Mod Note (Andy) - Throwback Thursday - this originally went up July 2012
A while back I mentioned that during the two years of my MBA program at a top-5 school, I'd put a star next to every note I took that I thought was worth carrying forward into my future career.
When I moved on, I threw away the 18 handwritten notebooks, but not before compiling all the starred stuff into a document. Depending on how you look at it ,you could say this document cost me nearly a quarter million dollars (not including opportunity cost). Disappointingly, it is only 11 pages long... and that's double-spaced.
A couple people have since written asking me for the document. It's a pretty personal list, so I can't do that. But I will share a few juicy tidbits here.
On operations: Ops MBAs have very little advancement (C-suite) potential. This is because a smart generalist can run ops up until the numbers turn Greek. Then you just hire a specialist.
On convertible debt: After exhausting the straight debt markets, CFOs like to issue convertible debt that is non-callable for a given period of time, say three years. If you are an investor in the company's other securities, pay close attention to this time frame. This is often the outside horizon of the CFO's projected time with the company. (The CFO knows that if the stock doesn't go up a lot in these three years, he is already going to be out the door and it won't be his problem.)
On strategy: A lot of companies think they have a competitive strategy but don't. If my competitors could follow this strategy and get the same results, it's a best practice, not a competitive strategy. So keep looking.
On modern M&A: It's often just a way for intangibles to change hands. You can sell a factory; it's a lot harder to find a way to legally sell a customer.
On revenue synergies: Sell them to the clients. Don't believe in them yourself.
Looking for early signs of a company in distress? The credit rating downgrade is not a warning; it's the final nail in the coffin. Instead, find out whether they are missing their 2/10 net 30 discounts. The return on that discount is way above most corporations' cost of capital. So if they're missing it, they're either morons or they have cash flow problems.
Oh, and one more important thing I learned during the program: on one of my blog posts a while back, I said that anyone prepping for b-school needs to brush up on their penis jokes.
The general response to this was along the lines of this response: "OP is out of touch with our current reality. Penis jokes? Really? Are we back in high school? I mean, I'm about to drop half a mil on a b-school and I'm suppose to laugh at a penis joke?"
Other monkeys replied and said, "Dude, get a clue; the OP was joking."
Sorry, folks. I actually wasn't joking.
Oh yes, my friend. If you go to a top program, you will pay a quarter mil (probably not a half mil) to laugh at penis jokes (typically while drinking $2 beers).
If it's any consolation, the quality of the jokes is markedly better than they were in college. From the world's best and brightest, would we expect anything else?