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* Kaufman believes that MBA programs "teach many worthless, outdated, even outright damaging concepts and practices."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

Comments (85)

  • TNA's picture

    Here is the thing. Until there is an industry accepted alternative to the brand and experience an MBA offers people will still demand it. It is commonly accepted that you go to get a different name on a piece of paper and network with other amazing people. Right now there is nothing else to replace it.

    Side note, I met some John Hopkins MSRE guys last night. They had great things to say about the program and said they had zero intention of getting an MBA.

  • In reply to Buyside CFA
    mr1234's picture

    Buyside <a href=https://www.e-junkie.com/ecom/gb.php?ii=1145861&amp;c=cart&amp;aff=44880&amp;ejc=2&amp;cl=175031 rel=nofollow>CFA</a>:
    To all the MBA-Bashers:

    Have you guys ever seen a Wharton resume book? There are some pretty incredible people in top MBA programs. As long as top MBA programs are populated by 100s of ex bankers, PE analysts, fighter pilots, consultants, entrepreneurs, Olympians with math degrees, special forces officers, engineers and so forth, recruiters for major employers will continue to flock to them.

    Exactly. Those guys were successful BEFORE Wharton, not because of Wharton. Those guys will get the LEAST benefit from Wharton.

    Buyside <a href=https://www.e-junkie.com/ecom/gb.php?ii=1145861&amp;c=cart&amp;aff=44880&amp;ejc=2&amp;cl=175031 rel=nofollow>CFA</a>:
    I'm trying to shift to a different industry AND change to a different geographic region - a region with very few alumni from my school. This task is looking harder and harder now that I'm a few years into my career. Barring some cold-calling luck, this change won't happen without an MBA

    And there is always the probability that it won't do what you want it to do for you, especially if you are trying to switch careers. You still want to sink that 150K?

    I'm not trying to tell you to not do the MBA. That's all you.

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

  • TNA's picture

    Yeah, I think that is something never talked about. Suppose the tech guy quits his job and drops 300K or whatever on a top MBA because he wants to be an associate. What happens if that doesn't happen. Every year there has to be some people who don't break in or who get jobs that might only pay 20-30K more than their previous job. Not taking anything away from a top program, just saying that no everyone walks away making money off a Harvard MBA.

  • In reply to Yung Gekko
    mr1234's picture

    Yung Gekko:
    Anthony .:
    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.

    Did your classmates at Syracuse add a lot to the equation?

    Beat it, loser. You're a waste of internet bandwidth.

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

  • In reply to TNA
    mr1234's picture

    Anthony .:
    Yeah, I think that is something never talked about. Suppose the tech guy quits his job and drops 300K or whatever on a top MBA because he wants to be an associate. What happens if that doesn't happen. Every year there has to be some people who don't break in or who get jobs that might only pay 20-30K more than their previous job. Not taking anything away from a top program, just saying that no everyone walks away making money off a Harvard MBA.

    There you go. The majority of candidates don't break into hi paying fields, even if they are from HBS/CBS/Wharton. They just have a better chance than guys like me. And they paid 150K for that chance.

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

  • In reply to shorttheworld
    mr1234's picture

    shorttheworld:
    mr1234:
    rufiolove:
    Current consensus is that they want to see that you've got a power MBA name to be a player in many cases... don't like it, then network your ass off and prove 'em wrong...

    I have actually been interviewing for post-MBA jobs in CRE, on the basis that I have all the required skill sets without the MBA salary price tag. This might not be the case for some other hi-paying fields, but I think the current paradigm should (and probably will) change.

    not wall street finance which this board is concerned with and the focus of the talk.

    Maybe I wasn't clear the first time, so I will repeat so you can understand.

    The current trend in CRE is that the MBA is not very valuable. I think that mentality will shift over to the financial industry. And that is relevant to this board.

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

  • In reply to mr1234
    econ's picture

    mr1234:
    I could buy 2 nice BMWs for 150K. Or buy a small business if I had 150K in my back-pocket. There is SO much I could do with 150K that would give me much greater utility than an MBA, and this should be true for a VAST majority of people who get their MBA.

    I think this opportunity cost argument is the main reason I question the value of the MBA. I hate to think that when I'm 40, I could have saved much more money if I wasn't paying off MBA loans, and as a result don't have the same ability to start my own business, invest wisely, or take a huge pay-cut and work for some startup with ridiculous upside.

  • In reply to TNA
    econ's picture

    Anthony .:
    Yeah, I think that is something never talked about. Suppose the tech guy quits his job and drops 300K or whatever on a top MBA because he wants to be an associate. What happens if that doesn't happen. Every year there has to be some people who don't break in or who get jobs that might only pay 20-30K more than their previous job. Not taking anything away from a top program, just saying that no everyone walks away making money off a Harvard MBA.

    This is just an anecdote, and maybe not that meaningful, but my "MBA-friend" was telling me about this as well (just to be clear, he went to a program ranked between 15-20, and graduated in 2009 which was obviously a bad job market). He basically said that most people trying to switch careers weren't able to, and many of them had to take relatively shitty jobs. And he was a career changer who got a pretty good job offer. He also doesn't buy the salary statistics posted on MBA websites (thinks they're biased upward), but that's another story.

  • TNA's picture

    Go to www.quantnet.com and check out some of their discussions on MFE programs. You see a huge lack of transparency in a lot of programs pertaining to placement and salary. Schools really do not want to tell the full truth. Buyer beware!

  • In reply to Buyside CFA
    Nefarious-'s picture

    Buyside <a href=https://www.e-junkie.com/ecom/gb.php?ii=1145861&amp;c=cart&amp;aff=44880&amp;ejc=2&amp;cl=175031 rel=nofollow>CFA</a>:

    I have my doubts about getting an MBA but I consider it foolish to make blanket statements about the worth of the degree. I cringe when I hear someone say, "Well my Uncle Lou got an MBA from Northern Illinois Fuckface State 27 year ago and HE says MBAs are a waste of time."

    I cringe when misinformed dipshits such as yourself fall into the whole "iBanking = Finance" (and by this I mean the only thing in finance is investment banking) mindset and seemingly believe that an MBA is your ticket to success in this sector of business.

    Sorry, both my father and my uncle are highly educated, intelligent and accomplished professionals at firms dealing in what everyone in this board is busting their ass to try and get into. They both make millions and live more than comfortable lives. And to paraphrase Gekko, "I'm not talking about the $400,000 a year wall street schmuck, flying first class, being comfortable."

    Am I saying that an MBA from a t10 MBA school like Harvard will not help you at all? Nope. The connections you stand to make from graduating from one of those schools are invaluable and the main reason you are going there, not for the education. What are the chances of everyone on WSO actually getting into a t10 MBA program? I am guessing at or below 50%

    I am simply relaying the information given to me from accomplished financial professionals to the rest of WSO. If you don't like it, then don't listen to it. But those are the words from guys that have gone through it already and are accomplished.

    You can mock my uncle's NIU MBA all you want, but he has made it. You are commenting on an internet forum TRYING to make it.

    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.

  • Buyside CFA's picture

    Nefarious said "I cringe when misinformed..."

    Calm down, Hoss. I don't want to fight you or Uncle Lou and I didn't mean to knock anyone's school. I'm just a bit confused....

    In your initial post you said:
    "Both have told me the same thing throughout the years: "An MBA is a waste of time and money""

    In your last post your said:
    "Am I saying that an MBA from a t10 MBA school like Harvard will not help you at all? Nope."

    My point was this: A variety of factors determine whether an MBA is worthwhile. You initially just parroted the advice you heard many years ago without doing any of our own research or understanding the complexity of the decision.

    Now that's enough. I won't argue with an 19 yr old who thinks BUYSIDE refers to an investment bank...

  • swagon's picture

    everyone's saying it's "so expensive"...wtf? I thought you RECEIVED a ton of money in the NBA, not the other way around.

  • swagon's picture

    ahhh shit, my bad. I misread that. nevermind.

  • In reply to Buyside CFA
    Nefarious-'s picture

    Buyside <a href=https://www.e-junkie.com/ecom/gb.php?ii=1145861&amp;c=cart&amp;aff=44880&amp;ejc=2&amp;cl=175031 rel=nofollow>CFA</a>:
    Nefarious said "I cringe when misinformed..."

    Calm down, Hoss. I don't want to fight you or Uncle Lou and I didn't mean to knock anyone's school. I'm just a bit confused....

    In your initial post you said:
    "Both have told me the same thing throughout the years: "An MBA is a waste of time and money""

    In your last post your said:
    "Am I saying that an MBA from a t10 MBA school like Harvard will not help you at all? Nope."

    My point was this: A variety of factors determine whether an MBA is worthwhile. You initially just parroted the advice you heard many years ago without doing any of our own research or understanding the complexity of the decision.

    Now that's enough. I won't argue with an 19 yr old who thinks BUYSIDE refers to an investment bank...

    Congratulations, you're the dumbest fucking person I have run into on WSO thus far. I am not 19, nor am I still in college. The advice that I heard "many years ago" was just recently retold to me a week ago. This isn't some bullshit I heard when I was 12 and ran with it.

    Them telling me that an MBA is worthless and me seeing that there is value in getting an MBA from a t10 school are two completely different ideas entirely. I am sorry your minuscule mind is flipping trying to grasp that intricate concept.

    I am not going to argue with you anymore because it is apparent that you not only know about finance and business, but you ARE finance and business. This has to be the case, I mean both "buy side" and "CFA" are right in your username.

    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.

  • TNA's picture

    Yo Nef, Buyside's comments throughout the thread have been pretty moderate. He is also legit. Might want to ease off on the insults and hate considering you are rather new here.

  • Marcus_Halberstram's picture

    First and foremost my question is who the fuck is Josh Kaufman and why should anyone care what he thinks?

    This is a largely stupid article.

    One of the first points he makes is how expensive MBA's have gotten these days and consequently un-worth-it, partially as a result of that ever increasing price tag. That in and of itself eliminates any shred of credibility. Personally, the $150K price tag is not the major (economic) consideration. The real thing I struggle with is losing 2 years of income, which is several times a multiple of the 2 years MBA expenses. If I go to b-school I'll idealy (and on currently on track to) leave a $250-350K a year income on the table for 2 years. Opportunity costs, tuition, room & board = $600-800K. So even if MBA programs have jacked up their tuitions 50% in the last 4 years, that $50K is a less than 10% increment to my existing cost of an MBA. 300K lost comp x 2 years + 100K tuition = 700K total cost, 50K increase in tuition 50K/700K = 7% increase. So right off the bat, his cost argument is moot. The increasing tuition cost has a minimal impact on the big picture 2 year economic cost of an MBA.

    Second, this idiot proposes that because he read a bunch of textbooks he is equivalent to a Harvard/Standford MBA. Time after time, I've heard the same thing: people who go to (elite) business school tend to keep going and continue to excel and torpedo through their careers while their non-MBA-getting counterparts tend to stall out and hit a cieling of sorts. This is what I've heard Jamie Dimon say. This is what I've heard Steven Schwarzman say. And when I hear them say something, I don't have to ask "Who the fuck is Steve Schwarzman and why should I give a shit about what he says?"

    Third, he bases most of his argument on this stupid fuckin academic study. I've done an academic study as well and I'll have you know there is very little difference between an academic white paper and a pitch book valuation, other than the formatting. I came up with my conclusion first (its human nature) and the data just happened to support my presumptions. For every study telling me one thing, I can find 10 more telling me the other.

    Forth, am I the only one seeing this, he worked at P&G for a number of years, alongside well-educated professionals, and now is launching a brand of his own. If he had worked alongside a bunch of SUNY Oneonta communication majors would he have the same knowledge and insight he has now? Probably not.

    So in sum, this douch is sophmoric and pretty immature in my personal opinion. He fails to acknowledge that 90% of what he knows he learned from working alongside harvard and wharton MBA's, and not from reading textbooks. He seems to think that the sole cost of an MBA is the $'s spent, and the sole benefit is the textbooks lessons taught. He doesn't recognize that one of the primary reasons and benefits of an Elite MBA is the fraternity and professional network you develop, the team work and management skills taught, and all the past experiences all your peers bring with them and share collectively.

    Lastly, this article is making this kid out to be some sort of deeply innovative, cutting edge entrepreneur. Since when was a self-taught MBA cirriculum groundbreaking? The article says if Josh Kaufman would have pursued an MBA, he likely would have gone to Harvard or Stanford. Did he get admitted to either of those institutions? Because admission is a little known requisite to getting an MBA. I didn't read the entire article so I could have missed that he did in fact get into Harvard and Stanford. I've probably shared this before, but throughout college my college experience and even after it (non-target) it was very challenging to get into IBD. It was an uphill battle and one I started with a handful of friends and classmates. Only a few of us had the drive, luck and persiverience to crack our way in. The ones that fell by the wayside still to this day insist they see no value in a banking job, as if they had the option of accepting one. They'd just as soon quit trying because they're intropectively defeated and don't think they're good enough (and Im not saying there is such a thing as not being good/smart enough for banking), than acknowledge externally that failed, often under the guise of "I dont want it."

    Truth be told, I may or may not get an MBA. And I've heard several people tell me that "You need to seriously consider the benefit it will offer you, because everyone is different and it very well may not be of much value to you while it may be very valuable to someone else." But almost all of these people are significantly older and are themselves graduates of MBA programs I'd be interested in attending. So I value their opinions. I have absolutely no interest in listening to a 28 year old with a undergrad from cinncinati U (not that theres anything wrong with that) who runs a web site telling me the merits of not getting an MBA. Shame on that web site for presenting him as if he's some sort of oracle on all things MBA.. and primarily promoting his product, which is all he's doing.

  • In reply to Marcus_Halberstram
    Stringer Bell's picture

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  • mr1234's picture

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

  • mr1234's picture

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

  • mr1234's picture

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

  • ikicker's picture
  • In reply to shorttheworld
    econ's picture

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