Current Value of MBA for Highly Successful Young Professionals
I'm hoping the WSO community can satisfy my curiosity about this subject. Of course, each individual has a unique background and future goals, so an MBA is more or less essential for different young professionals. But WSO seems to thrive in generalities, so I'll pose this hypothetical scenario:
Let's say this. An individual graduates from a target school. He or she then spends 2-3 years in a Top BB/EB with great exists (GS TMT, MS M&A, Evercore, Lazard, Moelis, etc). Then proceeds to a PE MF, Prestigious MM PE, or Top HF. Would this hypothetical person with a great pedigree still find value in taking time off to get an MBA, even at H/S/W? Or would it be a waste of time.
Although none of the answers will be conclusive, I'm excited to hear all of your opinions and snarky shit talking.
Thanks.
I think a lot of the value for someone like that would be a solidified brand that is more stable than any employer,, intrinsic value (of learning, time off, bragging rights), long-term benefits when on boards, raising a fund, switching job/industries down the road, and finally career insurance. So I think if you're talking about H/S/W then the value is there, but you have to decide for yourself if it is "worth" it
If you're already in PE, that's not why you go. The reason why you would go is because it's an extended "network" of classmates who will then go on to provide your deal flow once you're 10-15 years post MBA.
Is this true? I'm genuinely curious. I'm in a master's program right now and feel zero loyalty whatsoever to my peers. I'm a huge fan of my undergraduate institution (obviously) and, frankly, while I might help if asked, I wouldn't go out of my way (i.e. inconvenience myself) to help a fellow alum or current student from the institution. Is my position uncommon?
I know I'm a bit of a philosopher, but I don't feel comfortable making this kind of generalization. Your observation is as good as mine. I also think it varies a lot by school. There are some schools which tend to be very close-knit and alumni will generally go out of their way for each other.
I think MBA is a lot different than other Master's programs though. It can be huge if you have no network in the field you ended up pursuing (like myself who wen to a private school in the south).
I was told by an individual at H/S/W that while doing his summer internship in VC, they looked at missed deals to try to determine why they hadn't seen them. They concluded that the biggest reason was a lack of school connection with those on the other side of the deal (includes undergrad, but obviously attending two schools increases one's odds). Take that for what you will. The same person had an interesting anecdote about how when you're in Silicon Valley (I think this is true in other circles as well), it's very "cool" (for lack of a better term) to talk about how an MBA is a giant waste of time and money. However, most of the people saying these things are not decision makers (but I'm sure their "uber of __" is going to change the world). Look at the bios of the senior professionals at PE/VC shops, and you'll find the large majority have top MBAs (of course, there are exceptions).
I've definitely seen alumni connections pay dividends for individuals above me in both banking and PE. When you're talking about the top programs, I think any graduate could point to times where alumni connections have helped them out. Now, was it worth the cost (price, time out of the field, etc.)? This is really tough to measure, as are some of the other benefits of going back to school (optionality, time to reflect, travel, education, etc.), and vary greatly depending on individual circumstances. And, contrary to popular belief, it's not as simple as whether you are or are not in one of the groups or firms that monkeys pleasure themselves thinking about at night. What do you want to do next (even if you're staying in finance, there's a big world out there)? Are you lacking in particular skill areas? What are your current options?
All that said, the highest performers will probably be similarly successful with or without an MBA, so a lot comes down to personal choice.
Nice feedback. Thanks for that.
Just as an aside, these startups didn't learn much in their MBA programs if they went directly to alumni for non-competitive bidding on the seed/Series A investment. Rule #1 in VC is to always get competitive investment proposals. Heck, that's rule #1 in business.
Appreciate the input so far. Going forward , let me make a clarification -- this person wants to stay in finance for the long run. Not interested in the career re-evaluation an MBA provides. Thanks again.
Two of the best threads on WSO about this subject are as follows:
To anyone considering an MBA
Reflections on Year 1 at Booth
Read those. Doesn't really apply to people in top groups.
It's a bit more subjective on what you will be doing in finance.
The specific source was a podcast posted on a finance blog called "The Big Picture" where the speaker was from PE and was talking about how his seniors had all benefitted from going to HBS, as studying there allowed them to form relationships with managers who later became key drivers of their ability to source and manage deals that the firm was engaged in.
So ask yourself that. If you're in a similar track(what it sounds like) then how much value you get out of it is going to be direct proportion to your ability to be popular in groups.
I am currently on the "VP track" at a PE shop (we'll see whether or not I make it all the way) and have decided to skip B-school. For better or for worse, to make my decision I basically narrowed down my future to two paths:
Path 1: go to B-school, come back to PE or "high finance" and grind away until my B-school connections start paying off in ~5-10 years. Give up ~$600k in potential earnings and pay ~$250k+ in expenses over 2 years, bringing the total cost to $850k or so. Factor in additional risk of leaving my current gig for an uncertain future, and the all-in cost to me is $1mm+. I am already married so would not be going to B-school for the poon. I also don't want to transition careers out of finance.
Path 2: keep on the current grind, put money away, and play it by ear. Take time off to travel and enjoy life whenever I hit a wall in my career, then use my existing network to try to network into something else (potentially in another country). Try passive investing of different forms. The bet here is that I will be able to keep my job in finance for long enough to get close to my "walk away number", at which point I don't intend to actually walk away, but I will place a higher premium on how enjoyable my day to day is over how much $ I'm bringing in. By this point I will have a couple of kids over the age of 4 and my wife will be going back to work. Ideally by mid 30's I will have over $1 million saved up in investments and real estate, with both me and my wife able to earn $200k+ each...
I choose Path 2 because it focuses on immediate returns and gives me more flexibility in the long-run. I take less risk by not giving up my current fantastic job, I don't go into debt, and I keep saving ridiculous amounts of money for my age.
I may live to regret this, who knows. But it feels right to me.
Totally agree for a structured path IB/PE - you should skip it IF you can (meaning your current opportunities and feedback from professionals for your current employability are already comparable to what you'd get post-MBA). This is probably especially true if you value money a lot.
To me, MBA is most useful to the type of people who need the networking effects (to start their own HF) or structured recruiting opportunities (changing careers).
Yeah exactly - my mentors tell me I don't need an MBA because (1) I've built strong technical skills across multiple areas of finance through experience, so I probably won't learn anything in an MBA that I can't teach myself on YouTube, and (2) I value money and certainty now, and optionality later. I drive a fast car and buy expensive toys because I don't need to chase pussy at a nightclub (perks of being married, a $20 bottle of wine and $5 bouquet and I'm guaranteed some booty 3 weeks out of every month). I don't want to meet new people on a professional self-discovery trip to India or some shit like that. I enjoy saving half my money and spending the other half on superfluous shit. I enjoy crushing it at my job and buying my MBA friends drinks when I go out. I enjoy having a business card that says "investment professional" on it instead of "MBA candidate". And I'm pretty sure I will always be able to network my way into a high paying job even if PE doesn't work out - I meet a lot of people that make $150k or more and I often think they're morons. The beautiful thing is I think Wall Street prepares you to go out and crush it in life, wherever it takes you.
Thanks for sharing NuckFuts. Really helpful.
This. Great advice!
I try and save more than half of the amount, and with breaks in between jobs/contracts, I can do some light travelling. Though I am not married yet, so going to meet other women can be interesting at times.
What I do like are the options between RE/CRE vs. joining a local bank branch (Chase, WF, etc), career wise, and it is a slower pace lifestyle out west.
Where do you two typically travel to?
I did a lot of thought on this two years ago. In the HF space it makes a lot less sense. In the PE/banking space its still largely expected/required at the top groups. NuckFuts provides good counterpoint. My PE friends did it because they wanted the break, their bosses wanted them to do it, and places like Bain pay for it if you come back. The after tax opportunity cost is roughly $500k-$700k and tuition is $120k. You have room and board regardless. If you are going to be a rich bastard regardless, the prestige/networking/travel etc are probably worth it in the long run.
My good friends in their second year have class 2-3 days a week and say its a complete joke at this point. I have a minor twinge of regret for not doing it, but it would have conferred essentially no career benefit for me. Starting a HF realistically requires at least $5mm of personal capital and some early investors, maybe $3mm if you have a great seed deal. Life is about trade-offs.
Thanks for the comment, Gray Fox. I should say that I would be more inclined to get an MBA if my firm paid for it, if it was expected of me (and I had a decent chance of coming back with higher earning potential), and if I needed the break. I want the break, but I don't physically need it (yet), and I started from 0 in this country without any family wealth to fall back on (unlike many of my peers who are currently at HBS, Wharton, Stanford, Sloan, etc). If any of the above were not true, the MBA starts to make more and more sense for the reasons you mentioned (long-term benefits of the prestige and network, plus it's a lot of fun and MBA school is kind of a joke).
I actually think your firm paying for it is the worst reason to get an MBA as it usually comes with at least a 2 year work afterwards requirement. In finance tying yourself up for two years is generally not worth it, and on buyside you can probably find someone that would give you a better offer even relative to having Bschool paid off (unless you are at a top MF).
Think the discussion above has been excellent so far. I decided not to go (technically still time but getting to be too late since i don't want to graduate at 32). A lot of my friends made a different decision (granted, I'm HF side and they were mostly PE) but we've spent time discussing pros/cons. My conclusion is that you should go to H/S unless the seat you're currently in is gold. For everyone else its a toss-up, and outside of H/W/S/C I'd probably favor keeping a solid buyside job
Pros: + Network: this is huge, as you develop a network that constantly replenishes itself and includes/ will include many of the most successful people in the world. People talk about doing deals 10 - 15 years down the line but more important is if you need a new job 6 months down the line, especially in a different industry. I've had friends decide to switch from finance to tech/media/ other high-paying highly in demand jobs and the school network made it seamless for them to go from building DCFs one day to interview for top corp fin/ biz dev/ whatever roles. If I wanted to make that kind of transition it would be a drag getting in front of the right people and just getting a shot
+Downside protection: The top school degree gives you downside protection if something happens that forces you out of your current job/industry. Same point as in "network", but having people ready to respond to you and give you chances just b/c you went to a school is huge
+Fun/relaxation: this is the part that I semi-regret the most. Seeing your peers partying in another country every week, just having fund with no adverse consequences while knowing that they are simultaneously benefiting their careers
Not pros: +Starting a HF: I saw this mentioned multiple times above. To start a HF you will need a strong career/investment track record behind you. While going to a top school might be a step in getting that, the MBA in and of itself doesn't matter. No one gives even the slightest fuck that you went to HBS/ Stanford when they're giving you money. A community college graduate with a stronger track record will stand a better chance. This is just a completely nonsensical thing to talk about w.r.t. benefits of your MBA
Cons: + Money: $200K + foregone compensation - this is a big deal, but in the (long?) span of a finance career, maybe not really. Honestly it could turn out to be one good sized bonus down the line + Time: 2 years of your life - similar to the money, hard to say how much of a big deal this ultimately is
Random: + Personality/community: this is something no one talks about, but by the time you've done the elite school, 2+2+elite MBA you are part of a very specific 'establishment', a social circle that tends to believe, think, and behave in certain ways. These are basically your people for life. They are smart, ambitious, and in many ways wonderful, but also relentless climbers and at least a little prestige-whorish
For HF the cons are a bit more important than for PE because your career is less linear. You know exactly how much you're giving up in PE if you go, but in a HF context you might be giving up that one year you would have scored huge and made a lot of money/ really progressed your career (or maybe you would have lost money and gotten fired - such is HF life).
I ultimately decided not to go because I saw what a lot of my most talented and successful peers were doing instead: starting companies, starting (or becoming #2) at hedge funds, and taking really interesting risks. I decided if I was going to take a 2 year break from finance it would be for something completely different (take a shot at the startup thing) that would be more worthwhile to me. For me the community part also loomed large - wasn't really sure I wanted to be that much of an 'insider'.
Did I make the right decision? No clue. The years I would have spent in Bschool turned out to be pretty mixed professionally. If I'd made a few mil and fast tracked to launching my own fund I'd probably be fist-pumping like "NO WAY MAN. THOSE BSCHOOL KIDS ARE IDIOTS". As it is, my peers that went to Bschool have some things I don't have, and I have at least one thing they don't have (much deeper investing experience).
Hope this helps with your decision
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