The Fallacy of Business School from a PE Associate
Credentials: * MBA Grad (Harvard/ Stanford) - PE AS1+2 (APO/BX/ KKR/ SL) - IB Analyst (GS/MS/PJT RX) * (Ignore my WSO title cant be bothered to update)
Graduated for a Top MBA programme not too long ago and even though the experience was enjoyable some things need to be addressed for any future cohorts or people who think about following this ‘golden path’.
The MBA has been marketed as the ultimate career accelerator and a passport to elite networks, industry leadership, and financial success. However imo in modern, the harsh reality is clear: The MBA is no longer a wealth-building or elite networking tool. Instead imo, it has become an expensive career detour that benefits employers more than students.
While past generations leveraged MBAs to build financial empires, today’s graduates are simply optimizing for salary increases rather than creating real wealth or impact. The modern MBA is a prestige-driven corporate safety net for risk adversed people (like my self previously), not a launchpad for innovation, ownership, or financial independence.
The MBA "Network" Fallacy (The Connections are minimal):
One of the biggest selling points of MBA programs is the idea that they provide a powerful business network that will help students start companies, secure funding, and unlock game-changing opportunities. The reality is far different. Most MBA graduates are employees, not entrepreneurs. From my experience an overwhelming majority of MBA students are not risk-takers. Like myself they are consultants, bankers, and corporate professionals who want to re-enter the job market in a slightly upgraded role after graduation.
Few MBA students are truly focused on building businesses, raising capital, or creating investment firms. Instead, their primary goal is to return to their previous industries (finance, consulting, technology) with a marginally higher salary and better prestige driven title to impress their school buds.
Additionally as I’ve seen throughout my career, top level relationships do not come from classrooms. The most valuable professional relationships are built through real work experience, long-term collaborations, and financial trust not through classroom discussions or MBA networking events. The idea that top hedge fund managers, venture capitalists, or private equity leaders built their teams through MBA programs is a myth. In reality, the strongest investment teams form from years of working together or trusted elite-family connections, not from meeting in a business school.
Additionally what some of my classmates didn’t know and were shocked to find out when recruiting for summer associate positions is that An MBA network won’t get you into private equity or hedge funds
Private equity, hedge funds, and venture capital firms hire based on experience (maybe network if you come from an elite connected family very rare though), and credentials. The brutal truth is that:
- If you did not work in private equity before your MBA, you will not be recruited into a top or even UMM PE firm after graduation.
- If you already worked in private equity before your MBA, then leaving for two years to get a degree makes little sense to me, they are basically indicating to you that you are a not currently good enough for partner track and you should go off and get some more experience - Even if you get recruited by the same firm post MBA you are basically filling the ranks compared to people who got offered partners track directly from AS2 .
- The same applies to hedge funds firms do not hire MBA graduates unless they have proven investing experience before business school.
The MBA as a Corporate "Break" and Not a Real Career Accelerator
Previously in the 70’s/80’s/90’s the MBA was once a legitimate stepping stone to high-level corporate leadership. In the 1980s and 1990s, finance, consulting, and private equity were still expanding industries, and MBAs played a key role in building them. That era is over.Today’s corporate world is driven by asymmetric risk, ownership, and capital control. As I’ve seen MBA does not teach you how to build wealth, it teaches you how to try and optimize your salary.
Today, these industries are mature, structured, and highly competitive. Rather than being a launchpad for financial success, the MBA has become a glorified two-year vacation for burned-out professionals looking for a reset.
It might seen basic but surprisingly most people don’t know, the real path to financial power is through ownership, investment, and control over capital, not through prestige-driven career climbing.
Furthermore After spending two years and $200,000 on an MBA, many graduates realise their career trajectory has not changed.
As I have seen at a great level, a majority of MBA students take two years off, only to return to the same system. A majority of my class that left their jobs before the MBA commenced expected a major career transformation. Instead, they find themselves in slightly better-paid versions of their previous roles.
For example:
- PE AS2 leaves TPG, exits to UMM PE or MF PE in a tier 2 city
- Investment bankers leave Goldman or Morgan Stanley, then return to a similar finance role.
- Corporate professionals take a two-year break, only to end up in another version of the corporate structure they left.
For many, the MBA does not lead to a transformation it is simply a delay.
Why Are So Many MBA Graduates Feel Unfulfilled
This environment then leads to many MBA graduates from top schools to lower tier schools experience a deep sense of career dissatisfaction after completing their programs. They expected to feel elite but nothing really changed. After spending two years networking, studying case studies, and attending corporate-sponsored events, many modern-day MBA graduates expect to re-enter the workforce as industry leaders with bullet-proof networks . Realistically you spent two years and six figures, only to realize they are still employees, do not own businesses, do not control capital and still reliant on corporate structures and promotions for financial progress.
Two years is a long time in the corporate world, many people who skipped the MBA route often realistically ended up ahead. Many MBA graduates see their former colleagues who never left to get an MBA getting promoted, increasing their earnings, and making more industry viable connections than they have. IMO Instead of leaving for two years, these professionals simply kept working, took ownership over their careers, and advanced without an expensive degree.
Additionally for some reason many classmates thought they would come into the these top MBA programs and bag a future 7 figure, big baller, future PE super titan and live happily ever after with him or her. Reality is that most people are already in long-term relationships or married already - this was literally 85% of my class. Does cheating sometimes go on here and there - of course! However, they its always casual fun and never translates into anything serious.
Final Thoughts
The MBA is not just overhyped IMO it is fundamentally irrelevant for anyone serious about wealth, power, and independence. The world has changed, but business schools are still selling a boomer-era dream that no longer applies. There are some exceptions, if you are a complete non-target with no finance or consulting experience, an MBA might help you break in. But even then, it is not a guaranteed ticket. The reality is that top firms hire based on experience, deal-making ability, and direct performance, not a degree. Also when it comes to networking, I was always open to networking with everyone regardless of background, however, many people I with my similar background (TOP PE AS), didn’t care for networking with non-target/ non prestigious corporate or alternative career pivot class mates as in their words ’Any value gained would always be one sided’.
I used to be a big advocate of MBA’s being good for candidates coming from emerging markets countries as a U.S. degree carries weight. But as I saw, the brutal truth is that most international MBA grads don’t stay in the U.S.they return home, making their investment questionable. The USA’s MBA value is tied to the American finance and corporate system if you cannot stay in that system, the degree holds little long-term value.
Ultimately it’s not completely useless and I am extremely happy with my experience from a social standpoint, I had fun going on retreats and partying like I was in college again. Despite this, the MBA is a prestige-driven, risk-averse move. It is a safe path for those who fear uncertainty and want a structured career progression, not for those who want to own, control, and build. How do I know? I was this person!
Just some food for thought - feel free say if you disagree
I just think it's too expensive in today's world. Are people really ok with taking on 200K of debt or even using their hard-earned savings to pay such tuition? Or do most people just get help from their parents / scholarships and I'm missing something?
The one thing an MBA does carry is signal. Same with CFA. We can consciously say that it doesn't, but it does, at least to some hiring managers
It's think its really more of a function of finance being mostly commoditized at this point
There's also nothing pretty much you can learn in school that you can't learn online for free, unlike the 90s
Perfect use case is for a career switcher who wants to move into say IB after doing something totally unrelated
this
Education in general is becoming commercialized. Prestige universities have realized that they need to operate more as a business and take advantage of the reputation and employer relations they've built up.Putting it simply, an MBA back then was an exclusive cohort of young professionals at the top of their field, these are the people that would graduate and build empires or run empires and thus build the reputation of the program with them. Nowadays, as class sizes have increased, programs become less selective, the cost/benefit ratio has changed completely. Those that would have found themselves pursuing business school 30-40 years ago, are able to differentiate themselves at top UG's and then enter the industry directly. By their mid 20's, after having worked in consulting or IB, when they'd want to do an MBA, they're already ready to launch their startups. I'll also say that the world in general has changed a lot, theres a disproportionate amount of 20-30 yr old startup millionaires created in the 21st century and that's completely shattered the illusion that you need 10-20 years of experience working in a company to build one yourself. It's really a mix a lot of cultural and economic trends. All in all, the combination of a few highly respected entreprenurs shattering the illusion that a university education or degree is neccesary for success as well as the unis recognizing this shift and thus commoditizing their degrees more results in what we see today
what were the employment outcomes + comp like? is it really as bad as everyone's making it out to be
A counter-argument (sort of?) if OP or anyone care to chime in:
What do you think of the long-term value of your network? Agree that real relationship/trust comes from collaboration through ups and downs, but wouldn't MBA give you infinite opp to start getting into those? You enjoy working with someone a lot in class, then you guys start to build on that once you graduate. The difference between this vs not doing MBA would be a) there are more "likely to succeed" people (for lack of better word), b) diverse surrounding e.g 10% of students actually have unique profiles should you want to hang out with them and c) less transactional, more genuine/friendly environment
I think that's a good argument if you're looking at it over a 15-20 year time horizon AND network your ass off. Many people churn out of finance so if you aren't planning on staying for long (or moving to executive level in corporate) there's no point. FWIW, many of my coworkers have masters and MBA's. I can only recall one time when their connections had a tangible benefit. And the connection was a friend from undergrad.
Agree, IMO the value of an MBA comes from career switching from a low paying job to IB/consulting/etc
Hi OP, thanks a lot for this. I found your take interesting and something I broadly agree on.
If I could challenge you a bit, do you think in a case such as mine an MBA would make any sense? I'm planning to apply to HSW later this year.
Currently in UMM PE in London, was in BB M&A before. Want to move to NYC for personal reasons. We do a lot with the US (incl. me personally) but can't transfer to our NYC office (issues with our corporate structure make us ineligible for L1s + some situations specific to the office there). Double passport from Western Europe + UK.
I have a lot of friends and connections in the city, as well as many that did HSW. The feedback I'm receiving is quite positive given existing PE experience + worst case, there's always going to be the European fund ready to sponsor a Euro guy already in the country and with top credentials. However, I can't help but feel like this is driven by knowing me personally and wanting to be optimistic / positive.
Feels like my situation is a bit different from all those you laid out.
I would very much appreciate yours (and anyone else's) unbiased perspective. FWIW, I'd be doing this purely to move across to the US - zero interest in doing it otherwise.
what’s your view on this now? would do the mba for the same reason
I graduated from HBS and agree. Very well said. I currently am taking a pay cut to what I made pre-MBA. I’m trying to transition back to the industry I started in just to see some kind of pay increase
is that banking? did you not recruit for banking out of MBA?
Got an MBA, returned to same industry (LP investing). Could not agree more with the above. I lost two years of investing and building industry relationships.
MBAs are great, and potentially necessary, for career changers (ie nonprofit, deadend corporate, engineers) seeking to move into professional services. Otherwise, opportunity cost is too significant.
Yep I moved from LP role pre-MBA to actually a GP role. But all the GP roles that were available were shitty so I actually took a cut going from LP to GP
Most business schools these days are strictly in the money making business -- fill those seats with high-paying customers, qualifications and pedigree is secondary. That leads to a lot of problems.
Re consulting, a big thing that's changed is access. Used to be the big boys would only hire MBA grads and generally from a tiny list of elite schools. Brother was one back in the 80s. His firm only hired from HBS, Stanford, Wharton, Chicago. He actually had an offer dinner with the founder of the firm. Built an enormously powerful network via consulting which you can say derived from the MBA.
Today, most of the top firms hire directly from UG. Some will require the MBA for career tracking but I think it's mostly optics for their clients. Still, if they want it, they want it.
Son is at a firm (finance) that will let you only go so far without the MBA. All the Heads of X or senior management folk got it and it looks like many got it along the way to check that box.
Summary: very firm dependent.
I'm a 1Y at a non-HSW M7. I do see quite a bit of what you're saying. A lot of folk were already in pretty elite careers, and they're not exactly upgrading materially. I also see the sponsored folk taking the 2 year break.
I probably fit one of the exception categories. I was making maybe 50k pre-MBA with a non-traditional background, think teacher, peace corp, military. The MBA gave me the opportunity to secure an internship where I will make at least 6x that for fulltime comp. Probably wasn't going to happen without the MBA platform.
I'm debating going to business school and I agree with most of your points. I think if your goal is to become a C-level executive or raise capital to start your own fund it will help a ton. Look up the heads of the top banks and PE firms. They all have one. But for everyone else, it's not necessary.
Assuming you're doing a full-time program, I would argue the true cost is way more than $200k. If you're already in a career track then you need to add the opportunity cost of two years of not working. So the added compensation over your career must be at least $500k for your typical analyst. Most of us aren't going to get significant scholarships to put a real dent in it.
My mentor (former CEO of a bank) came from the time period you mentioned and is encouraging me to get an MBA. I am employed in REPE but have been searching for a new role for over a year. My program is ending soon and getting a new job has been a challenge. The industry is getting crushed due to changes in interest rates. I've made it to several final round interviews and passed modeling exams, but I haven't been able to receive an offer. He thinks it's because I don't have an MBA, but I really think if I went and got one I'd still be in a shitty situation. Except my Excel and technical skills would have deteriorated. Unless I used it as an excuse to hide out for two years.
Changing careers would be more difficult than my current search. And probably wouldn't pay off either compared to staying in my industry. My coworker went from consulting to a top 5 MBA program to REPE. At 30 he was still an associate and made as much as my 24-year-old coworker. I haven't seen many people both go up in title and switch industries immediately after an MBA. No one wants to spend the time and effort training someone new when they can find someone who already has the exact skillset they need.
Part of me thinks that if I applied myself over the next 20 years, an MBA would be the key to me getting into a leadership position or launching my own fund. But part of me also thinks the grind isn't worth it when with much less effort I can get to MD and get meaningful carry.
Yeah the opportunity cost is huge. I didn't mention this in my other comment about my salary. Not only was my salary super paltry, but I was also in a career field where they would eventually pay for my schooling when I left. Low salary combined with my MBA mostly paid for is a very different situation from the average M7 caliber MBA candidate. That low opp cost for me is what let me take a huge risk and recruit for buyside vs something traditional like IB or consulting. Still wasn't easy, but I imagine the added stress of know that I had 200k in loans would have crushed my soul.
Meant to comment to someone else*
My thoughts (agreeing with the above):
Not challenging what you’re saying, because it’s true—I’m just surprised this isn’t an obvious take.
Historically, when MBAs started gaining popularity in the 1950s-1960s, they were primarily a training ground for executives who lacked a formal business education. Think of the young guy who worked his way up from the mailroom to head of a division in a food company. The MBA functioned as a "business boot camp" for companies to send their executives, so they could return more effective in their roles.
During the 70-90s, the MBA was still mainly a route into executive or corporate positions rather than a tool for extraordinary exits or entrepreneurial venues. Many of the figures you see in finance—Marc Rowan, Schwarzman, Dimon, etc.—did their MBAs almost immediately after undergrad or within a couple of years, typically as a way to pivot into better roles. Again, no focus on entrepreneurship.
To get to the point: an MBA was never designed as a path to entrepreneurship. It has always been a stepping stone for climbing the corporate ladder—which makes me skeptical about how well people research MBA programs before enrolling. The supposed MBA => Entrepreneurship path doesn’t exist. The only real path is Work Experience (with or without an MBA) => Entrepreneurship. You go into entrepreneurship because you feel professionally prepared or because you recognize an opportunity through your professional experience—not because of an MBA’s network, academics, or coursework.
I mean, yeah, long-term, most of your MBA classmates will likely be in corporate roles. If they chose an MBA instead of walking away from the corporate world altogether, that’s already a sign they’re in it for the long run. This may be valuable for some people who have almost no contact with such people because of their background, but in general, you have more to gain by staying at your job and networking aggressively.
OP - awesome post and thought provoking.
I definitely don't understand the point of going from high flying career to MBA back to basically the same career. But maybe this is a phenomenon you see more at the absolute top schools like Harvard and Stanford. I think there's a level (arbitrary maybe like top 15-20 in the US), which strikes an interesting balance between being attainable for people with unimpressive backgrounds, while still giving enough chances at meaningfully improved trajectories afterwards.
There is another piece around using MBAs to transition - which can be valuable, whether that is career or geography. There is another piece around 1 year MBAs instead of 2 year MBAs, which can improve immediate ROI. Finally there's a piece around doing an MBA through a "big fish small pond" strategy where you might shoot a bit lower to get a meaningful scholarship.
I sort of did some combination of the above - went from Big 4 consulting in my home country to T2 consulting in a new country, through a 1 year program where I had a meaningful scholarship (due to my profile being relatively strong within a typical cohort here).
I think there are plenty of ways to make it work but ultimately it all depends on your goals.
So what can a consultant do, if they want to pivot to public markets?
MSF in MIT/Princeton?
Or game over?
Listen my friend - This world works through contacts, a consultant is rarely going to break into Pods or SM’s without connections. There are several ex MBB consultants at Coatue and other SM’s however they are seriously connected (family/network). Point is you can probably break into an investing role at Tiger global with connections… It’s all about who you know
Enough of BS like this what you can do matters far more!!! Yes, connections matter, but you get them by being good and not insufferable. 90% of the game is learning, and understanding the job the last 10% is connections stop making it sound like 10% if you can do it 90% connections. I am sick of this its who you know crap.
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