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 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.

 
Best Response

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.

 

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

  • Recruiting/ Access : even for HFs this is huge - there is no better stage to recruit than a top Bschool because firms will come to you and the recruiting process will be well - defined (i.e. specific steps within a specific timeframe). The top schools will also be recruited by all of the Marquee names (i.e. top PE/HF). My friends, who I think of as investment babies (i.e. not much better than a post-banker skillwise in my view) still got looks (and some offers) from funds that I couldn't even get interviews at because those funds take a few from their school each year. Outside of a school structure buyside interview processes also tend to be incredibly drawn out and erratic, so this is 500% the best recruiting experience you could have

+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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