an education in diverse fields such as psychology can be a plus: anything that broadens your horizons and teaches you how to come up with “insightful solutions”. The point is that education is the best investment that one can make. Unlike stocks and bonds, education never loses value; and when you add experience, it gains even more value. Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa

When startups ask me whether they should outsource product development, I usually advise against it. If they’re desperate to save money, they should outsource some testing or ancillary-product development, not core products.  That’s because the developers of innovative technologies need to interact with each other and be close to customers and markets.  In my book, outsourcing is for corporate I.T. departments and for large companies with global operations, not for small tech companies.  I said this in my BusinessWeek column , three years ago.  I also cited research that showed that the tech industry has never constituted more than 15% of the outsourcing market (banking, finance, and insurance accounted for 40%; telecom, 17%; and manufacturing, 12%)—and this includes the product development that companies such as Microsoft, Adobe, and Cisco perform in their offshore locations. When I wrote that BusinessWeek piece, Peter Harrison , CEO of GlobalLogic—who happens to be a good friend and someone I have mentored over the years—tore into me.  He insisted that I was wrong and offered to prove it by introducing me to his customers.  I ignored him (as I often do).  But Peter is persistent.  Last week, he roped me into his customer conference to have dinner with Mike Moritz of Sequoia Capital, who is a GlobalLogic investor.  Peter also had me meet some of his customers. I wasn’t surprised at how bullish Moritz was on GlobalLogic and outsourcing. VCs always hype their investments and are known to put pressure on their portfolio companies to reduce development costs through outsourcing.  But I was a little surprised to hear small Valley firms rave about the productivity and cost savings they were achieving by doing R&D in places like Kiev, in the Ukraine, and Bangalore, India.  And I was very surprised to learn how rapidly GlobalLogic was growing despite the dismal economy. The company employs 3000 software developers world wide and has just received a mezzanine investment from a top investment bank (which usually means that the company is one step away from an IPO). Despite this, I remain unconvinced that outsourcing core development is a good strategy for startups.  During my tech days, I outsourced R&D to St. Petersburg and Novosibirsk, Russia.  But as you can read in this FastCompany article , my technology was conceived there, and that’s where my entire development team was located (and I was able to hire brilliant ex-KGB mathematicians who had skills I couldn’t find anywhere else). Having development teams working on a single product but being in different locations makes innovation much harder to achieve (yes, I know this is how open source works, but that’s different).  I’m going to detail my reasons and let GlobalLogic CTO, Jim Walsh , tell us all why he thinks I’m wrong. Here are the reasons I’ve cited for outsourcing not making sense: 1) Communications and customer needs. Developing a product requires a deep understanding of customer needs, and extensive user interaction.  Locating R&D personnel away from customers limits the ability to develop innovative products that meet market needs. 2) Components must fit together. Complex software is more like a Swiss Army knife than a meat cleaver.  The blade, bottle opener, and screwdriver have to work in an elegant manner and can’t be developed independently.  In a similar way, members of a software-development team need to work closely together. 3) Management bandwidth. It is a lot more challenging to manage diverse teams at multiple locations and in different time zones than to manage them together.  Additional layers of management are often required. 4) Fewer developers can often produce more. In the tech world, scaling up development teams doesn’t always lead to greater productivity.  Small teams are often the most innovative and productive. 5) Skills scarcity. The specialized skill and mindset that tech companies look for are hard to find.  For example, India doesn’t have programmers who have grown up to understand the intricacies of computer-game development, because few can afford the high-speed Internet connections needed.  In India, the best developers gravitate to prestigious companies like Infosys and Wipro, not to small startups. 6) Intellectual-property protection. This is a particularly strong concern in China, where it is almost impossible to protect trade secrets and where piracy is rampant.  Employees often leave to start ventures that compete directly with their foreign employers, and the laws provide little protection, because they aren’t enforced. Here is Jim Walsh’s response.  I must warn you that this may read like an ad for his company, but I need to be fair, because I’ve just trashed GlobalLogic’s entire business model.  So take this for what it’s worth: If  by “outsource” you mean throwing stuff over the wall to a third party, then I’d never advocate this for core development. If, on the other hand, you mean collaborating with a firm that possess specialized skills that you lack, are hard to find or very expensive and aligning your goals around a common outcome, then clearly I’m a fan. Firms that fail at globalizing R&D do so because they either because they pick the wrong partner (i.e., one that lacks the R&D DNA and does not specialize in the firm’s domain) or because they throw stuff over the wall and don’t invest in the intimate collaboration and goal alignment that true R&D requires. Most IT services firms make poor product development partners because they focus on compliance and optimization, which suppresses innovation. By contrast, GlobalLogic has created a network of global innovation hubs that are made up of some of the brightest and most innovative software minds. Our software professionals are connected by a platform that supports Agile collaboration and that is designed exclusively for the purpose of accelerating breakthrough products to market. We are doing this successfully for a “who’s who” of the technology sector, from the very tiny to the very large. That said, let me respond to each of your points in turn. 1) Communication: I completely agree that building great products calls for a deep understanding of customer needs and great communication.  We believe in creating small agile teams where the product owner is an integral member.  If this team is distributed, then it’s essential that you either (a) separate the scrums and have product owners in each location or (b) have the product owner overlap with the engineering team for several hours every day to review deliverables and provide constant feedback.  Although in the old days this was hard to do, modern communication and development platforms have made collaborating across distance easier.  In some cases, they can improve the quality of communication over co-located teams. 2) Integration: While building tightly integrated products with distributed team members might have been hard in the past, modern development tools and architectures have made it increasingly straightforward for even the most complex products to be built by distributed teams.  Most open-source projects are living proof of this progression. 3) Management: Managers who have distributed teams do need to learn new skills; however, once proficient, a manager with a distributed team can often outperform a centralized one. Take for example the opportunity to follow the sun by developing during the day and testing the same code line at night (i.e., daytime in a second location).  Or consider the opportunity to leverage specialized skills that you simply don’t have in one place or to have a larger or more skilled team than one could assemble otherwise.  If you’re struggling to overlap enough hours a day, one can always leverage teams in Latin America that work in US time zones. 4) Talent: I’m well aware that one great developer can often outperform many mediocre ones. That’s why I’d never compromise on the quality of team members – particularly for new product development. However, it’s possible today to get developers in Argentina, China, Eastern Europe and India (i.e., locations where we have innovation hubs) who are just as talented—and in some cases just as experienced and innovative—as those in Silicon Valley.  The key is to set your bar high and hand-pick your team in the same way that you would if you were doing the development right here at home. 5) Skills: While there was a time when specialized skills were hard to find abroad, this is simply no longer the case.  When I started in this industry 25 years ago, the skills in the U.K. were about 10 years behind those of the U.S.  Today, there is no longer any skill lag.  Indeed, it’s possible to get skills in cities like Bangalore and Kiev that are in advance of what you can find in many U.S. cities. 6) Intellectual Property: For all but a handful of products, IP risk is a red herring thrown out by firms to defend the status quo.  In our history of building more than 1000 products for more than 200 product companies, we’ve never had an incident of IP theft.  There is simply too much at stake for our firm and our employees for this to be a meaningful risk.  Finally, many firms have concluded that the only true defense for their IP is moving faster than the competition, and we can certainly help them do that. Lastly, we would argue that the day has come when even a startup needs to think globally (i.e., become a micro-multinational) and seize the opportunity to create products that can be used around the world.  Therefore, it’s not enough to focus only on what American consumers want.  Having a global team is a great way to ensure that you’re creating a product that can address global needs. The last part, on globalization, is exactly what Mike Moritz said in his talk.  I agree with this.  But Jim hasn’t convinced me about the other issues.  It could be, though, that things have changed from the time when I was a CTO and CEO, and that my information is dated.  So I look forward to reading your comments on what has and what hasn’t worked for you, and what you think about this topic. Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa .

Thirty five years ago, give or take, I was presented with my first etch-a-sketch. And it looked a little bit like the iPad. Which makes me qualified to declare the iPad the future of media. Or at least, that’s the logic of an article in today’s Guardian by Alan Rusbridger, who says that a block of wood that he saw sixteen years ago showed him the future. And that future was the iPad . “My personal journey to the iPad began around 16 years ago in Aspen, Colorado,” Rusbridger begins. He saw a website showing a newspaper online and was duly impressed. “But the real excitement lay in Aspen, where the Knight Ridder newspaper chain had set up a “laboratory” to study the future of news. It was rumoured that they had built a “tablet” – a portable screen on which people could read newspapers.” The tablet he saw was a block of wood with a printout of a newspaper glued on the front. No, I’m not kidding. “At present it consists only of an A4 block of wood, with a ‘front page’ stuck on it: the technology for creating Fidler’s ‘Flat Pad’ is, he estimates, still a couple of years off. And the iPad finally fulfilled that dream. “Here it was – the Aspen block of wood incarnate!” says Rusbridger when his iPad arrived. The iPad Will Not Fix Your Newspaper Rusbridger then goes on to talk about how perfect the iPad is to consumer the Internet ( no disagreement from me on that point). And he suggests the iPad might be the knight in shining armor who rushes in to save the day for newspapers: “So is the iPad the future of newspapers after all?” The best I can tell is that the newspaper guys envision people sitting on a train on the way to work reading their iPad. That’s similar to people sitting on a train read the newspaper. And since those two things are similar, voila!, the iPad will save newspapers. Seriously, that’s as far as the argument goes. But jumping back to reality…the iPad changes everything, which really means nothing has changed. All the pressures the Internet put on newspapers – crushing the business model, unlimited competition, no need for tree massacres – are just amplified by the iPad. Now would be the time to embrace the Internet. But the New York Times, the Wall Street Journal and other are running in the opposite direction with apps that have no hyperlinks and/or require a fee to get access. All those people sitting on trains with their iPads are going to do the same thing that all those people sitting in their offices on their laptops did – get their news from free sources that hyperlink to other free sources. The etch-a-sketch was very, very cool. But it didn’t give newspapers a competitive advantage and a way to stay alive a little longer. And neither does the iPad. CrunchBase Information iPad Information provided by CrunchBase

Yammer , the San Francisco startup that offers a solid enterprise-grade microsharing and realtime communications service, is expanding its executive team after successfully closing a Series B funding round to the tune of $10 million earlier this month. The company made one internal promotion, appointing co-founder and VP of Technology Adam Pisoni to CTO. In addition, Yammer recruited David Satterwhite to lead its sales efforts, while Steve Apfelberg was brought in as VP of Marketing. Before working at Yammer, Adam Pisoni served in senior engineering roles at Geni and Shopzilla and co-founded and was CTO at Cnation. The company says Pisoni played an instrumental role in building Yammer’s communication platform from the ground up, adding that is now in use by over 60,000 companies and organizations (including TechCrunch). David Satterwhite, who recently joined as executive vice president of sales, began his career in sales at Oracle and then held multiple roles at Clarify. Satterwhite went on to lead worldwide sales at NightFire Software, @Road, and newScale, before making the jump to Yammer earlier this year. Finally, Steve Apfelberg served as the senior vice president of marketing and business development at Callidus Software before joining Yammer as VP of Marketing in October 2009. Prior to Callidus, he held senior roles at Siebel, Remedy, and Oracle. He’ll be working with Jon Grall , who recently joined Yammer as Senior Manager of Product Marketing after a brief stint as Product Lead at Dropbox. Yammer has seen solid growth since winning the 2008 edition of our TechCrunch50 Conference, and with close to $15 million in venture capital and a slew seasoned SaaS executives at the helm, the startup is well-positioned to sign up more customers and grow to profitability in the next year or two. We’ll be monitoring them closely along the way, and not just when they go down . CrunchBase Information Yammer Information provided by CrunchBase

While Apple is being lamented here and there for not supporting Flash on its shiny new iPad – boy does Cupertino have a strong dislike for the platform – Adobe has already responded to the news on the official Flash Platform blog . The blog post, unambiguously titled “Building iPad Applications with Flash”, is mostly just to remind people of the company’s Packager for iPhone product, which will enable developers to make Flash apps function on the iPhone / iPod Touch through a work-around whereby Flash apps can be easily converted into iPhone apps using Creative Suite 5 (CS5). We’ve written before that this could turn 2010 into the year when approximately 2 million Flash developers could potentially start cooking up stuff for the iPhone en masse. You can now add the iPad to that, it seems. The company notes: We announced the Packager for iPhone at MAX 2009 which will allow Flash developers to create native iPhone applications and will be available in the upcoming version of Flash Pro CS5. This technology enables developers to create applications for the iPhone, iPod touch, and iPad (though applications will not initially take direct advantage of iPad’s new screen resolution). It is our intent to make it possible for Flash developers to build applications that can take advantage of the increased screen size and resolution of the iPad. For that latter part, Adobe points to this article by Christian Cantrell , Product Manager and Application Developer on the AIR team. The article goes in depth about how developers can build apps using Flash with authoring with multiple screen sizes and resolutions in mind. You won’t be able to fire up, say, Hulu through your browser on the iPhone or iPad any time soon, but Adobe appears determined to show the world that Flash has its place on Apple’s products one way or the other. And it’s also sending a message to Flash developers that they can and should stick to the platform rather than look at other ways to join the App Store goldrush.