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Josh Kaufman Basically Says "MBAs Suck"
 

econ's picture
O
(Neanderthal, 2,416
 
Points)
 on 10/28/10 at 2:46pm
josh kaufman.JPG

So I read this article a few minutes ago, and I wanted to share it with you guys (as well as some quotes below).
http://poetsandquants.com/2010/10/04/why-josh-kauf...

* Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.”

* “Business schools don’t create successful people,” insists Kaufman. “They simply accept them, then take credit for their success. With heavy debt loads and questionable returns, MBA programs simply aren’t a good investment—they’re a trap for the unwary.”

* Instead of paying up to $350,000 in tuition and forgone earnings to go to Harvard, Stanford or Wharton, Kaufman says a better way to learn business is to open the pages of classic business texts and learn on your own.

* Much of Kaufman’s argument rests on a study published eight years ago by Stanford Business School professor Jeffrey Pfeffer of Stanford University and Christina T. Fong of the University of Washington. The pair analyzed 40 years of data and studies and came up with a provocative and startling conclusion: “There is scant evidence that the MBA credential, particularly from non-elite schools, or the grades earned in business courses are related to either salary or the attainment of higher level positions in organizations.”

* “Unless you want to be a consultant or an I-banker (where a top MBA is nothing but a screen for admission),” Godin wrote, “it’s hard for me to understand why this is a better use of time and money than actual experience combined with a dedicated reading of 30 or 40 books.”

* “If you want to work in an industry that uses the MBA as a screen, you are effectively buying yourself a $150,000 interview,” he contends. “If you want to do anything else in business, if you want to start your own company, get a job in another field, you don’t have to have an MBA. It’s better if you don’t because of the debt.”

* And even for consulting, investment banking or Fortune 50 positions, Kaufman says, the benefit is ephemeral. “The effect (of the degree) is strongest immediately after graduation,” he says, “then largely wears out within three to five years. After that, you’re on your own. Hiring managers no longer care so much about where you went to school. They care more about what you’ve accomplished since then.”

* Kaufman estimates that all of these firms combined, from Goldman Sachs to McKinsey & Co., probably hire no more than 5,000 to 10,000 MBAs a year out of the more than 200,000 people who are getting MBAs around the world. The other 190,000 to 195,000 are getting MBAs they don’t really need.

* “Going to Harvard all told can cost you about $350,000. That is mortgage level debt. Put that through an amortization schedule at a 6.8% rate of interest. It’s a $2,200 monthly payment over 30 years. You are spending $821,000 when you account for the interest. The cost is enormous.”

For my aspiring Entrepreneurial Nomads, check out my blog.
Tags:
econ's picture

As the OP, I feel I should

O
(Neanderthal, 2,416
 
Points)
 on 10/28/10 at 11:56am

As the OP, I feel I should chime in on this article.

First, with regard to actually learning from an MBA program, I think most people on WSO are in agreement that MBA programs are not about teaching you anything. Furthermore, IMHO, a lot of other educational backgrounds will give you the tools to be an autodidact. Studying something really challenging in undergrad or grad school, and really pushing yourself will payoff I believe. After struggling to understand fixed point theorems and abstract algebra, teaching yourself MBA-level finance will be a breeze. It's like weight-lifting for the mind.

Second, I think people will say that MBA programs give you a strong network, alumni base, contacts, recruiting, etc. Interestingly enough, the article didn't touch on this stuff at all, even though it's what WSOers will probably say is the best reason for getting an MBA in the first place. I guess what I'd like to ask you guys, is whether the price is worth it? For one thing, one of my friend's who earned an MBA truly believes the stuff about networking is hype. He claims he and many of his classmates networked hard, but it didn't pay off. I'm actually skeptical of my friend's opinion, so what I find more compelling is the advice on websites like this one and M&I. Namely, that networking is about picking up the phone, calling people, reaching out, etc. So, do you really need to be in an MBA program to get the benefits of networking? Wouldn't it be much cheaper (and maybe even better) to actually have a job (so you're learning and making money) and commit yourself to reaching out to X number of people a week, read the "Networking Like A Ninja" guide, etc?

For my aspiring Entrepreneurial Nomads, check out my blog.

peacerenity's picture

i think it's pretty much

 
Points)
 on 10/28/10 at 11:57am

i think it's pretty much accepted that an mba is just a credential, not something you need to actually learn something about business. i've also heard that if you can't get into a top 10 mba program then it's not worth the time and money, which is held up by a lot of what other people have said.

as far as whether or not it's worth it to get a harvard (or some other top-tier) mba, my feeling is that it is worth it long-term, especially if you're going into consulting or finance.

but yeah, a lot of people get degrees they don't need and can't use. surprise, surprise. look at all of the people who get Ph. D's in English then can't find jobs. just because someone's interested in business doesn't mean that they automatically make smart business decisions.

mr1234's picture

Bingo. I thought about

O
 
Points)
 on 10/28/10 at 1:10pm

Bingo.

I thought about getting an MBA:
http://www.wallstreetoasis.com/forums/i-got-a-730-...

Yes, the MBA is pretty much a useless credential. You need a JD to practice law and an MD to practice medicine, but you don't need an MBA to practice business. Does it it give you any knowledge that would make you better investment banker or consultant? No, obviously not.

In my opinion, certain MBA programs only benefit a certain type of professional. And nothing beats skill and experience in this job market.

I am DYING to hear what people have to say about this, but I have a feeling most will be mum because what this guy is saying is so true despite what most people on this forum believe. In fact, this thread should be put on the front page blog. Are you hearing me, Mr. Moderator?

---
man made the money, money never made the man

shorttheworld's picture

it does benefit people. wall

EN
 
Points)
 on 10/28/10 at 1:17pm

it does benefit people. wall street finance especially more so than anything. which is what this forum is for.

I need a crib, a big estate, I need a boat and that need a lake, I need some salmon that need a plate, that need a chef so I feed my safe

From trading equities to slanging wine in Latin America

A ship is safe in harbor, but that is not what a ship i

mr1234's picture

shorttheworld wrote: it does

O
 
Points)
 on 10/28/10 at 1:24pm
shorttheworld:

it does benefit people. wall street finance especially more so than anything. which is what this forum is for.

How does it benefit people? I know that is a basic question, but I am trying to kick-start a conversation.

And I am expecting a basic answer that I have already heard. So lets hear it.

---
man made the money, money never made the man

mr1234's picture

shorttheworld wrote: it does

O
 
Points)
 on 10/28/10 at 1:24pm
shorttheworld:

it does benefit people. wall street finance especially more so than anything. which is what this forum is for.

How does it benefit people? I know that is a basic question, but I am trying to kick-start a conversation.

And I am expecting a basic answer that I have already heard. So lets hear it.

---
man made the money, money never made the man

TNA's picture

Yeah, MBA is the ticket for

O
(Human, 13,508
 
Points)
 on 10/28/10 at 1:24pm

Yeah, MBA is the ticket for admission to many top jobs. I think there is value if you come from a non business background, but it is pretty commonly accepted that your not going to really learn anything.

People will keep getting MBAs as long as people recognize them as something special.

MSF Website
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ibhopeful532's picture

^ Midterms so don't have much

O
(King Kong, 1,016
 
Points)
 on 10/28/10 at 1:26pm

^ Midterms so don't have much time but off the top of my head:

Philosophy 101 utilizes more or less the exact same material for schools ranging from Princeton to PodunkU. Does that mean that the substance that students ultimately take away is the same? No.

I always questioned the worth of an Ivy-league degree. After, all, aren't most of the classes the same? You don't need (and you rarely get) a *star*-professor teaching you undergraduate courses. They're the fundamentals, and they are taught the same everywhere.

The *value* of a "good" school is your peers - and I don't mean only in the sense that you're making a lot of friends who may one day be rich and powerful people (although yes, that is definitely within the realm of possibility). The human mind is enriched most when it is challenged by powerful and motivating experiences and modes of thinking. A Harvard MBA will teach you finance as you can learn in a book - true. But at Harvard / Wharton / Stanford / other elite schools, you will LEARN FROM YOUR PEERS.

Granted, this does not necessarily translate into direct monetary gains (although I'm sure having a Harvard MBA will not hurt over a lifetime). Are you paying a lot of money? Sure. But would you not agree that *enlightenment*, challenging yourself to think in new ways through meeting some of the most capable people in the world, is extremely valuable in its own right?

This article's point is right - people who get into HBS are tremendously successful in their own right upon gaining admissions. However, I would argue that these people still gain to benefit tremendously from the overall learning experience as described above, which can only be found in an academic environment.

TNA's picture

For non finance people it is

O
(Human, 13,508
 
Points)
 on 10/28/10 at 1:27pm

For non finance people it is a great exposure to overall business. Your classmates also add a lot to the equation. The network you build, the second chance at a career, etc are all tangible benefits.

I think you could get all these things for free, but that would require a lot of outside the box thinking.MBAs off a prepackaged experience.

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ibhopeful532's picture

oh geeez that's bad

O
(King Kong, 1,016
 
Points)
 on 10/28/10 at 1:28pm

oh geeez that's bad grammar... guess thats what consistent all nighters do to you.

rjroberts1's picture

He also basically reinforces

ER
(Baboon, 161
 
Points)
 on 10/28/10 at 1:28pm

He also basically reinforces the point that if you want a high-level finance career then you need an MBA, or atleast an advanced degree in finance. I went to a shitty undergrad school where I learned hardly anything useful from my finance degree. There was no way I'd get a decent job in finance with that degree, and I quickly realized how much I hated selling life insurance and mutual funds (which was about all I was qualified for). So I bit the bullet, took a year off, borrowed a bunch of money and got a Masters in Finance from a much better school. For me it was well worth the debt and lost income for a year because it got me into a career I never would have been able to get into otherwise, and my income is a multiple of what I was making a few years ago before going back to school. On the other hand, I have friends who went back to get an MBA from the same shitty school they went to for undergrad, and they're still struggling to find a job making $60k a year. I think it all comes down to knowing what you want to do and knowing what you need to do to get there.

Stringer Bell's picture

Did anyone actually click on

PE
(King Kong, 1,679
 
Points)
 on 10/28/10 at 1:31pm

Did anyone actually click on the link? It's some asshat trying to sell his online MBA program, of course he's going to say that.

mulandee's picture

Top hedge fund/Private equity

IB
(Monkey, 59
 
Points)
 on 10/28/10 at 1:32pm

Top hedge fund/Private equity comapnies do not want their protegees to go even to top tier MBAs. They think it is waste of time. They will do far better by staying and learning the ropes, once they are in PE/Hedge fund.

mr1234's picture

Anthony . wrote: Yeah, MBA is

O
 
Points)
 on 10/28/10 at 1:34pm
Anthony .:

Yeah, MBA is the ticket for admission to many top jobs. I think there is value if you come from a non business background, but it is pretty commonly accepted that your not going to really learn anything.

That's unsustainable. Eventually employers and MBA candidates are going to have to wake up and realize that this is EXACTLY the case: a 150K MBA is a nothing more than a ticket to a POSSIBLY better opportunity and that you learn very little that is applicable to the real world.

Anthony .:

People will keep getting MBAs as long as people recognize them as something special.

I think paradigm is starting to shift and MBA's are losing their special-ness.

---
man made the money, money never made the man

econ's picture

Stringer Bell wrote: Did

O
(Neanderthal, 2,416
 
Points)
 on 10/28/10 at 1:35pm
Stringer Bell:

Did anyone actually click on the link? It's some asshat trying to sell his online MBA program, of course he's going to say that.

Yeah, I urge people to click the link and read the article. But, I don't completely agree with that description. It's from some kid guy who was an assistant brand manager at P&G, and taught himself a lot of things he would of learned in an MBA program. So, he started a website where he recommends books that will allow you to do the same. He also consults, but that's another story because his website is not a subscription service or anything like that.

For my aspiring Entrepreneurial Nomads, check out my blog.

mr1234's picture

Stringer Bell wrote: Did

O
 
Points)
 on 10/28/10 at 1:36pm

---
man made the money, money never made the man

shorttheworld's picture

mulandee wrote: Top hedge

EN
 
Points)
 on 10/28/10 at 1:36pm

I need a crib, a big estate, I need a boat and that need a lake, I need some salmon that need a plate, that need a chef so I feed my safe

From trading equities to slanging wine in Latin America

A ship is safe in harbor, but that is not what a ship i

mulandee's picture

If you are from WH it is of

IB
(Monkey, 59
 
Points)
 on 10/28/10 at 1:39pm
TNA's picture

I do think the MBA market is

O
(Human, 13,508
 
Points)
 on 10/28/10 at 1:44pm

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mr1234's picture

shorttheworld wrote: but a

O
 
Points)
 on 10/28/10 at 1:53pm

---
man made the money, money never made the man

mr1234's picture

Anthony . wrote: In the

O
 
Points)
 on 10/28/10 at 1:51pm

---
man made the money, money never made the man

mulandee's picture

many people attend the

IB
(Monkey, 59
 
Points)
 on 10/28/10 at 1:59pm
mr1234's picture

mulandee wrote: many people

O
 
Points)
 on 10/28/10 at 2:04pm

---
man made the money, money never made the man

Buyside CFA's picture

What did Matt Damon say about

AM
(Gorilla, 510
 
Points)
 on 10/28/10 at 2:16pm
mr1234's picture

Buyside CFA wrote: Whatever,

O
 
Points)
 on 10/28/10 at 2:22pm

---
man made the money, money never made the man

craigmcdermott's picture

Experience is a major reason

IB
 
Points)
 on 10/28/10 at 2:43pm
mr1234's picture

craigmcdermott

O
 
Points)
 on 10/28/10 at 3:02pm

---
man made the money, money never made the man

rufiolove's picture

mr1234 wrote: craigmcdermott

IB
(Neanderthal, 3,299
 
Points)
 on 10/28/10 at 3:24pm

1/2 of the WSO Bash Brothers
"Licensed to Ill It"
We all know Bro J did it...

craigmcdermott's picture

Everything that you're

IB
 
Points)
 on 10/28/10 at 3:40pm
econ's picture

mr1234 wrote: And the author

O
(Neanderthal, 2,416
 
Points)
 on 10/28/10 at 4:07pm

For my aspiring Entrepreneurial Nomads, check out my blog.

econ's picture

craigmcdermott

O
(Neanderthal, 2,416
 
Points)
 on 10/28/10 at 3:51pm

For my aspiring Entrepreneurial Nomads, check out my blog.

MrFuture's picture

Bottom line is, they are

(Baboon, 149
 
Points)
 on 10/28/10 at 3:57pm
mr1234's picture

craigmcdermott

O
 
Points)
 on 10/28/10 at 4:20pm

---
man made the money, money never made the man

mr1234's picture

rufiolove wrote: Current

O
 
Points)
 on 10/28/10 at 4:33pm

---
man made the money, money never made the man

TNA's picture

I agree with the above

O
(Human, 13,508
 
Points)
 on 10/28/10 at 4:53pm

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Otter.'s picture

Anthony . wrote: I agree with

CD
(Gorilla, 554
 
Points)
 on 10/28/10 at 6:35pm

Hi, Eric Stratton, rush chairman, damn glad to meet you.

Stringer Bell's picture

mulandee wrote: Top hedge

PE
(King Kong, 1,679
 
Points)
 on 10/28/10 at 7:11pm
MBAApply's picture

Lots of good points made

EN
(King Kong, 1,007
 
Points)
 on 10/28/10 at 7:27pm

Alex Chu
www.mbaapply.com

monkeymark's picture

^^^^ I like how this dude

ST
(Baboon, 105
 
Points)
 on 10/28/10 at 9:52pm
Bondarb's picture

I generally think the MBA is

HF
(Neanderthal, 2,283
 
Points)
 on 10/28/10 at 10:22pm
navyrugby's picture

That dude started MBA Apply

AM
 
Points)
 on 10/29/10 at 12:42am
swagon's picture

The "best 99" books he

EN
(Neanderthal, 2,970
 
Points)
 on 10/29/10 at 2:18am
Buyside CFA's picture

Mbaapply might be the best

AM
(Gorilla, 510
 
Points)
 on 10/29/10 at 11:06am
Nefarious-'s picture

I read this article last

CF
(Neanderthal, 2,213
 
Points)
 on 10/29/10 at 11:28am

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

shorttheworld's picture

mr1234 wrote: rufiolove

EN
 
Points)
 on 10/29/10 at 11:37am

I need a crib, a big estate, I need a boat and that need a lake, I need some salmon that need a plate, that need a chef so I feed my safe

From trading equities to slanging wine in Latin America

A ship is safe in harbor, but that is not what a ship i

SAC's picture

Good post by MBA Apply.

HF
(King Kong, 1,171
 
Points)
 on 10/29/10 at 11:53am

Learn Financial Modeling
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Buyside CFA's picture

To all the MBA-Bashers: Have

AM
(Gorilla, 510
 
Points)
 on 10/29/10 at 12:34pm
Yung Gekko's picture

Anthony . wrote: For non

 
Points)
 on 10/29/10 at 12:59pm
mr1234's picture

MBAApply wrote: When you cut

O
 
Points)
 on 10/29/10 at 1:04pm

---
man made the money, money never made the man

TNA's picture

Yung Gekko wrote: Anthony .

O
(Human, 13,508
 
Points)
 on 10/29/10 at 1:06pm

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