To anyone considering an MBA
There has been a lot of recent discussion on these forums as well as in the media regarding the value of an MBA. As a longtime member of the community and someone who recently made the decision to pursue an MBA, I thought I’d share some thoughts.
You can see my full background story here: http://www.wallstreetoasis.com/forums/how-i-got-in...
In summary, I went to a relatively unknown undergrad in New England where I received a degree in MIS. I went on to do two years of investment banking at an MM doing sell-side M&A. I then did two years of MM leveraged buyouts in a pre-MBA role before switching to a competitive MM leveraged buyouts shop in a partner track role (post-MBA role with no MBA).
Despite the fact that I am on a partner track without having an MBA, I made the choice to pursue b-school. I’ll have six years of experience when I matriculate this fall. I am very happy in my current job and will likely pursue very similar opportunities upon graduating. I won’t be receiving any employer sponsorship nor have I been guaranteed a position when I graduate. I’ll be attending one of the M7 schools (not H/S/W – they all rejected me).
First of all, I don’t think an MBA makes sense for everyone. It ultimately comes down to a combination of career path, adversity to risk, financial situation, geography, etc. There is no one-size fits all formula; you’ll need to decide for yourself if it is a good fit for you. There is also no hard and fast line for which MBA programs are worth it and which ones are not. For some people, only Harvard/Stanford/Wharton are worth it. For others, a top 50 program could be the boost they need to get on the right track. Ignore any discussion where people try to value an individual school without regard to the applicant’s individual circumstances.
Many people cite the cost of an MBA, combined with the opportunity cost, as the single biggest reason that it is “not worth it.” For me, the cost was never a consideration, though the total cost of attending will likely exceed seven figures (opportunity cost included). I like to believe that I have very modest expenses in life relative to my income. I don’t enjoy expensive dinners, don’t drink more than a few drinks when I go out, and I have no interest in a fancy car/boat/yacht. I’ve saved all of my annual bonuses without ever having to pass up an opportunity due to money. For me, the biggest inhibitor of maximizing my happiness has always been a lack of time, not money.
Wealth alone doesn’t bring happiness; it just enables us to afford experiences and things that make us happy. While the cost of an MBA is very high, I view it as an opportunity to have unforgettable experiences while I’m young without negatively impacting my career. Without including the five vacations (week+ long) that I’ve taken in the nearly six years I’ve been working, I haven’t had more than two straight weeks off since high school! This summer I will take advantage of my nearly three months off before school to build my language skills in Latin America, explore cities in Europe I’ve never been to, and visit friends and family in the U.S. that I haven’t spent time with in years since I live in a different city. And the best part is that employers won’t view it as a “hole in my employment history” as it is generally accepted to take time off before starting an MBA program. I don’t think I will have another opportunity like this for the rest of my career unless I lose my job or retire.
Money aside, I also place a lot of value the learning aspect of business school. Given I have an MIS degree, everything I know about finance has been learned on the job. While I am rapidly reaching the point where intricate accounting / finance knowledge is not required to be successful in my job, I do encounter situations where I have no idea what my CFO is trying to explain to me. Things such as utilizing standard costing come intuitively to my peers who studied accounting, but require extra effort for me to understand. There is also a whole world of finance that I have never been exposed to (derivatives, hedging, heck the entire stock market) that I feel will improve my ability to perform my job. This is an often overlooked part of business school that I think people should take into consideration when thinking about applying.
Even if you completely negate the learning aspect of an MBA, the intangibles alone are reason enough for me to get an MBA. These intangibles come in many forms: (1) credibility, (2) network, (3) executive presence, (4) risk mitigation, and (5) option value.
Credibility. The combination of attending undergrad at a university few on Wall Street have heard of and working at small institutions, there is nothing in my bio that gives me credibility. Sure, I can eventually earn respect through performance and results, but often times a lack of credibility can prevent my ever being given that shot. I’m constantly meeting with people that judge my credibility. Current and prospective executives of investments, bankers, lenders, and down the line when I am more senior, limited partners. For me and many others, attending a top tier MBA will enable me to gain this credibility.
Network. This is the one intangible benefit of an MBA program that people latch onto, and rightfully so. I can’t begin to count how many times I’ve seen senior professionals tap into their alumni network to learn more about a particularly industry, transaction, or opportunity. Furthermore, if you’re looking to change jobs, having a network of people that are willing to take your call and assist you is invaluable.
Executive Presence. The vast majority of junior professionals lack the ability to articulate their thoughts in a structured, cohesive, and concise manor. Their opinions are often discounted or ignored due to this fact alone. When someone delivers an opinion with confidence and conviction, they come across and knowledgeable and intelligent. B-school is an opportunity for people to develop this soft skill through frequent interactions with others when there is no pre-determined seniority. Executive presence is not only valuable on the job, but one of the defining characteristics of leadership.
Risk Mitigation. Things change in life, particularly in the financial services industry. Private Equity appears to be contracting as many established firms are unsuccessful fundraising. I work at a relatively small firm where the departure or incapacitation of a couple individuals could force us to wind up the fund. There are many factors outside of my control that could force me to find a new job despite how well I perform. Opportunities are few and far between at the post-MBA level and I would be at a serious disadvantage without one. I have yet to read a job description for a PE professional that didn’t state “top-tier MBA required” or at least “preferred.” I view the MBA as risk mitigation in the event that I find myself in such a situation.
Option Value. Many people go into MBA programs after only three to five years on the job. Usually they’ve only worked in one type of job their whole career, be it M&A, consulting, logistics, you name it. These career paths often build a very specific skillset and do not give you exposure to alternative career paths. While I’ve had the good fortune of getting exposure to a wide variety of companies, I don’t know the first thing about product management, marketing, etc. An MBA gives you broad exposure to and dare I say a rough skillset in each of these categories. This exposure will not only bolster my ability to work in PE but also widen my options through developing a broad skillset in the event PE doesn’t work out.
Some people tell me I’m crazy; that I may come out of business school with a worse job than before. The reality is that there are a ridiculous number of ways to make money. I see it every day. Some guy starts designing pet t-shirts in his garage and within five years he is making $10mm a year profit. Every single product you consume was manufactured somewhere, distributed by someone else, whose systems are managed by a third party that uses software developed by another group. The opportunities are ENDLESS to either improve on existing business models or even create a whole new market yourself. The key is to develop your knowledge/skills as much as possible and be willing to take a risk.
I like to believe that I am a pretty self-aware individual. My thoughts have continued to evolve as I’ve progressed through my career and I recognize that they will continue to change. I’m not entirely sure if I will feel the same way about obtaining an MBA after completing the program or even ten years from now. What I do know is that the window to gain acceptance to top programs is very narrow and it is “now or never.” The majority of applicants that are admitted to the top programs are in their twenties and 2-6 years into their career (broadly – most seem to be 3-5 years). I will likely never have the same opportunities available to me in the future if I postpone the decision. That is one risk that I’m not willing to take.
Very well said, CompBanker.
Very well said, CompBanker.
“The pleasure of rooting for Goliath is that you can expect to win. The pleasure of rooting for David is that, while you don’t know what to expect, you stand at least a chance of being inspired.” - Michael Lewis
SBed before even reading
SBed before even reading it...
You are my hero. I want to
You are my hero. I want to be you in 6-7 years.
"An intellectual is a man who takes more words than necessary to tell more than he knows."
- Dwight D. Eisenhower
Check out my blog!
+1 for excellence. I can
+1 for excellence. I can relate to much of this minus the successful career part since I graduated in May. Working on that one though!
Frank Sinatra - "Alcohol may be man's worst enemy, but the bible says love your enemy."
Did you ever give any thought
Did you ever give any thought to part-time? I work in Chicago, and did my undergrad at UChicago, so I've been considering applying to the part-time program at Booth in a few years (I don't see myself being able to afford it otherwise).
Also, does anyone know how part-time vs full-time looks when it comes to post-MBA recruiting?
I would agree with you, but then we'd both be wrong.
agreed. about to start my 3rd
agreed. about to start my 3rd quarter.
+1 I hope this means you have
+1
I hope this means you have more time to post on WSO. Your insight never falls short of efficacious.
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
CompBanker: Wealth alone
Wealth alone doesn’t bring happiness; it just enables us to afford experiences and things that make us happy.
+1 on this
Great article - very well
Great article - very well written and logical.
Except for one thing. If you value your time far more than your money, why are you on this career path? Does the presitige of an elite job and high pay make you feel good? Do you simply love the work itself?
I'm not asking to be critical, but because it's an issue I struggle with personally.
rogersterling59: Did you ever
Did you ever give any thought to part-time? I work in Chicago, and did my undergrad at UChicago, so I've been considering applying to the part-time program at Booth in a few years (I don't see myself being able to afford it otherwise).
Also, does anyone know how part-time vs full-time looks when it comes to post-MBA recruiting?
Yes, briefly. My company would prefer that I continue working and attend a part-time program on the weekend. After looking into it, I decided that it isn't for me. Many of the driving factors for me to attend b-school (travel opportunities, networking, interaction with others) would no longer be possible if I went to the part-time program.
To answer your second question: The purpose of the part-time programs is for people to attend while continuing to work. As such, you aren't expected to be looking for a job and prospective employers aren't going to give you the same consideration because you're already employed. If your company is paying for it, you'll be locked up for the next two to three years anyways. Also, it is generally known that the part-time programs are easier to get into and therefore don't offer the same degree of credibility that the full-time programs do.
CompBanker
rogersterling59: Did you ever
Did you ever give any thought to part-time? I work in Chicago, and did my undergrad at UChicago, so I've been considering applying to the part-time program at Booth in a few years (I don't see myself being able to afford it otherwise).
Also, does anyone know how part-time vs full-time looks when it comes to post-MBA recruiting?
Basically part-time recruiting is the same as full time recruiting in that you get similar companies...You're invited to the same on-campus information sessions. However, full time students get first priority and some companies look very specifically for full timers.
You basically have to be very pro-active in your job search in part time recruiting. The careers office isn't very helpful and tends to see you as a second class citizen. They'll prioritize the needs of the recruiter over yours instead of trying to "help" you the way the full time students get. Its doable to get the same offers as the full timers but you have to make an extra effort to find your own opportunities.
instant classic, thanks comp!
instant classic, thanks comp!
WSO's COO (Chief Operating Orangutan) | My story | Connect with me on Linkedin.
2013 WSO Conference
+1; Great post!
+1; Great post!
"History doesn't repeat itself, but it does rhyme."
Ditto. All of the reasons
Ditto. All of the reasons why I would go back to b-school, even after having had success in the financial services industry.
Super Nintendo, Sega Genesis - when I was dead broke man I couldn't picture this
valiant7002: If you value
If you value your time far more than your money, why are you on this career path? Does the prestige of an elite job and high pay make you feel good? Do you simply love the work itself?
I'm not asking to be critical, but because it's an issue I struggle with personally.
Your question makes a very large assumption; that I work long hours and therefore don't have much free time. This was certainly true when I was an investment banking analyst and partially as a pre-mba associate. Now, I realistically work about 50 hours a week. Unless we have a deal under LOI, I'm not working weekends and I've only had dinner at the office once. The thing that eats up most of my time is work travel, which admittedly is at least every other week. There are very few other jobs out there that would significantly reduce my hours at the office and none that would do so at the same level of compensation.
As for the work, I genuinely do enjoy some of the work I do. I enjoy learning new things, particularly how things work. A significant element of my job is to learn as much as I possibly can when evaluating investment opportunities. While there are certainly mundane elements of the job and not every company is exciting, I've been able to learn about hundreds of different companies and industries just six years into my career. There are very, very few career paths that give this sort of exposure.
I also like a lot of the people that I work with. I've purposely made "culture" and "fit" my number 1 & 2 criteria when looking at job opportunities. I've avoided the NYC atmosphere where big egos and rude behavior is commonplace. Our office culture is truly fun and laid back, yet we still manage to produce good returns and make a ton of money. Imagine that?
CompBanker
Awesome viewpoint. It goes
well done. +1. you and I
See my Monday Morning Brainteasers
Instant classic. Thank you
CompBanker: Some people tell
Check out my WSO Blog
have my babies
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
CompBanker: valiant7002: If
People tend to think life is a race with other people. They don't realize that every moment they spend sprinting towards the finish line is a moment they lose permanently, and a moment closer to their death.
Amazing story! How much are
Great write up. I definitely
CompBanker: Some people tell
CompBanker: rogersterling59
Very well written with
"Don't let making a living prevent you from making a life."
John R. Wooden
From my point of view, it
I'm a lover, not a fighter, but I'm also a fighter, so don't get any ideas.
My WSO Blog
Great insight. I'm definitely
The hills are alive with the sound of horsepower! - Jeremy Clarkson
inkybinky: CompBanker: ro
Thanks for the great post
Great post. Thanks!
This post raises a more
Your outlook is ridiculously
inkybinky: CompBanker: ro
CompBanker
labanker: This post raises a
CompBanker: rogersterling59
I would agree with you, but then we'd both be wrong.
after reading this i may have
Thank you for your reply.
In addition to your list I
I hope this works out for you
Compbanker, Given the
Great post. My personal view
.
Congratulations for your
Almost everybody I know in
Financial Modeling Training
Guide to Finance Interviews
fleetersamuelli: Great post.
@CompBanker: What about the
Awesome post and awesome
CompBanker, awesome thread.
another great post
Capitalist