Thoughts from a Stanford MBA and PE Associate

It’s a tough market. MBA pays dividends later 

This feels like a troll post from someone sad they didn't get into a top MBA program when admissions came out this past week. 

Did those that skip the MBA still move into PE VP roles? Or pivot to something else?

I believe the MBA benefit cashes in later when you're looking at partner promotes, at least this is what i was told by an md at a bb

Mind if I PM you?

I will not be getting an MBA unless forced to, and even then I might lateral elsewhere instead of going back to school. I’m just two years out of school and already on the buyside. It would be stupid to leave and have to break back in. I’ve seen people struggle to get a similar seat post-MBA, so what’s the point?

It's always a close call with the MBA and I think you can't really go wrong either way.  When someone's situation is right on the fence between going and not going, I tell them to lean toward not going because I think the networking benefit is counter-trend in this digital world, and the brand benefit is also fading as employers and candidates find more ways to match abilities to roles and don't value the signaling of a brand as much anymore.

But it's only 20 months between starting and finishing MBA, with a 3-4 month break in the middle that's usually compensated.  So the lost income isn't that bad compared to most graduate programs and that's why its usually a close call.  

So for someone currently in a good program, don't get too regretful about it.  At the bare minimum you gained some good knowledge & personal development over that time, and you didn't give up all that much.

BTW, can definitely confirm that LPs are the reason for all the DEI hiring at PE shops. The pensions require it.

I mean OP you get to go to Stanford for your MBA. I walked around HBS the other day, and trust me it sucks when you're not smart enough to even apply to the program. Count your blessings and move on, you'll be successful in any role

IMHO what I have gleaned from 1. Having spent quite a lot to get a fancy business degree albeit at the undergrad level and 2. Being the professional / financial / business workforce for a decade or so and been a student of so many greats is that a lot of what you learn in MBA isn’t super useful/practical up front…

But, you get a broad skillset and knowledge base and then have to specialize very quickly whether it be just finance, just marketing, just management etc to start your career. But as you get more senior a career starts looking more like an hour glass whereby it’s broad and wide at the bottom (ie during business school) thin and focused in the middle (you are the number 1 person in the world for just ventilation companies covering independent dental offices in northwestern Kentucky) and then broad and wide at the top as you expand coverage and start leading a whole company where you once again need to start thinking about marketing, management, Human Resources, accounting, etc. All the stuff you learned (and paid a high price for) that may seem useless now and the network and whatever, if you end up being a senior leader in business or anything down the road, those skills/knowledge and connections start to become very useful and valuable as you need to wear more hats and take on more and different responsibilities. You’ll hopefully know people in high places in all the different specialized places you may need / could make use some extra help. I hope this helps. Good luck and best wishes!

The MBA has a place in the world but it's not a panacea and it only is a fit for some people, some time, under certain circumstances. So this discussion is very valuable. 

Too many people just go get MBAs in an un-strategic way, and end up regretting it.  Candidates should be far more thoughtful and nuanced.

There's a lot of misconceptions around the degree (I had many going in). One should be incredibly strategic about when and where to get an MBA, or whether a different degree/study might be a better fit.  For some it's a waste of time, for others the MBA is a life-changing experience, but it all depends on the place you are in life and how you do this. 

The MBA is just a grad degree, with cobbled together classes. Your core program has you take a bunch of intro classes in business (finance, accounting, marketing, stats, HR/organizational behavior), etc.  Then you take electives as you see fit.  In parallel you're spending 2 years in an active recruiting process that gets you access to employers who come to campus.  

Can you use it as a pivot?  Absolutely. But you'd better come in prepared. The best performing MBA turnarounds took classes before hitting campus, did an internship pre-MBA in their area of interest (even if unpaid) and lined up academic year internships in their pivot area. 

The MBA is not going to give you technical finance skills in those intro classes. If anything, the very volume of the courseload, and the fact that you're trying to balance non-finance classes in the curriculum are distractions.  It's hard to learn how to build a good financial model if you've got other class-based workloads to manage in parallel. So if you want to learn hard technical finance skills, best you do undergrad classes, take online financial modeling classes (BIWS, WS Prep, WSO) and get all those skills down on your own time. If you want finance knowledge, prep for CFA or take an MS Finance somewhere. If you're interested  in real estate,  study REFM online, rebuild models, and apply for a traineeship at a large commercial broker or developer.  

At this point, having been thru b-school myself (done poorly and non-strategically), been on the IB's campus recruiting team, and mentored friends who went on to get MBAs and other grad degrees, I have some cases to analyze. 

•  In the case of OP and others like him/her, the MBA was an unnecessary. He already had ibanking and PE training and experience. Taking a bunch of intro business classes is a waste of time. Going to Stanford of course will open up an incredibe network, so maybe it makes sense regardless, but only if he uses those 2 years to meet with lots of alumni, do internships at multiple PE/VC funds or tech companies, and seek out a 'corporate fit' and mentors. 
• I coached one WSO member into a Ivy League MBA.  Her path took her from low-waged under-valued office job outside the US into an BB IBD internship, and hopefully a FT offer. Life turn around in process.
• My brother used the MBA to pivot into REPE from non-profit. He had an undergrad in business from a top tier school. But after some time at an IB he went the non-profit route. The MBA allowed him to get exposure to real estate and eventually move back to finance. And his tuition was low as he was in-state.
• I fell thru the cracks after undergrad. I went to a top tier undergrad, but pursued a technical field. I didn't have the benefit of online IB prep, and was under-prepared for IB andconsulting interviews, so didn't clinche it.  The MBA helped me get the coursework and get a BB offer. But if I was to do it again, I would have delayed a year, done my CFA prep, done more pre-MBA internships and work, and made the pivot as a stronger candidate.
• One of my classes most successful MBAs is a founding partner at a major PE firm. He was on the younger side, just finished his BB IBD analysts stint. He did a pre-MBA PE internship, worked for a top tier PE fund as an intern during both years, starting right from day 1 (even tho the school forbids academic year internships). He spent his summer at a different PE shop to get a point of comparison. But he joined his internship PE fund full time after graduation. After a couple of years he and his partners did an MBO of the business and he's now doing very well as founding partner of a major PE fund with tens of millions of dollars under mgmt. 
• Another classmate got his MBA in conjunction with his MD. He did a top down study on concierge medicine and wrote a business plan during the MBA on concierge medicine. He subsequently launched a very successful concierge medicine and dermatology practice. I'm sure he's doing more than fine. 
• Another classmate got his MBA in conjunction with his MD, but during his studies decided he didn't want to be an MD. He went to MBB, in healthcare practice, then joined his pharmacom client as a senior strategy officer. He spent a decade in strategy at the company, running different regions, and I think he's now head of stratgy at one of the big pharmacoms.   
• Others who went to b-school without a clear plan, went at the wrong time, failed to do the right pre-MBA coursework or network ... well their results varied.. 

My point is, it's intellectually  lazy to say "MBAs are a waste of time" just as it is to expect b-school to solve all your propblems.

When candidates told me things like "I'm dead set on real estate" I'd tell them to go get an MRED degree somewhere.  Be thoughtful, be prepared, delay your entry as needed, and if it's the right decision for you then pick your school very carefully.

An under-prepared MBA student is just like a second bite at undergrad, and that's a very expensive way to pursue life.

EDIT: I'll share more about my experience below, as some are DMing for more details and analysis on whether the MBA was worth it. 

MBA is not about getting the degree and using that degree for promotion. It is about networks with extremely rich people. In Stanford MBAs your classmates may be the sons and daughters of multi-billionaires, or some start-up founders, or successful entrepreneurs. It is for marrying-up, or finding partners for your entrepreneurship, or get Angel fundings for your own start-up idea. There are many success stories in this regards. Some people literally married into Forbes families from Stanford MBA program. Another reason to do MBA is to switch industry and reset career track. If your aim is just to go back to your original company and original role, then getting MBA is wasting time and wasting money. It is pointless to say the least and harmful to say the most. It slows down your promotion by two years and people will also think that you have screwed up your job and that’s why you end up in a school program, even though that’s not what truly happens. Because realistically, you get nothing outta the program other than a student debt and a two-year-vacation.

It's going to be 10 years since I graduated from bschool later this spring and I've reflected a lot as to whether doing an MBA was worth it. Historically, you could group MBA grads according to the short / medium term benefits they gained from the degree into 3 broad categories :

1. The degree has at best a marginal impact on their ability post-MBA position (ie. they got a job they could have gotten without going to business school). Think people with pre-MBA PE / HF experience, bankers who went into consulting and the likes into this bucket, consultants who were sponsored, etc. While this group likely benefited the least, they also had the best, most high profile placements and the value they got from the MBA is mainly around the network and the experience (ie. being able to take a 2-year semi-vacation) 
2. People who used the experience to gain a decent "step-up". Think people at T2/ T3 banks / consulting firms who ended up at a BB / MBB or people who were in corporate and ended up in consulting. This group benefited mostly from the branding and access to quality recruiting.
3. People who did a hard pivot. From my class, thinking of a military guy who is now a partner at MBB, an opera singer who now runs IR for a large fund, guy who was chief of staff to a well known politician who is now at top AM, etc. This group really benefited from the overall experience, including the academics. 

It's easy to see that the problem is that only a small portion of MBAs actually benefited from the academic experience. In that respect, I kinda agree that the MBA is a bit of a boomer degree. Initially, MBAs were established in an era where practically all incoming students came from liberal arts background and had limited or no work experience so it made sense that the curriculum was focused on building a business foundation. That approach really does feel antiquated nowadays as the vast majority of the incoming students already have a solid foundation build through a combination of a more business focused undergrad and relevant work experience. I went to a school that had a pretty rigid core curriculum the first year and I can tell you that it was a complete and absolute write-off, I did not learn anything. I found the average academic (ie. professors who didn't have real world business experience) to be utterly useless. Combining that with tuition that keeps on growing much faster than wages and the opportunity costs become harder and harder to justify. 

There's also been a seismic shift in how PE as an industry views MBAs. While getting one used to be more or less a requirement at most funds, as others have pointed out, there's been a complete reversal in the last decade where it's now expected that the best and brightest will be promoted directly. Yes there's value in the network, but if you work at a well-known PE firm, you can build a similar network on your own, people are going to take your calls!! All of that to say that there's been a huge reduction of people from the first group getting MBAs and that has had an impact on high profile placements, something that schools like to point to when recruiting prospective students. From the perspective of a PE associate, the value of an MBA really isn't what it used to be and I think there's a strong case to be made for many that it just isn't worth it anymore. 

Graduate degrees, in general, are for those who made mistakes. 

I'll share a bit more about my own experience, since some folks were asking me in DMs. 

I regret the MBA - at least how I pursued it. Had I been more strategic, it might have made more of sense and had greater impact. 

I had a solid undergrad. Berkeley, top 2% in my class, honors graduate, but with an engineering degree, not business. I should have added a business degree while in undergrad, but did not. Regret #1.  Undergrad was the time to get the skills and content while it was early and cheap in my career. I made final rounds at all the MBBs but couldn't clinche an offer. In hindsight, I just didn't have the business knowledge to do well in the cases, nor did my CV have the right weight as I didn't do the right sorts of internships, even though I did try my darndest to prepare for case interviews.

So I started at a tech company, but after a year got laid off with a lot of my colleagues. I didn't have much in savings and I couldn't get a proper job after to save my life. So went to work for real estate developers (remember that engineering degree?) making very little money doing financial modeling and analysis and overseeing some acquisitions and disposals. As I was bored and unhappy, as well as underpaid, I started looking around.

The MBA gave me a chance to get those business classes and reset the career.  My MBA was cheap (almost free) by today's standards due to in-state tuition in California, and because I could sleep on my mom's couch while going to school, despite being a top 10 ranked MBA.   So my tuition was nearly zero, and my opportunity cost was very low (remember, being underpaid in real estate development). 

Would I do it again?  Nope. At least, not in the same way.  I would have :

• Probably pursued a different grad degree instead, either in engineering as I was a strong candidate for scholarships, or a lower-cost 1 year MS Finance.  If I was to pursue an MBA it would have been later in life and in an evening+weekend MBA program (but even then I'm not sure an MBA would have worked for me at all)
• sought out other roles in the field, at different workplaces, rather than knee-jerk reaction jumping to get an MBA
• Taken Wall Street Prep / BIWS / WSO courses.  Mind you they didn't really exist back then. But had they been available I would say online courses would have been better ways of closing the skill and knowledge gap.  
• studied for my CFA 1, whether or not I would even take the test. That could have allowed me to self-study the content, at my own pace and at no cost. And buying Mark Meldrum or Kaplan CFA prep is much cheaper than an MBA, and can deliver content.  My wife failed out of INSEAD, and then prepped for her CFA1 using online courses, and she said she got more content out of 6 months of CFA prep than she did out of her MBA. And had she taken the CFA1 prior to MBA, she would not have failed out of INSEAD. 
•  

The bigger question is are there that many jobs where the 2+2+2 (including MBA) really helps with versus just the 2+2? It seems like the path ends with 2 years as an MF associate, from which your world is pretty much your oyster (SM, L/S, LO, stay in PE, pivot back to IB, high-level corporate strategy). The average class at an MF is far stronger than the overall H/S MBA class. Heck, the average HYPW UG student is probably smarter and more driven than the vast majority of H/S MBA students.

The only people I know with elite 2+2 backgrounds who went to an MBA wanted to take a break (which can be enticing given how hard you work those 4 years).

Is MBA getting the heat due to being very generalist in nature or is it just that you are spending a shit ton of money and sacrificing 2 years og income? Would something like MFin (many universities have 1 year MFin degrees) be any better or does it fall in the boat as MBA?  

If you are already in IB/PE/PC finance, it would seem difficult to justify. If you are an engineer trying to pivot it could make sense if it’s T20, you have sponsorship/scholarship, you have a goal in mind and can clearly see how that schools outcomes can help you (career services outcomes are clearly spelled out for most top schools). 
 

You have to remember some people are dealing with non finance roles way out there, working on aerospace projects, automotive engineering, chemical engineering etc, their day to day is not finance but they have major interest in the non-technical aspects of the businesses and want to learn more. That makes sense.

MBAs like law schools used to be like finishing school for people, it was an upper class signal of sorts to go to the top schools even if you wouldn’t use them - for that reason I get the “boomer degree” sentiment 

Will add my perspective as a current H/S student. I was previously in a UMM / MF PE role and decided to pursue the MBA to 1. Get a break after grinding the analyst / associate years in banking and PE; 2. Make life-long friends that could become potential investors / bring future business opportunities; 3. Recruit for some of the top funds that primarily recruit H/S MBAs.

The MBA has ticked all three of these boxes, and I am overall quite happy with my choice. Is there immediate / clear ROI on my decision? Probably not, but the first two points outweigh this by quite a lot for me. I am in the best shape of my life, pursuing many of my hobbies, and have found a life partner. I also managed to recruit full-time for one of my dream funds (think Dragoneer, D1, Elliott) that otherwise unlikely would have hired me.