Are MBAs becoming less important?

Interesting blog post from Fortune, which talks about how prominent PE firms such as GTCR are no longer requiring their associates to attend business school. Rather, promising associates are being promoted from within. A similar trend is happening at MBB consulting firms, which used to kick out pretty much every analyst after 2-3 years. Now, a lot of them are staying rather than going to b-school. Pretty interesting trend.

I think the huge costs (tuition keeps going up while median compensation has barely budged) is definitely playing a major role here. In addition, I think the movement towards one-year MBAs, executive MBAs, and specialized masters programs such as mfin/mfe is a real one.

http://fortune.com/2015/06/05/mba-less-important/

 

This is a trend not limited to MBAs but to university degrees as a whole.

How we educate and train people for various occupations will continue to broaden beyond the university credential, with the emergence of MOOCs, a la carte training, and so forth. Even universities are offering more of these a la carte programs (including b-schools such as HBS with HBX; b-schools will likely continue to expand their offerings beyond just the plain vanilla 2-year MBA program if they want to stay relevant).

Doesn't mean that traditional bricks-and-mortar degrees will become obsolete, but that they won't have the near-monopoly as the sole gatekeepers to high skilled jobs. And this goes for MBAs as well - even in the past, an MBA was not absolutely essential (an option and a potentially valuable one at that), but that it will only become more of a luxury in the future.

Alex Chu www.mbaapply.com
 

I agree with this. The financial industry is certainly not immune to technology, globalization, and specialization. I think a lot of finance jobs will either be automated or done by quants/programmers. The exception would be roles that require both market knowledge and client interaction as well as bottom-up security research since the latter is so much more than just modeling.

In terms of knowledge, I learned 3 key things during my time in b-school:

  1. accounting, corporate finance, and valuation
  2. looking at businesses from a big-picture strategic viewpoint
  3. effective communication

I think these are all valuable things (especially #3, which is critical to long-term professional success), but I don't think they alone justify the insane cost of an MBA. The way I see it, the primary short-term professional benefit of an MBA is access to OCR. The advantage of OCR is twofold: it allows people access to companies and jobs that they otherwise may not have been able to get and it limits the competition to just MBA students. However, the downside is that OCR is mostly limited to banking, consulting, and F500 roles. For those who want non-OCR jobs, they're pretty much on their own, for career services is extremely unhelpful (don't get me started on how useless career service is). A lot of my classmates got their jobs by reaching out to the network they already had BEFORE b-school.

The long-term benefit of an MBA is ostensibly the network, or at least that's what the school will trumpet in their marketing. I don't quite buy that. Yes, you make friends you stay in touch with over the years, but I have talked to a lot of older MBA alums, and I have yet to see the MBA network having a meaningful impact on one's career trajectory years down the road. The other potential long-term benefit is that an MBA serves essentially as an out of the money put option; it protects you from economic volatility by helping to ensure that you have a comfortable white-collar six-figure job. I think the argument here is a bit more persuasive, although it's hard to predict what the job market will be like years down the road.

I certainly don't regret going to b-school and thoroughly enjoyed my experience. However, my view on the MBA has changed radically. Before I started, my view on b-school was naive, overly optimistic, and borderline delusional. After having gone through the gauntlet, my perspective on not just b-school but life and people, is much deeper, mature, nuanced, and realistic. When younger people ask me now whether they should get an MBA, I ask them a bunch of questions and even tell a good number of them to NOT get an MBA. Ultimately, I think schools have done an ingenious job of marketing themselves to potential applicants burned out from the corporate grind, looking for some sort of salvation.

 

MBA degrees serve as a screening mechanism. I think that given the greater proliferation of access to jobs such screens will if anything become more important not less.

Also, people that hire MBAs have MBAs and in part do so the justify their own degree. If managers stopped placing this emphasis on such degrees they would be devaluing themselves.

 
ke18sb:

MBA degrees serve as a screening mechanism. I think that given the greater proliferation of access to jobs such screens will if anything become more important not less.

Also, people that hire MBAs have MBAs and in part do so the justify their own degree. If managers stopped placing this emphasis on such degrees they would be devaluing themselves.

The signaling theory is incorrect in many industries. Employers often care about tangible, hard skills and relevant experience. Anyone that acts on the assumption that the signaling theory is correct (i.e., doesn't bother to learn hard skills) will be severely limited in their job prospects (confined essentially to management/consulting/IB roles).

“Elections are a futures market for stolen property”
 

We are talking about MBAs, obviously people will be confined to management/consulting/IB roles (you forgot marketing).

And no, signaling theory is not incorrect. As I stated the greater access to jobs leads to a greater applicant pool. Companies receive hundreds of applications per job. Things such as top undergrads, MBA - for the necessary industries, etc. will become more an more important. In other industries such as tech/engineering having a top pedigree is just as or even more important than its every been. Simply taking a MOOC won't get access to top jobs. Even if you look at LinkedIn for people that did bootcamps the vast majority still had a top tier undergrad.

For the record, I'm not arguing one system is right or wrong just recognizing current market dynamics.

 
ke18sb:

We are talking about MBAs, obviously people will be confined to management/consulting/IB roles (you forgot marketing).

And no, signaling theory is not incorrect. As I stated the greater access to jobs leads to a greater applicant pool. Companies receive hundreds of applications per job. Things such as top undergrads, MBA - for the necessary industries, etc. will become more an more important. In other industries such as tech/engineering having a top pedigree is just as or even more important than its every been. Simply taking a MOOC won't get access to top jobs. Even if you look at LinkedIn for people that did bootcamps the vast majority still had a top tier undergrad.

For the record, I'm not arguing one system is right or wrong just recognizing current market dynamics.

It is true that a large portion of MBA candidates look for/are satisfied with management/consulting/IB work, but there are many that are interested in work beyond these traditional fields, especially in finance. As markets become more liquid and therefore more efficient, and as technology continues to develop, these roles are becoming increasingly quantitative.

The soft skills provided in the standard MBA curriculum are becoming increasingly obsolete and this is reflective in placement trends. Beyond this, and in general, there is simply greater specialization among all fields which increases the opportunity cost, both for employers and for employees, to abandon training in favor of developing soft skills (which can be learned on the job) from an MBA program.

The signaling effect is probably still strong when it comes to getting an interview (but less so now that the labor market is very strong) but based on my own experience, it seems nonexistent when it comes to actually getting a job.

My two cents.

“Elections are a futures market for stolen property”
 
Best Response

"The soft skills provided in the standard MBA curriculum are becoming increasingly obsolete and this is reflective in placement trends."

Have you ever actually worked for a real company outside of the buy-side? Soft skills are the ONLY important thing in almost every industry. I don't mean that you don't need the technical skills, but above a certain level (generally middle management) soft skills are the only thing that's going to get you the promotion to upper management. No one in consulting or IB makes MD/Partner without soft skills, given that the vast majority of their job is sales. Even in tech, those who do the best are great programmers who also have management skills. Milton Waddams wouldn't make it to CEO of Google.

The only reason the buy-side (and I mostly mean HFs/AM) is an exception is it's one of the few industries you can do well in by sitting by yourself in a corner and crunching numbers. Frankly it's the only industry of that kind I can think of. If you don't believe me, look at every single survey that asks employers what they look for in new hires. Here's one:

http://www.forbes.com/sites/susanadams/2014/11/12/the-10-skills-employe…

 
ke18sb:

We are talking about MBAs, obviously people will be confined to management/consulting/IB roles (you forgot marketing).

And no, signaling theory is not incorrect. As I stated the greater access to jobs leads to a greater applicant pool. Companies receive hundreds of applications per job. Things such as top undergrads, MBA - for the necessary industries, etc. will become more an more important. In other industries such as tech/engineering having a top pedigree is just as or even more important than its every been. Simply taking a MOOC won't get access to top jobs. Even if you look at LinkedIn for people that did bootcamps the vast majority still had a top tier undergrad.

For the record, I'm not arguing one system is right or wrong just recognizing current market dynamics.

I disagree here, at least a bit. #1 it's credentials. I'd interview a guy who was a developer at Google and did his undergrad at College of Waukesha County. Why? Because he's a developer at Google. Maybe he didn't land there out of undergrad but Google doesn't hire and retain idiots. The same holds for GS and most banks (perhaps moreso).

If you went to Harvard, or even (more elite) UIUC, or even worked in IBD at Goldman a few years ago, nobody cares all that much. What's more important is what you've done lately, or perhaps what your biggest lifetime accomplishment is. (Something tells me Bill Clinton won't be poor anytime soon).

And to be honest, if we say we want to live in a democratic, meritocratic country, that's the system we want. Where you will be five years from now depends a whole lot more on the next five years than on everything that has happened up until now.

 

I think both of you guys are right to an extent. The signaling effect, whether we like it or not, is still very real and pervasive, especially in banking, pe, and consulting.

I think signaling is way more powerful for post-college jobs than it is for post-mba roles, mainly because MBAs will have actual work experience and a professional network even before school starts. For college kids, there isn't much to judge them on aside from their educational pedigree, major, gpa, and prior internships. I'm also of the belief that the finance game starts super early and that if you don't get the right job coming out of undergrad, your career trajectory could be seriously compromised. The older you get, the more difficult it is to break into the job that you want.

 
ArcherVice:

You have some sort of complex, everything in the world you don't have is put on a pedestal or is a greener pasture... everything you do have you marginalize ad nauseam.

Coming from someone who constantly strove for the next this or that for a couple of decades and advancement was my sole thought and goal, and actually did accomplished what I wanted, yet in the past few years has just chilled out, I'd recommend

 

Maybe I can contribute something. I'm a 1st year associate at a MM PE fund and just accepted a lateral position at another fun rather than applying to business school.

Here is my thought process:

There are times when business school is more important and less important. Assuming we agree Bschool's end-all benefit is to a better job then right now Bschool is competing much more heavily against the current job market. Given the quality of the market, the amount of jobs in the industry and the amount of experience you can get at a fund (proxy by volume of deals being done) I just don't see why I wouldn't keep working. Until the market gets worse / if I don't get promoted then Bschool becomes a much better option for me personally.

People may not remember '09-'11 but I know a lot of guys that were at funds for 2 years and never did a full deal because the market was so tough. Given in my first year at my current fund I will complete two full deals as the primary associate and I have another fund offering me a 3 year guaranteed spot with potential for promotion to VP, why would I be going to Bschool when these opportunities are available + the market is allowing so much experienced to be gained.

Caveat my thoughts with the fact I'm only 25 and I personally don't have a problem starting Bschool all the way up to the age of probably 29...

"If you want to succeed in this life, you need to understand that duty comes before rights and that responsibility precedes opportunity."
 

Given in my first year at my current fund I will complete two full deals as the primary associate and I have another fund offering me a 3 year guaranteed spot with potential for promotion to VP, why would I be going to Bschool when these opportunities are available + the market is allowing so much experienced to be gained.

I couldn't agree more.

#REF!
 

Good to see someone else doing this. My current fund wouldn't promote since I don't have an MBA so I lateraled to a VP position rather than going to business school. The best part is beating out the guys in b-school for the job.

 

Let's be fair here........the price of ALL degrees has skyrocketed so much that you have to question their value, not just the MBA. Anyone who is pursuing a degree without thinking carefully about what they are trying to achieve and where they are trying to go is risking a lot of disappointment.

I'm very happy with my MBA, but I was coming from a place where I had almost no idea what my next career step should be. The chance to take some time to assess my interests, abilities, and goals was probably the most valuable thing for me. Access to recruiters, 2nd year MBAs and recent grads, and career services allowed me to learn a great deal about a variety of companies and roles in a way I could never have done on my own. I was able to visit people and companies from all around the country, AND I learned a ton from the pre-MBA careers of my classmates. Just because THEY were leaving consulting/finance/marketing/etc. doesn't mean it wasn't right for ME. It was the late night conversations with the former consultants in my class that ultimately led me to my job.

But that doesn't mean I'm some doe-eyed dreamer about the MBA. When my wife got laid off, we looked at an MBA for her to re-enter the market. We ultimately decided that with her background and experience level, it didn't make sense. Her and I come from different places and have different goals. Doesn't mean she won't do one in the future though; she went ahead and did the GMAT even after accepting a new role so we could keep the option over the next 5 years.

If I was already making post MBA money at a company and wasn't stalled at my level, I wouldn't get an MBA either. With the pay and bonus structure of a lot of finance roles, I'm not surprised people are putting it off. One of my undergrad classmates got into HBS 2+2.........we graduated over 5 years ago and she still hasn't gone. She did 2 years at McK and now is out in NY doing the high powered finance thing, and I'm not sure if she'll ever go. If she does, it'll probably be because she wants to start her own business and figures HBS will help with that.

 

i don't have an mba, but i'm close with several people who attended and graduated from top programs...i think the better question is whether the value is still there. is it better to have the mba vs. not. i would think in most cases, yes. but, when you factor in all of the costs and other hurdles to getting an mba, the value might not be there for most people. if you are a career changer, a military person, or are trying to get access to a career that is predominantly secured through an mba, then i think the value is there. if you are already working in a business field, doing well, getting good experience, moving up, etc...i would then question if it's worth it. this is basically the consensus i've gleaned from the friends i have who have gone through it. i agree with many of the comments above...the mba is more and more becoming a ticket/access to certain careers. will you learn new things and benefit from the education? certainly, but again, especially if you are coming form a business background or have a business undergrad, is that knowledge worth all the cost and hurdles. the other big question is where the employment market is headed...as the price of education continues to increase, less and less people will pursue these programs. there is a reason why the % of foreign students is increasing throughout all of the US higher education institutions. there simply is not enough talented domestic demand to fill these seats. so, that could potentially increase the value of an mba if you are one of the few to have the degree, or it could make it more and more irrelevant. i'm not sure which way it's going to end up. i do know that work experience and your career track record and accomplishments are and will always be king. i don't care if you have the best degrees from the best schools, with the specialization and niche focus of jobs these days, the person with the best experience and already-obtained-know-how is going to get the job. so, if you can get great work experience without pursuing higher education, i say skip it. if you aren't getting good experience and need higher education to get access to a better work experience, you should go for the mba.

 
<em>bird</em>:

i don't have an mba, but i'm close with several people who attended and graduated from top programs...i think the better question is whether the value is still there. is it better to have the mba vs. not. i would think in most cases, yes. but, when you factor in all of the costs and other hurdles to getting an mba, the value might not be there for most people. if you are a career changer, a military person, or are trying to get access to a career that is predominantly secured through an mba, then i think the value is there. if you are already working in a business field, doing well, getting good experience, moving up, etc...i would then question if it's worth it. this is basically the consensus i've gleaned from the friends i have who have gone through it. i agree with many of the comments above...the mba is more and more becoming a ticket/access to certain careers. will you learn new things and benefit from the education? certainly, but again, especially if you are coming form a business background or have a business undergrad, is that knowledge worth all the cost and hurdles. the other big question is where the employment market is headed...as the price of education continues to increase, less and less people will pursue these programs. there is a reason why the % of foreign students is increasing throughout all of the US higher education institutions. there simply is not enough talented domestic demand to fill these seats. so, that could potentially increase the value of an mba if you are one of the few to have the degree, or it could make it more and more irrelevant. i'm not sure which way it's going to end up. i do know that work experience and your career track record and accomplishments are and will always be king. i don't care if you have the best degrees from the best schools, with the specialization and niche focus of jobs these days, the person with the best experience and already-obtained-know-how is going to get the job. so, if you can get great work experience without pursuing higher education, i say skip it. if you aren't getting good experience and need higher education to get access to a better work experience, you should go for the mba.

is your shift key broken?

 

Why do people keep comparing the CFA and MBA as if they were interchangeable? This is not like deciding between a BS in accounting and finance where both can get you into banking. The CFA is irrelevant in banking, while the MBA is still where most associates come from. After you complete the CFA, it is not like banks start coming to you and posting jobs, like they would if you were at an MBA program. The CFA is a professional designation, while the MBA is a degree- two different things.

The CFA is important and has its place, but the MBA is what you want if you are looking to get into banking from another industry, if you find yourself unable to lateral from a boutique, want to build up some credibility, etc. The technical knowledge learned from the CFA is great, but again, it is not a requirement for banking.

 

Just some perspective from a non-finance guy. I'm an Electrical Engineer by degree, spent a few years in an Engineering Leadership Program then Technical Sales for 3-4. Progressed nicely, but how do I get into management/finance/consulting?

OP may very well be right about people with the experience through and through, but even if I spent a ton of time learning the concepts (I have, taking finance classes at local schools and online) no one if going to take me seriously as a candidate without the MBA. Career switchers are a significant portion of the MBA market and the degree is still very much alive and necessary for us.

 
David__D:

Just some perspective from a non-finance guy. I'm an Electrical Engineer by degree, spent a few years in an Engineering Leadership Program then Technical Sales for 3-4. Progressed nicely, but how do I get into management/finance/consulting?

OP may very well be right about people with the experience through and through, but even if I spent a ton of time learning the concepts (I have, taking finance classes at local schools and online) no one if going to take me seriously as a candidate without the MBA. Career switchers are a significant portion of the MBA market and the degree is still very much alive and necessary for us.

Forgot to mention: headed to Rice Jones in the fall on a full tuition scholarship. Couldn't hack it at HBS (interview but rejected) and didn't consider any of the 10-25 ranked schools between HBS and Rice that would be better targets for my stats (740/3.6) due to family concerns, my wife and I wanted to be in Houston or Dallas.

 

i think maybe this may be more prevalent with non top 20 MBA programs. if you go to a M7 or top 15-20 schools, the networking is powerful plus you get to interact with high caliber minds and maybe learn a thing or two and at the very least broaden your perspective. Outside the top 20, unless you get really lucky then the CFA is a real alternative with a fraction of the cost. I am working my way toward part time MBA from top 5 school and i think that is a lot better then the CFA (albeit full time would be better, but not an option for me). it also depends on your situation. some of us with non traditional backgrounds need to have the MBA as a way to simply check that box and put recruiters at ease. if you are already part of the standard feeder pipeline into PE/HF/AM/IB/MBB/Consulting then MBA might be less relevant and CFA will give you a much deeper set of skills. bottom line: the answer to your question is that in some cases they are and in others not. use caution and as good judgment as you can muster. cheers.

"I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. " -GG
 

The MOOC train has already come and gone. Are that many people actually learning and becoming proficient in marketable skills? Most people get more mileage out of telling their friends they are taking online classes at Harvard, Michigan, CalTech, whatever.... as opposed to actually learning something which could improve their life. So no, MOOCs will not take anything away from MBAs. At best they have the potential to be a part of a future hybrid model which universities will have to employ in order to keep costs down.

What will decrease the relevancy of MBAs are the value companies put on them. Companies are starting to realize that it may be more advantageous to have their own leadership dev. programs to retain internal talent and give them the polish/skills an MBA may provide. That or more part-time MBAs. The demand for an MBA will always be there so long as there is a demand for MBA candidates exists.

 

I chose to go to a top part time MBA (school is a top 10 program) in a major MSA. For the longest time, I did not think I needed the MBA, but it dawned on me one day that everyone I worked with higher up had a MBA. I work in real estate development.

While working and going to school, I was able to get a new job in real estate that was a post mba position. Today my coworkers on my level are graduates of CBS and Kellogg full time programs. I would say the optionality of a part time, top MBA was beneficial since I was married and had to work, to support aging parent and later on a baby.

Part time is a different experience than FT, mainly socially and somewhat with career services. I would say my part time classmates though have landed pretty good management consulting positions (McK, Deloitte) and a couple ibanking positions (very few, mostly middle market).

Other than those industries, I did not see a material difference in career advancement opps.

In real estate development, the MBA and Masters of RE Development, are very relevant since the job is as much about managing people, communicating an investment thesis, as it is financial modeling and other more technical skills. There is a strong need to be well rounded and connected.

Have compassion as well as ambition and you’ll go far in life. Check out my blog at MemoryVideo.com
 

The main differences between PT and FT MBA is the social life and the fact that the former do not have access to OCR for summer internship recruiting. At a lot of schools, part-timers and executive MBAs get access to OCR for full-time recruiting, but I do know that at some programs they don't even get that.

There is also a difference in selectivity and caliber of students, but I'm not quite sure how that translates into post-mba opportunities and professional trajectory. I would imagine that some firms are more snobby about this than others.

 

One thing I forgot to add earlier in this thread. It's remarkable how much the finance job market has changed since the crisis. I talked to older alums who graduated from my school before 08, and their recruiting experience was very different. Back when they were in school, all the banks came to campus to recruit not just for banking but for the other divisions as well, such as s&t, research, Asset Management, etc. A decent number of hedge funds and asset management firms also recruited. Moreover, these firms were much more willing to take chances on a bright MBA grad who may not have directly relevant experience. Now, finance recruiting at the MBA level is much more narrow, and firms won't even interview you unless you meet every single criteria they outline.

 

If you take a look at some of the most successful people in any industry, most of them weren't necessarily A+ rank-and-file employees, but nearly all of them were at least a B on their own technical stuff.

There are exceptions.

It's not all about competence and getting stuff done.

The best way to describe soft skills is that they're cake icing, or salad dressing, or butter. People without soft skills aren't necessarily that much fun to work with or that employable, but they're a whole lot more preferable and employable than people with ONLY soft skills. Nobody eats salad dressing straight as an appetizer, and I don't think anyone likes working with a person who only has soft skills.

Soft skills are best used to augment technicals. Again, icing on a cake, salad dressing on lettuce. You need to start with a base and build from there.

And to be fair, nobody would go to Magnolia Bakery if all they sold was cupcake buscuits with no frosting. Nobody has ever raved about an amazing salad that did not have some sort of dressing on it. The value-add oftentimes makes up most of the total value. But if you're not trying to deliver something with intrinsic value, you're in even worse shape than Magnolia Bakery delivering cupcake buscuits or Del Frisco's serving up a salad with just lettuce in it.

 

Although your post was strange, I agree with the gist of it. Put it this way, Strong technical skills are much more difficult to acquire than strong soft skills. I've seen STEM geeks improve their social and communication skills, but a dumb fratboy is not going to become an analytical genius no matter how hard he tries.

There is room for both types of course. And I agree with the poster above who said that to move up you need to communicate well, work well with others, and have people like you. To go back to the point of this thread, I don't think you need to attend b-school to learn soft skills. And since b-schools are light on quant/technical knowledge, the primary value you derive from it is access to recruiters. But if you're not interested in the companies who do OCR, how are you going to extract value from the program in a way that it justifies the tuition and 2 lost years of income? I'm not sure what the answer is, nor do I pretend to offer one. I've just had a lot of time to reflect on the MBA now that I'm done.

 

Oh I think there's a lot of sources of fundamental value out there besides just STEM. I just think that at the end of the day... -Mark Zuckerberg calls himself a programmer. -Jamie Dimon calls himself a banker. -The CEO of Sotheby's calls himself an art dealer. -Rex Tillerson (Exxon CEO) calls himself an oilfield engineer. -Colin Powell calls himself a soldier.

Marketing and social skills are great complements to these peoples' core competencies, but they're not necessarily successful peoples' core competencies in and of themselves (besides maybe marketing firm CEOs and self-help gurus). At the end of the day, there's a fundamental ethic of getting something done... on your own if you have to... that I think a lot of these people have.

 

While I've gone off-topic a bit on this thread, here are my two cents (as a recent MBA grad) on whether MBAs have lost or gained value:

First off, I can't answer this from a historical perspective. I don't know much about how MBAs were viewed/what they taught 20 years ago. What I can judge is what the value of an MBA is today. In my mind, there are only a few reasons to go get an MBA:

  1. You want to switch careers and move into one that has a strong MBA OCR presence (consulting, banking, marketing, gen mgmt, etc.)
  2. You have absolutely no business skills (i.e. you were a musician, actor, etc, etc) and want to transition into the business world
  3. You're in an industry in which moving up requires an MBA (PE, consulting)
  4. You want a two-year vacation

I think that 1 and 2 are as valid as ever. In some industries, it's nearly impossible to break in from outside without the MBA OCR track, so for that it makes good sense to get an MBA. Reason 2 I think is fairly self-explanatory. No one is going to hire a former professional violinist to be a PM without some training in the interim. I think reason 3 is becoming less valid. Honestly, I think the big value of the MBA to those two industries is the network (in consulting having a network of former classmates at F500 jobs is a big help in selling projects), and while that has not changed I think the MBA "stamp" is becoming less important. Reason 4 is never going to go away.

As for skills, I personally found a lot of value in some of the courses I took. With the availability of data today, some of the research being done by academics is hugely interesting and valuable and is not being done in industry. However, I don't think these skills and ideas are valuable enough by themselves to justify an MBA. In my opinion, go for one of the 4 reasons above (and the last one is tenuous at best) or don't go at all.

 
ke18sb:
I'm pretty sure this article was already posted this week and ripped to shreds on the board when it was pointed out that it was written by a 20 year old.

Wow, my bad. Didn't realize someone already posted it.

That said, this kid is the founder of UnCollege and a Thiel Fellowship recipient. So he got paid $100,000 not to attend college, which puts him about $200,000 ahead of his peers. I wouldn't dismiss him out of hand.

 

I'm trying to decide if an MBA will be right for me, it may not be. But I don't think any top 25 MBA's will be taking salary's as low as $46,000 which they list as the figure in the article. There is a real debate over getting a good MBA or going a different route, but this article isn't it.

 

Makes me happy to see this kind of thing, you know why? Because I'm graduating undergrad with no debt and the thought of throwing 150k at grad school is sickening. I don't even need to say what kinds of things you can do with 150k.

Sure there will always be the Bradys of the world who would burn down an orphanage to go to HBS, but for those of us who couldn't care less about prestige, this is good news.

Besides, who wants to go to more school, hell I almost dropped out of ugrad until the project I was working on broke a patent and I had to flush it.

My drinkin' problem left today, she packed up all her bags and walked away.
 

I agree in concept to what the author is talking about. The MBA has been so diluted that it really only makes on a FT basis if you go to a T10 or T15 university. Outside that do it PT if your work place reimburses you.

This is causing the increase in specialized masters. People just don't want to spend 2 years and $100K or more for a degree. T15-30 schools are rolling out these degrees to offset declines in MBA applicants.

 

I don't think this is ground breaking, although I would probably set the cap at top 15-top 20, instead of top 10.

Most people (who are serious about going to top bschools) know that you attend a top MBA program to have a shot at opening up doors that would have otherwise been closed. At this point in human history, most smart people know that they could learn most business subject matter through independent study.

If you pay 100k+ and attend a "non-target" MBA program, and don't land a great gig, that's on you. Sames goes for undergrad - I know plenty of people who attended these no name, expensive private schools (i'm talking 45K+ tuition), and they're working as bartenders now with no foreseeable exit opportunities.

The amount of money you drop on education does not necessarily translate into the amount of incremental money you'll earn in your career; however, the name (just as anything in this life) of the school you attend, does have a major impact.

Just my personal opinion.

Super Nintendo, Sega Genesis - when I was dead broke man I couldn't picture this
 

I see this as Mr. Stephens taking the extreme case of the potential negatives of an MBA. His examples are hardly typical. Quoting one of the most expensive MBA costs out there and tying that to a low rung MBA program churning out $42,000/year salaries is a bit extreme. I think most people know that for some people it makes all the sense in the world to get that MBA from that particular school due to your particular career goals, while others career goals don't align well with pursuing an MBA. When people take an extreme example on either side it delegitimizes their argument in my opinion.

 

All I know is I would like someone to drive a stake into the heart of these fly-by-night MBAs (online or advertised on public transportation) that take vulnerable, hungry people who don't always have great potential and load them with false hopes and debt. It's just a variation of the Nigerian Prince scam, and it's sad.

 
Scott Irish:
All I know is I would like someone to drive a stake into the heart of these fly-by-night MBAs (online or advertised on public transportation) that take vulnerable, hungry people who don't always have great potential and load them with false hopes and debt. It's just a variation of the Nigerian Prince scam, and it's sad.
Agree, those and the for profit schools. I went to one for personal interest, and wasn't looking at getting a job (massage therapy). But a surprising amount of the kids I was in class with really thought that there was recruiting and a steady paycheck at the end of the program...they were bitterly disappointed.
Get busy living
 

Generally, the guy makes some valid points. Its no secret that everyone knows H/W/S are the business schools most want to attend and offer the best return on investment. Further, the point about the avg salary was made on the basis of students enrolling with 1 year w/e. Frankly, not sure how many schools worth going to admits such students but worse is the idiot choosing to spend $100k on the back of very little experience.

 

At some level this isn't too far off from what's being said about all forms of paid tuition at the tertiary-and-beyond levels. Plenty of folks saying that college isn't for everyone and a poor investment, especially if you're not a STEM major or otherwise at a prestigious university. People have been shitting on law school aplenty, far more than business school. To say that MBAs, as a whole, aren't that useful unless you go to a prestigious one isn't that far off from the general trend, which leads to worrisome conclusions: does education just suck now?

The key thing to realize with this trend is that the asset side of the education question remains the same; it is the liability side that has changed over the years, with tuition far outpacing inflation and real-wage growth over DECADES. The role played by government subsidies to student loans in this rampant inflation issue has already been discussed.

In this context, the value erosion of business school has very little to do with what business school offers - if anything, business schools today are BETTER than they were when they became 'the hot thing'. The problem is the cost-side, and the business schools (and insert here most parts of the American university system) are just being market participants in a government-intervened market.

I don't know where the cut-off is exactly for where an MBA - or a JD, or a BA, or a BS, or any other form of paid tuition - is no longer worth it. My disclaimer is that I lived frugally for years and am responsibly financing my education (I choose this word deliberately) at a very highly-ranked business school with excellent career stats, and I'm a very happy customer. I can't speak to what the experience would be like outside the top 10 (and even within, where it seems like 'education' isn't as important at some peer schools), but I can say that I was willing to attend schools outside this range, though not much further out.

The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be the shepherd.
 
futurectdoc:
Either go to a top B-School however you define it, whether it be H/S/W, MBA business schools">M7, A8, T-10, T-15, T-20 or T-25; or go to a cheap state school. Going to a UConn, Mizzou type program instate likely will get you a decent F500 role.

I really find all of these abbreviations to be utter bullshit. Why can't it just be I went to X school because I thought it would get me Y job, and I [succeeded/failed]. The A8 is utter bs imo btw

"They are all former investment bankers that were laid off in the economic collapse that Nancy Pelosi caused. They have no marketable skills, but by God they work hard."
 

I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

Even in the case of H/S/W, I think you need to seriously consider what and who you want to be down the road. MBAs (from a top school) make sense if you want to be a professional manager, corporate executive, or a senior finance professional (which is most of the people on this site). However, if you want to actually build things, start a company, or work in a role with a more specific (perhaps maybe technical) purpose (i.e. not a generic "manager"), then I think an MBA is a waste of time.

And as for not actually learning anything, I don't think that's a surprise, and I don't know of really anyone that's come out of b-school singing the praises of their classroom instruction. Most see the classroom aspect as a necessary minor diversion from the real purpose - networking, job hunting, and partying.

 
FrankD'anconia:
I'm shocked that an institution which is used primarily for people to take a couple years off of work and bases its acceptances off of pure gamesmanship is losing its utility.... mind boggling

Haha. I agree that MBA admissions is total fluff.

 

This article is not that well-written and uses the most extreme examples.

B-school, unlike law or med school, is not required per se to practice a certain field. And you certainly don't need an MBA to become wealthy. The question of whether an MBA is "worth it" hinges upon the school itself, the person's career goals, his professional development up to that point, and other personal variables.

From a purely monetary standpoint, I don't "need" an MBA, and some of my friends are questioning my decision to apply. But for me, i think a top MBA will provide me with a fungible and trasnferable skillset that will never go out of fashion or get automated away. It will also allow me to much more easily transition into a different industry if I decide to do so in the futre, and the network itself can be immensely valuable. One can definitely have a good network by say going to professional mixers and going out and meeting people. However, due to the unique nature of the mba experience, the network from b-school seems more cohesive and more responsive when you need help.

 
labanker:
I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

 

OH IT'S ON!!!!

PuppyBackedSecurities:
labanker:
I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

IT'S ON LIKE DONKEY KONG!!!!
Get busy living
 
PuppyBackedSecurities:
labanker:
I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

While he may have said it sort of douche-ily, I think he does sort of have a point. People might find it strange that someone who went to Harvard undergrad decided to sort of "step down" a notch in the prestige game. I'm not saying it's fair, but I could certainly see an interviewer asking "so why the hell did you go to CBS/Booth/MIT/etc?" or something similar. People often assume that since you're not at HSW that you didn't get into HSW, and thus there might be something "wrong" with you that they just haven't sussed out yet.

 
PuppyBackedSecurities:

You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

Dead serious. Harvard is a top tier undergrad. Booth is a second tier (albeit still viewed as a good) b school. Thus if you went to Harvard for undergrad and then Booth for b school, you are on a downward trajectory. PE shops, hedge funds, and other prestige whores will certainly notice this and ding you accordingly. Places that wouldn't notice this probably wouldn't care about an MBA in the first place, so the MBA from a lower tier school is a waste of time.

IlliniProgrammer:

Frankly I don't place much value on an MBA. The tech firms and startups look down on them, they're not helpful for trading, and you get little out of them besides what is increasingly looking like a network of unemployed people.

One of my friends runs a startup, and his cofounder just turned down HBS.

You don't place much value on an MBA because of your industry and vocational focus. MBAs are important for jobs where "seeming" is more important than doing. Most of being a corporate executive or senior PE professional is sounding good and looking polished. MBA programs, directly and indirectly, train you to sound good and add some polish to both your resume and your presentation skills. In tech industries or in the case of starting a business, you actually have to know what you are talking about and how to do things, and polish is less important. Thus an MBA is not as useful.

 

I read this article in the WSJ and I honestly was pretty frustrated with the author. My thoughts on the value of an MBA are pretty well known as I outlined them in another thread. He seems to be just another individual that has taken a polarizing stance on the entire degree.

My primary issue with the article is that the author fails to understand the types of people at HBS and similar schools. He recommends reading books and taking online courses to fill the "education" component of school. But HBS grads aren't looking for software development jobs, they are looking for PE/HF/Consulting/Managerial jobs that can not be obtained through online coursework. He then recommends "building trust" through networking. Sure, if you network for many years and remain in close contact, you might build trust with key relationships. However, when a business owner goes to sell his business, he rarely hires the guy he trusts; he hires an army of b-school grads that he thinks will get him the highest price. I've seen it dozens of times -- at best the business owner retains his friend in a side role in order to throw him a bone, but he still picks up the phone and calls Goldman.

The reality is that whether or not the degree is useful depends on each individual's circumstances. A military professional may have no other way of breaking into certain private sector jobs (for example, value investing) without obtaining an MBA. For him, going to Columbia would be a dream come true and worth its weight in gold. For others such as myself, the decision to obtain an MBA is not an ROI calculation but based on the intangible factors. When a person is comparing job offers, they don't simply take the one that offers the highest pay. They consider all other factors: lifestyle, career development, promotion potential, etc. These same factors come into play when evaluating MBA vs. no MBA.

P.S.: One of the five employees of the author's Uncollege company has an MBA and runs his marketing.

Regarding the Brady post on that other forum: if you notice he attempted to make a contraction out of "who" and "are" and ended up writing "who're." Kinda comical...

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IlliniProgrammer:
Frankly I don't place much value on an MBA. The tech firms and startups look down on them, they're not helpful for trading, and you get little out of them besides what is increasingly looking like a network of unemployed people.

One of my friends runs a startup, and his cofounder just turned down HBS.

Why did he go through the pain of applying in the first place?

 

I have to agree that an MBA is a much less attractive proposition on a NPV basis because tuition has skyrocketed while wages have largely stagnated. I went to a top 3 MBA program just five years ago and in consulting, starting salaries have only increased by 5 percent while tuition has increased by 40 percent in the same period. I have a difficult time ethically advocating MBA programs to prospective students while the programs have no sense of cost management and just stick the bill to the students. Beyond top 10, it's a complete waste of time. The only way it's worth it if the student can get significant discounts (ie. scholarships).

 
ecuaman:
I have to agree that an MBA is a much less attractive proposition on a NPV basis because tuition has skyrocketed while wages have largely stagnated. I went to a top 3 MBA program just five years ago and in consulting, starting salaries have only increased by 5 percent while tuition has increased by 40 percent in the same period. I have a difficult time ethically advocating MBA programs to prospective students while the programs have no sense of cost management and just stick the bill to the students. Beyond top 10, it's a complete waste of time. The only way it's worth it if the student can get significant discounts (ie. scholarships).

I take it you went to Wharton.

 

I have nothing to say about B-schools since I am only a naive undergrad student. I do however want to comment on these Thiel fellows. I haven't seen the last thread on this so I apologize if my post is redundant/uncalled for:

Fuck these kids. I don't care what you have accomplished to obtain a six-figure sum from Peter Thiel himself - that does not give you some higher-perspective on guiding the millions of college students with unique experiences and goals. No, I cannot just absorb the knowledge on planet earth through some sort of osmosis and then just walk my happy ass to the company of my choice and be like "Bro, I know this shit" Do I wish I could compete on a knowledge basis rather than academic prestige/cost basis? Fuck yes! Do I wish I owned a unicorn? Fuck yes even more! As an idealist pursuing finance I learned quickly that no matter how much bullshit I find in the industry, as a financially independent adult I don't have the luxury to sit there and bitch about it. Time to wear that suit I hate and get my ass to an interview for Legion Of Doom- I mean Goldman Sachs. The day my parents are good for retirement and I have a cash blanket to fall on, I can work on some Earth-rattling projects like the elite Theil fellows.

Unfortunately, these kids get on some kind of a high horse because the messiah himself has handpicked them, making them greater than education itself. I came across one of his original disciples who was on track to obtain a doctorate at the tender age of 18-19. Did that kid needed college to get somewhere? No. Did he have to work 40 hrs per week in high school that side-tracked his whole academic career? His experience says otherwise. I have no doubt these are some incredibly intelligent students, one day I may even apply for a job in their multi-trillion-paypal-currency conglomerates. Will their experience change my view on getting an irrelevant degree? Not in the least bit.

If Peter Thiel came up to me and say "Bro, 100K or college. Pick one" I would pick the 100K too - I have to somehow make rent month. /Rant

 

The author needs to qualify what MBA segments he is talking about. You cant put USC and HBS in the same bucket - your analysis will be worthless. I graduate this semester from a (barely) top 20 US MBA (full time) program and I am considered a "top of the bell curve" candidate in comparison to my peers at my program (GMAT, GPA, prior work experience, success in the program, all top of the bell curve). I got rejected from AT LEAST 20 opportunities (after having interviews) in the consulting, corp finc, and IB arenas. Walked out with 4 full time offers, two at consulting firms and 2 at IB (one boutique and one BB). All of my peers at my program who have jobs (likely 70% at this point with another wave of companies coming through right now for more) are making 100K+.

That said: if youre making 75+ now, working for a good company, and you already have a business undergrad, MBA programs arent a total slam dunk oppty anymore. They are still worth it ONLY if you can get into a top 20 AND you have rock-solid goals. Top 50? I say dont go - huge risks if you want to get into competitive industries.

Say you're looking to make a career change? MBAs are still worth it IMO.

 
Edmundo Braverman:
I frankly can't believe we banned him. That guy was comedy gold.

He was actually banned? He drove a whole lot of discussion (and traffic) here, and usually took most of his beatings graciously. I always figured maybe he started getting laid more, or decided to get serious about the whole business school thing.

 
IlliniProgrammer:
I really have no idea whether that was what happened. We have stayed in touch. He is now convinced that if he can somehow make it into Princeton's MFin program, all of his problems will be solved and he will float on a cloud into DE Shaw or KKR.

So Bendheim is going to become the new HBS here on WSO? Interesting.

Are you now slaying mad amounts of pussy? Are you being utterly worshiped by all of the unworthy undergrads? Are you hitting up TI/Cottage/Ivy parties on the weekends in your sweet, sweet MFin fleece jacket?

 

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You know where you are? You know what to do?
 

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