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I had a chance to speak with Dean Nohria last winter at a Harvard Business School Alumni Reception (I am not an alum/haven't gone to business school yet, but I was invited to the event by an alum). Dean Nohria told me that Harvard Business School is looking to shift away from admitting candidates in the financial services (banking, PE, and hedge funds) and try to attract more people from technology/engineering backgrounds. He also touted the school's i-lab ("Innovation Lab") as being very important to this new strategy.

I wouldn't say HBS looks down on hedge funds any more than it would look down on someone in banking or PE. However, the sense I am getting is that the school is trying to move away from financial services and focus instead on entrepreneurs who are going to create the next wave of innovations and new businesses.

Dean Nohria went on to say, QUOTE: "At the height of the 19th Century, most of the top universities in the world were all located in Germany. No one alive at that time would have foreseen that by the late 20th Century and 21st Century, all the top schools had shifted to the US and UK (Oxford, Cambridge, Harvard, Yale, MIT, etc.) Currently, Harvard Business School is the Number 1 business school in the world. However, will Harvard continue to be Number 1 in the 22nd Century? It is unclear, but the point that can be made is that if an academic institution is to remain relevant (Read: top-ranked) in the future, it must be able to adapt to changes in the world. Harvard Business School must change if it is to remain relevant in the rest of the 21st Century and into the 22nd Century." UNQUOTE

TL;DR version Will there still be a spot available for the blue-chip candidate with the stereotypcial GS TMT and KKR / top-tier hedge fund background? The answer is, of course, yes. However, those spots are going to be limited and may continue to get fewer and fewer in the future. Whether this is just a passing phase or the new normal, I cannot say for certain.

 
Deo et Patriae:

Dean Nohria told me that Harvard Business School is looking to shift away from admitting candidates in the financial services (banking, PE, and hedge funds) and try to attract more people from technology/engineering backgrounds. He also touted the school's i-lab ("Innovation Lab") as being very important to this new strategy.

So basically HBS is trying to be more like Stanford/Sloan?

Too late for second-guessing Too late to go back to sleep.
 

That's a very good post. I would add that Harvard doesn't look so much at what you've done thus far, but rather at what you tell them you want to do afterwards and how believable that story is given your current background.

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. See my Blog & AMA
 
Deo et Patriae:

I had a chance to speak with Dean Nohria last winter at a Harvard Business School Alumni Reception (I am not an alum/haven't gone to business school yet, but I was invited to the event by an alum). Dean Nohria told me that Harvard Business School is looking to shift away from admitting candidates in the financial services (banking, PE, and hedge funds) and try to attract more people from technology/engineering backgrounds. He also touted the school's i-lab ("Innovation Lab") as being very important to this new strategy.

I wouldn't say HBS looks down on hedge funds any more than it would look down on someone in banking or PE. However, the sense I am getting is that the school is trying to move away from financial services and focus instead on entrepreneurs who are going to create the next wave of innovations and new businesses.

Dean Nohria went on to say, QUOTE: "At the height of the 19th Century, most of the top universities in the world were all located in Germany. No one alive at that time would have foreseen that by the late 20th Century and 21st Century, all the top schools had shifted to the US and UK (Oxford, Cambridge, Harvard, Yale, MIT, etc.) Currently, Harvard Business School is the Number 1 business school in the world. However, will Harvard continue to be Number 1 in the 22nd Century? It is unclear, but the point that can be made is that if an academic institution is to remain relevant (Read: top-ranked) in the future, it must be able to adapt to changes in the world. Harvard Business School must change if it is to remain relevant in the rest of the 21st Century and into the 22nd Century." UNQUOTE

TL;DR version
Will there still be a spot available for the blue-chip candidate with the stereotypcial GS TMT and KKR / top-tier hedge fund background? The answer is, of course, yes. However, those spots are going to be limited and may continue to get fewer and fewer in the future. Whether this is just a passing phase or the new normal, I cannot say for certain.

Huh? I thought people who want to be the next entrepreneur/startup creator usually drop out of school. Not go back to business school.

 

I agree that it hedge funds are no different than PE or banking from a "contributing to society" perspective. As far as leadership/management, I believe that can be shown in any field whether it be finance, accounting, tech, consulting, engineering, etc.

Financial services will always be a big part of the business world and will thus always be well represented at each school. However, top schools don't want classes with a 40% composition of finance backgrounds. At the end of the day, H/S/W wants to have alumni in all industries (including new and emerging industries such as social media).

 

I recognize that a lot of people will criticize this and I recognize their reasons for doing so are valid (you want a diversity of perspectives, etc.), but nonetheless: I'd find it very compelling as an MBA option if there were a super-elite MBA program exclusively hiring candidates in the financial services industry and with no preference towards race or gender. Just smarts (exams, essays), academic pedigree, and experience. No EC's or other bullshit. Just a bunch of engineers out of MIT who worked in banking, then PE or a HF, and then fucking crushed the GMAT. I know it's a narrow way of thinking, but I still think it'd be an interesting option. It would be a very different kind of networking.

 
International Pymp:

I recognize that a lot of people will criticize this and I recognize their reasons for doing so are valid (you want a diversity of perspectives, etc.), but nonetheless: I'd find it very compelling as an MBA option if there were a super-elite MBA program exclusively hiring candidates in the financial services industry and with no preference towards race or gender. Just smarts (exams, essays), academic pedigree, and experience. No EC's or other bullshit. Just a bunch of engineers out of MIT who worked in banking, then PE or a HF, and then fucking crushed the GMAT. I know it's a narrow way of thinking, but I still think it'd be an interesting option. It would be a very different kind of networking.

This, ideally throughout all of university education, refocus universities to intellectual, academic excellence (or excellence in relevant field), away from bs and the thing would become interesting.

I would have thought hfs are sort of like trading for bschool, it's an unrelated skillet and hedgies don't think of bschool too highly anyhow...

 
International Pymp:

I recognize that a lot of people will criticize this and I recognize their reasons for doing so are valid (you want a diversity of perspectives, etc.), but nonetheless: I'd find it very compelling as an MBA option if there were a super-elite MBA program exclusively hiring candidates in the financial services industry and with no preference towards race or gender. Just smarts (exams, essays), academic pedigree, and experience. No EC's or other bullshit. Just a bunch of engineers out of MIT who worked in banking, then PE or a HF, and then fucking crushed the GMAT. I know it's a narrow way of thinking, but I still think it'd be an interesting option. It would be a very different kind of networking.

That's kind of how I think of some of the financial engineering programs. Of course, I don't believe they require much (if any) work experience and they are obviously geared towards quants.
 
International Pymp:

Just smarts (exams, essays), academic pedigree, and experience. No EC's or other bullshit. Just a bunch of engineers out of MIT who worked in banking, then PE or a HF, and then fucking crushed the GMAT.

Why the hell did this guy get monkey shit for this? This is what business school should be.
 
International Pymp:

I recognize that a lot of people will criticize this and I recognize their reasons for doing so are valid (you want a diversity of perspectives, etc.), but nonetheless: I'd find it very compelling as an MBA option if there were a super-elite MBA program exclusively hiring candidates in the financial services industry and with no preference towards race or gender. Just smarts (exams, essays), academic pedigree, and experience. No EC's or other bullshit. Just a bunch of engineers out of MIT who worked in banking, then PE or a HF, and then fucking crushed the GMAT. I know it's a narrow way of thinking, but I still think it'd be an interesting option. It would be a very different kind of networking.

Then get an MFin. This would make for a terrible MBA experience. Sure you could have some really detailed finance classes and everybody would be great at modeling going in but MBA programs are about a lot more than that. I would love to see the classroom discussion on leading people and management skills from a room full of people who spent their entire career so far being excel monkeys. I'm all for meritocracy and getting rid of the racial and gender quotas but a school full of only financial services people would be awful.

 

I agree with you. However, it would be equally silly for me to have a conversation about raising money for a private equity fund, or structuring a platform targeting distressed CMBS in japan, or whatever, with a bunch of people who haven't worked in finance at all. It would be like trying to teach a kid to read.

both the diverse class and the specialized class of mbas has its own disadvantages. I noted that in my first comment. My point is it might be interesting to have the option to choose one or the other.

Also, from what that recent article on Gender at HBS said, it seems its males in finance who do a lot of the talking in classes anyways.

 

I agree that b-schools should not accept exclusively people from a specific background; that would indeed make for a boring experience, and given that the MBA is a general management program, you want people from a wide array of experiences.

However, I agree with the heart of what International Pymp is saying. MBA admissions has become too fluff and unmeritocratic, giving free passes to rich international kids whose only accomplishment was being born to the right family and unduly rewarding those who hail from a certain demographic background.

My biggest problem with MBA admissions is that adcom is always riding the trend as opposed to trying to create it. By this, I mean that they are lagging indicators because they are responding to changes in the economic/business landscape. So post-financial crisis adcom started shying away a bit from traditional finance types. And now with the startup craze, they are going crazy for those with startup "experience."

If I had it my way, here would be some changes I would make to MBA admissions:

  1. The adcom committee would be comprised of of admissions officers, faculty, and a small group of successful alums from various industries. Obviously the alums would be too busy to devote too much time to it, but I think it would be interesting to have them give input since I figure they are much better at identifying future business leaders than adcom are.

  2. Make the essays less generic, so that they require serious thought and reflection. The variations of the "career goals, why MBA, why our school" and "tell us about a leadership example" have become too cliche. I think more thought provoking questions could tell us more about the applicant (at the undergrad level, uchicago does a great job at this).

  3. The interview should be less resume focused and go more in-depth into how an applicant analyzes issues, formulates an argument, and reacts under pressure. Wharton took a step towards this by introducing the group interview (taking a cue from Bridgewater?), but the questions were released beforehand, and it ended up becoming a kumbaya session where the interviewees were just agreeing with what others were saying.

Just my 2 cents.

 

TL;DR

Harvard and its connections to the NWO and other elite secret groups are being told that the gains to be made from finance are over, wall street and london have pillaged the world as it is and now they actually want to create value instead of using maths to steal pennies off the markets from the 99%

alpha currency trader wanna-be
 

I think you guys aren't really factoring everything in here. What they want are exceptional people/leaders. From what I can gather, it seems that their interest lies in bringing future leaders on board, regardless of what they might lead.

If my thoughts about it are correct, then it would make sense that someone at a hedge fund is less likely to get into HBS. HF guys don't generally do much leading (even the activists - they aren't leading people, they're leading people towards a conclusion).

"You stop being an asshole when it sucks to be you." -IlliniProgrammer "Your grammar made me wish I'd been aborted." -happypantsmcgee
 

Depends on what you did and want to do. The "I'm tired of guessing/bitching about company performance, want to go help improve it" line of thought, if genuine, makes sense and probably won't actually hurt you. And that pool of applicants tends to be incredible from a stats perspective. Maybe lag a bit in management/leadership experience, but can probably remedy that with a year or two of focused entrepreneurship or nonprofit work on the side.

Also, for HBS specifically, I think that given the constant discussion of ideas/positions/industry trends at a typical fund, many of those guys would do well with case method.

But how many guys that are killing it at $1B+ shops want to go to bschool?

 

This is a pretty interesting topic. What gets me is that if you look at the quote that's up there from Dean Nohria, the reality is that HBS has always been really quite pro-cyclical...ie, if you want to know what field is in a bubble, look at who HBS is admitting and what students want to go do en masse; in the early 2000s, it was likely financial services, and now it is likely some combination of tech / social media / whatever.

I know quite a few traditional finance kids going to HBS, so I don't really believe that they're going to go away, but I definitely think they've been diversifying.

On the other hand, they can't diversify completely, because check out this link: http://www.hbs.edu/recruiting/mba/data-and-statistics/employment-statis…

27% of Class of 2013 went into financial services, with fully 1/3 of that (9%) into PE and 5% into HFs. 24% went into consulting, and 18% went into technology. At the end of the day, a large portion of their student body still wants to go into finance...so I can't see them shifting so massively that that proportion is going to shift down to 5%.

I will say that I'd be pretty surprised if somebody from a really well respected HF couldn't get into top bschools, including HBS in some proportion. My gut would be that as somebody mentioned above, there are not all that many really stellar candidates from the top HFs applying to bschool to begin with. Most want to stay or will parlay the money they've already made into directly starting something on their own (one point I'd make is that after meeting C-level management at so many corporations and seeing how much they suck I can't imagine wanting to work for the vast majority of them, which is why I'd guess that you'd find very few prior HF people in a large corporate bureaucracy)

 

B-schools are pro-cyclical in general, not just HBS. Even traditional finance powerhouses such as Wharton, Columbia, and Booth, are trying very hard to shift away from finance and embrace the startup craze that has infected b-schools.

 
mbavsmfin:

xqtrack is right about hedge funds. While pretty much everyone at megafund PE firms go onto b-schools, that is not the case with top hedge funds. Not quite sure why this is the case.

Really your not sure why? Business school is sort of the antithesis to HF, bureaucratic, full of bullshit, not meritocratic.
 

As far as whether HBS discriminates against people from HF, that's hard to say. I don't think a ton come from HF to HBS. Definitely not a large slice of the pie. Might compare to RE admits.

However, there are a ton that go TO a HF. These are almost exclusively PE guys that go PE - HBS - HF. That's very very common.

 

If it's a name brand hedge fund, the applicant would have a great shot at HBS or any other b-school for that matter. If an investment professional from say Baupost Group or Paulson applies to HBS, most likely that person is getting in.

The standard path is something like target undergrad>BB banking>megafund PE>HBS>hedge fund. I think a decent number of long-short equity and multistrategy hedge funds recruit on-campus at HBS (Paulson, Citadel, Och-Ziff, York, Davidson Kempner, Highbridge, Maverick, Carlson, Passport, come to mind; I'm sure I'm missing a bunch of others).

 
mbavsmfin:

If it's a name brand hedge fund, the applicant would have a great shot at HBS or any other b-school for that matter. If an investment professional from say Baupost Group or Paulson applies to HBS, most likely that person is getting in.

The standard path is something like target undergrad>BB banking>megafund PE>HBS>hedge fund. I think a decent number of long-short equity and multistrategy hedge funds recruit on-campus at HBS (Paulson, Citadel, Och-Ziff, York, Davidson Kempner, Highbridge, Maverick, Carlson, Passport, come to mind; I'm sure I'm missing a bunch of others).

Who comes to your school?

 

I cant imagine someone who is actually in a good spot at a good hedge fund leaving to go to an MBA program where really the best you can do is to get your old job back at graduation....i guess some people may want to do a career switch but generally the money is too good to give up if ur in a good spot even if you aren't 100% happy in the job. Therefore the HF applicnts to b-school are probably not going to be really the top-notch people...so i think there is a bit of reverse selection in terms of places like harvard "discriminating" against hedge fund people.

 
Bondarb:

I cant imagine someone who is actually in a good spot at a good hedge fund leaving to go to an MBA program where really the best you can do is to get your old job back at graduation....i guess some people may want to do a career switch but generally the money is too good to give up if ur in a good spot even if you aren't 100% happy in the job. Therefore the HF applicnts to b-school are probably not going to be really the top-notch people...so i think there is a bit of reverse selection in terms of places like harvard "discriminating" against hedge fund people.

HFs usually do not require their analysts to go back to school to get their MBAs. They can just stay on and move up the ladders if they are good. It makes absolutely no sense for a revenue generator at an established HF with sizable AUM to give up a real job (and real money) to retreat back into the ivory tower for a couple years.

On the other hand, many PE firms including virtually all the megafunds require their associates to quit after 2 years and go back to business school so that when they graduate they have the POSSIBILITY (not at all guaranteed) to rejoin the firm or another PE shop on a partner track. They do this to their junior employees because they can. The PE environment for junior guys is so very structured and there are so many qualified applicants coming in from IBD and other sell side programs every year at a time when the PE space is shrinking. That and also PE associates are largely generic and undifferentiated so the recruiters set up additional filters like top MBAs to differentiate the pools of largely homogeneous applicants.

Too late for second-guessing Too late to go back to sleep.
 

It really depends on the person, his role and the type of fund they were at. I don't think it makes sense for a top performer at a macro fund such as tudor, brevan howard, moore, etc., to go to b-school since they won't learn that much in school that will help them with their job (assuming they want to come back to the macro space.) However, I could see the argument for long-short equity or distressed debt folks to go to a top b-school, and many certainly do. For instance, Perry, York, Davidson Kempner, send a decent number of associates to HSW MBA. Whether or not you think they're making a wise move is of course debatable.

 
mbavsmfin:

It really depends on the person, his role and the type of fund they were at. I don't think it makes sense for a top performer at a macro fund such as tudor, brevan howard, moore, etc., to go to b-school since they won't learn that much in school that will help them with their job (assuming they want to come back to the macro space.) However, I could see the argument for long-short equity or distressed debt folks to go to a top b-school, and many certainly do. For instance, Perry, York, Davidson Kempner, send a decent number of associates to HSW MBA. Whether or not you think they're making a wise move is of course debatable.

tend to agree but I doubt anyone at any firm learns much at b school. From the worse fund to the best.. its still a better gig than most people

I think everyone wants it to make sense and once you make a certain amount of $$$... who cares.. you can do whatever the hell you want....

Former head of JP Commodities left to teach high school math.. why? cause he can

 

Not even for them it makes any sense from a learning perspective, you arent going to learn anything at b school if you come from a top ls shop, it's a bit like a retarded dog trying to teach Einstein physics (not that it's different in pe but since pe isn't as directly observable performance driven prestige matters a lot more).

Some people just want a holiday, some people just think they can't move up at their current shop/role in general and may wanna switch to traditional am. If you are a top performer at your fund you wouldn't leave unless your feeling burned out, otherwise bschool is like getting a masters you only do it cuz you didn't get a job with undergrad.

 

Booth's reputation as a finance powerhouse is likely further cemented with the Nobel prizes of Fama and Hansen. Both well deserved and arguably a bit overdo--the Nobel Committee likes to keep people guessing who is gonna get it next and sometimes apparently deliberately bypass the obvious/most deserving candidate for a few years.

Re Hansen I personally believe that the direction of much of econometrics is rather misguided. Greater model complexity does not substitute for some fundamental inadequacies in the theories esp. normal distribution everything related to the fat tails. Power laws would be a better approach at handling the patterns of volatility as observed in the real world. Still that does no take away the contributions made by Hansen in developing the GMM etc.

P.S. Looks like with this post I just made King Kong! Not quite a monumental accomplishment as winning the Nobel Prize but still a nice milestone I guess.

Too late for second-guessing Too late to go back to sleep.
 

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I am permanently behind on PMs, it's not personal.
 

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