McKinsey Who?

Stumbled across this Forbes article from 1999 (link at bottom of post). When reading the first few paragraphs, you could easily think it was written yesterday (aside from the salary #'s). Makes the dotcom bubble of yore feel eerily familiar....

" 7/26/1999 McKinsey who?
A June graduate of UCLA’s Anderson School of Management, 27-year-old Seth Baum scored choice job offers from Deloitte & Touche and Diamond Technology Partners. Diamond promised e-commerce consulting work and stock options on top of a $140,000 salary and bonus.

He turned both down for a $75,000 job as senior marketing manager with Petstore.com, a one-year-old, on-line pet supplies retailer in San Francisco. Petstore offered him 50,000 stock options that could make him a millionaire when it goes public.

“The old wave is banks and consultants,” Baum says. “The new thing is 20-person Internet companies.”

Pity the poor consulting firms and investment banks. They still consume the lion’s share of the annual M.B.A. crop. But, lacking options and cachet, they have to struggle to attract the very best candidates, some of whom interview more to explore their options than because they really want jobs.

“People going into consulting don’t talk about it,” says 28-year-old Godard Abel. A 1999 Stanford biz school grad, Abel passed on offers from McKinsey & Co. and Morgan Stanley to join Niku, a company that helps Internet enterprises make more efficient use of the Web. As Eldon Thomas, who recently left the Boston Consulting Group to go to a dot com, puts it: “Consulting is now a safe, secure second-tier occupation compared to the glamorous, gotta-have type of Internet position.”

The number of Harvard M.B.A.s going to consulting jobs has dropped 24% in the past four years; for the first time this year, the fraction of Harvard graduates going to technology jobs (18%), including Internet startups, exceeded the fraction going into investment banking (12%).

Four years ago Harvard took 30 students on its first “West Trek” to interview for tech jobs. This year: 350.

All this presents a challenge for recruiters like Kenneth Keverian, a vice president with the Boston Consulting Group. In the 1980s BCG fought for talent against the mergers and acquisitions business. In the early 1990s, against the biotech industry. But Keverian regards the Web as a more serious and lasting threat.

Consulting firms are hiring more doctors, lawyers and Ph.D.s. McKinsey now draws more than 40% of its new associates from the ranks of non-M.B.A.s. To boost their appeal, firms play up all the e-commerce work they are doing for clients. Spend a couple years at a consulting firm, the pitch goes, and you’ll have enough experience under your belt to start your own Internet company or work for one. “The Internet situation is a challenge and an opportunity for us,” says John Helding, senior director of worldwide recruiting for Booz Allen & Hamilton, echoing a hopeful mantra among consultant recruiters.

But the M.B.A.s know consulting firms can’t do much to cut down on the constant travel required. They are willing to work 20 hours a day, as long as it’s for themselves. Besides, they can always take a consulting job later. “If my company stumbles and topples to the ground, these [consulting firms] are going to want me more than before,” says Jeremy Kagan, who just finished his business degree at Columbia this year while simultaneously co-founding ezcd.com, a peddler of customized alternative music CDs. Kagan, 29, fielded a stellar offer from PricewaterhouseCoopers. But in the end, the job couldn’t compare to running his own show, hanging out with rock bands at night and wearing blue jeans on workdays.

Consulting firms typically beat Web salary offers by $20,000 or more, but that’s no match for an option deal that just might be worth $1 million in a public offer.

Jennifer McAdams just graduated from Northwestern University’s Kellogg business school. Deloitte Consulting dangled in front of her a salary of $100,000, a $35,000 signing bonus and $50,000 of tuition reimbursement. She turned it all down for a $50,000 marketing job with Denver-based eBags, an on-line purveyor of handbags, purses and luggage. McAdams even paid for her own flight to Colorado for the interview.

Soon after, she and her husband were packing up a Ryder moving truck. McAdams’ husband, Matt, had just quit a consulting job with BCG to start an Internet company in Denver. Jennifer’s option package (still under negotiation): 7,000 to 10,000 shares. “This is a great time in our lives to be doing this,” she says. “In ten years I’ll probably be a little more risk-averse.” Or rich."

Original: http://www.forbes.com/global/1999/0726/0214067a.html

 

^This. Not sure what happened to Niku but Godard's Abel subsequent chapters included:

Godard is CEO of SteelBrick. He previously founded BigMachines, a leading CPQ software provider which he grew profitably from scratch to $50 million in revenue while building a global team of 250. BigMachines was acquired by Oracle Corporation for over $400 million in 2013. After his successful exit from BigMachines, Godard took time off to pursue two goals: playing a scratch round of golf and qualifying for the Boston Marathon. He has since accomplished both. At the same time, he founded G2 Crowd, an online community providing crowdsourced enterprise software reviews from real users. Born in Germany, but raised and educated in the US at MIT and Stanford, Godard is an odd combination of a laid back German and determined, precise American engineer. While his coding skills are rusty, he once wrote a simulation program at MIT that ran on a Cray.

Fill the unforgiving minute with 60 seconds of run. - Kipling
 

Sure, it kinda sounds like it could have been written yesterday... except for the bits where it talks about how much less tech firms were paying than consulting and banking jobs.

These days, well-funded tech firms are throwing so goddamned much money all over the place. It's kinda insane. I can certainly see why so many people want to head into tech. You don't even have to take a paycut to do it!

 

I just want to see the "content managers" who make $80,000 a year posting "which cat video are you" quizzes or ripping content from reddit end up unemployed and then forced to take a $30,000 a year job like a normal journalist. It's not really asking much. I just want to right the ship.

Commercial Real Estate Developer
 
Ace Rothstein:
CRE:
I just want to see the "content managers" who make $80,000 a year posting "which cat video are you" quizzes or ripping content from reddit end up unemployed and then forced to take a $30,000 a year job like a normal journalist. It's not really asking much. I just want to right the ship.

Glassdoor says they make ~$35k/year.

I know more than enough who make between $70k-$90k. Glassdoor isn't the bible, man.

Commercial Real Estate Developer
 

Good stuff. I find this article funny because I have a memory of reading it in '99 and I lived in SF during the dotcom boom and bust of the 90's/00's. Today's sentiment with regard to banking/consulting vs. tech is pretty similar though. Why work long hours in a suit being a spreadsheet/powerpoint junkie or have to travel Sun-Thur at a client's office when you can wear jeans, play ping pong and have a free cafeteria with any type of food you want? And change the world?!?

The big difference between then and now is that then, and I worked in PE in SF in the late 90's, my colleagues and I were all pikers because we didn't work at pets.com or fogdog.com and weren't paper millionaires. That didn't work out too well for the people working at a company whose largest asset was a sock puppet dog when it went belly up. Now I think a lot of companies have great business models (then a large majority of them were absolute jokes) but the valuations are just insane right now and I think they'll explode at some point, leaving a lot of paper millionaires underwater on their options and a lot less happy. That doesn't mean homeless with no hopes of getting meaningful employment, just a lot less happy like people were in 2001.

Well funded "startups," and I really hesitate to use that term for a unicorn that's raised hundreds of millions or billions and has a bigger valuation than the market cap of F500's, pay well and you may get some options, but there's a fallacy that by working in tech you're going to get a large paycheck and early employee options that will make you millions in 24 months. You either work at a big public tech or a well funded VC backed far down the path tech co, get paid a healthy salary and some options with a somewhat steady career path, or you join an early stage startup, likely get paid below market to live in one of the most expensive places on the planet and gamble that those early stage options are going to make you tons down the road. Neither are bad, but the amount of people who actually make tons of money in tech (or in anything) compared to the amount of people who work in tech is pretty minute.

 
Best Response
bl00211:

I'm going to disagree on the great business model comment. Take snapchat for example, a company founded to send dick pics with no current revenue potential.

I should have said "some good/great business models." At least the ones that get to an A round and beyond have an ok model or product. I really don't follow Snapchat so I can't comment on it, but back in the late 90's most of the business models were horrible. As in there was no way they were ever going to produce revenue, let alone a profit, and their product or service was plain old stupid. And the main goal back then was an IPO, not as much to be acquired by another tech co because while there were the AOL's and Yahoo's (yes, they were the players back then), they didn't exist in the same number as today so it wasn't as typical to come up with a data analytics tool that may not have much chance at being commercially successfuly on its own but a Google, FB, etc. will gobble it up. A lot of these companies were going public without having produced much or any revenue and were measured on "eyeballs" and clicks without having any strategy to monetize those clicks. Ever. And the best ones took their IPO proceeds and spent their entire annual marketing budget on a 30 second Super Bowl spot, and that's not a joke.

I was pretty friendly with a guy in Boston who founded thing.com (at least that's what I remember the name as, may have been something equally as stupid), raised $80 or $100MM, had something like 75k sf of office space at the Arsenal in Watertown Mass, awesomely designed space with all the Aeron chairs and foosball tables 8 or 9 figures could buy, and something like 150 employees. He was trying to get me to come work for him but no matter how many times he told me what they did I couldn't for the life of me figure out what the hell they did. Or what my role would be. He was just going to pay me, ~26 at the time, something like $150k (a shit load back then-IB bases were around $35k) plus a load of options to come into the office and from what I could tell join all of the other employees who participated in a daily circle jerk talking about how they were going to change the world and write about a new paradigm on white boards while sitting around on bean bags. While taking breaks to play ping pong and foosball and snacking on free food that was delivered to the office a few times per day.

And that company was by no means an outlier. There were dozens or hundreds of these types of startups. It was a really interesting time to live through. That's why I say that at least VC backed companies today have much better business plans. They may be outrageously overvalued in my opinion, but they're real.

 

I'm really hesitant to give Snapchat much credit in its current form. Does anyone over the age of 21 even use it? I had the app for a month and all I ever got was my little brothers' friends proclaiming to the world that they're hungover, a bunch of selfies from girls, and a bunch of pictures of morning shits from asshole friends. Deleted it soon after and haven't missed it since. I'm not an anti-social media guy either - I have instagram, facebook, twitter, linkedin, etc. Snapchat just seems stupid

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thebrofessor:

stocks trade on multiples of earnings, not hopes & dreams.

nufced

Not so sure about that
"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

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No pain, no pain.
 

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