Am I Thinking About an MBA Wrong?

Hey All,

Peers and friends from college have been talking about studying for GMAT / applying to B-School. Currently a 2nd year IB analyst in M&A and thinking about future. As someone who will have paid off close to 100k in undergrad loans (on track to pay off in another ~2 years), I cannot seem to wrap my head around the idea of taking out another massive loan.

While I'm thinking about PE, i don't think that would be my career. Could see myself going into VC, Corporate Strategy or even venturing out and starting my own business. I guess the short-version of this is, if I have no plans to make partner at a buyout I really need the MBA?

Comments (18)

Oct 8, 2019 - 11:26am

You're thinking about an MBA (mostly) right! I strongly recommend that applicants have a goal and determine if given their background and previous education they need an MBA to achieve that goal. Then determine if the MBA is the most cost-effective way to achieve it and if it's worth the cost. "Worth" included both financial rewards and personal satisfaction if you will enjoy what you're doing more after you earn the MBA.

While I understand the emotion behind "I just paid of $100K in debt, I don't want to do it again." as someone if finance, you know that's not how you analyze an investment decision. You need to look forward.

Here are links to a few interviews with current MBA professionals who decided the MBA is worth despite impressive academic and professional backgrounds before they went for the MBA:

* Ida Valentine: Investment Banker, Inspirational Speaker, HBS 2021
* MBA, Private Equity, Cop: Meet Nik Kumar, Columbia MBA 2019
* Bain & Company's Keith Bevans Talks About Careers, Life at Bain


Linda Abraham President, Accepted | Contact Me | Admissions Consulting
  • 3
Oct 8, 2019 - 11:42am

A lot of things to think about here, many of which will be personal to you, and that only you can really figure out if it's "right" or "wrong." I'll try to break it down, but the question is really, "What do I want out of an MBA?"

The monetary and time commitment are real. The monetary commitment won't just be tuition and living expenses, but all of the social/project stuff that will or may be never ending. That can add up.

A few verticals to look at..

Cost: You have already mentioned this. How big of a factor is it? How much does being in more debt/having the pay it off/sacrificing mean to you? Big difference if it keeps you up at night vs "Meh - I'll pay it off and be fine"

Professional: Do you want to switch tracks and do something really different? If so an MBA is a great reset button. If not... Will your company (you are in IB so probably not, but for the sake of others reading this...) sponsor you and then promote you/have a spot for you when you come back? What would the commitment be post-MBA? Can you get the roles you want/network into them without the MBA? If so, would it be much harder?

Social/Professional Network: How is it now? How is it from your college and personal life? Do you feel that you will need to build it out further? Would a MBA help? If you are not particularly social can you make good friends, say in work groups etc? If so, great. If not.. Being social in a program like a MBA (or college for that matter) can help enormously... Do you even care about your network? Many do, but I know many don't.

Academic: Do you want to actually learn new stuff? Did you go to a target school or not? Ie. will the MBA give you "pedigree" that you don't already have?

I'm sure there is more but this is off the top of my head.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 3
Oct 8, 2019 - 1:31pm

You're thinking about it correctly.

I believe the MBA will lose some value over time as more people start to recognize that the value of the MBA can be replicated in the aggregate with much lower expenditure of time or money.

Many examples of this but I prefer Tim Ferriss's example of his home-made MBA where he took the $200k he would need to spend on an MBA and instead invested it in different startups over time while being very involved in the diligence and management of those investments. By the time he was done, he had learned much if not more of what an MBA teaches in the classroom, had built great connections (fellow investors, founders, etc.), and any "brand value" he missed out on was probably more than made up by the brand he'd built as someone who'd done ~10 angel deals.

Anyway that's just one example, the point is, I think the MBA has already lost some of its luster and will continue to lose more as people wise up. I say this as an M7 grad who's been fortunate to reap significant benefits out of my own MBA (especially my current job which I never would've gotten without a direct connection from b-school).

Even though I've been lucky with it, that same random luck could've come through another channel if I'd chosen a different channel. So I don't think its accurate to credit my MBA program with the fact that I now have an opportunity via someone I met there. Odds of that happening are equally high if I'd take a more self-taught route.

You can build a network, a brand, and a business education on your own much more easily these days than you could 10-20 years ago, so I just don't think MBA is going to hold its value.

Exception would be someone who places an unusually high value on the first job out of MBA. For example, someone who's a few years out of college and just discovered IB/MC and decided that's absolutely what he wants to do. MBA could make sense for him because of the direct pipeline into those jobs.

Oct 10, 2019 - 12:12pm

There are a lot of reason to not go to business school, however, really don't think what you've outlined is accurate. Tim Ferris, lol. I mean first of all the guy is famous so its not really a good comparison out of the gate (not to mention the investing $200k in startups vs needing student loans - not even factoring in said access to startups). Second of all, as you should know, bschool is more about signaling than learning - for many sectors its table stakes. Third, again as a hf guy, its all about risk management - the likelihood of going the Tim Ferris path or assuming your could have networked into the same job is much lower than having gone the bschool route. Even if the value of the MBA loses value over time this will be much more like a melting ice cube and won't really matter over the next 10 years or so and bschool is really most valuable in the early inning of your career.

Reasons to not go to bschool would be that you have a great undergrad and a solid career track already and the likelihood of an mba enhancing that isn't as high. Think direct promote in banking or consulting or buyside. However, if someone went to a so so undergrad and can go to a top bschool, or if someone is trying to make a real career switch from accounting or fpa it totally makes sense.

The original poster, assuming good bank etc, would fit into the former category and bschool is likely not necessary.

Oct 10, 2019 - 12:45pm

The Ferriss thing was an example. Not a comparison. I picked the example because its simple and (thanks to his fame) verifiable. I don't see how it matters that its not a direct comparison to OP's situation. It's just an illustration of what I mean by constructing for yourself the basket of things that an MBA can offer you.

Very surprised to hear someone say that MBA is table stakes in many fields. Certainly not table stakes in the HF world; almost the opposite. Only field I can think of where its table stakes is mega/UMM PE funds and even then, its only table stakes for those on a specific path where they've already been a PE associate and the fund won't promote them without b-school. Those are limited circumstances. If you feel its table stakes for many fields I'd be curious to hear more examples.

Key difference between your opinion and mine, I think, is that I'm an optimist about how the person would spend their time if they didn't go to b-school. I'm assuming that if someone considers school and then chooses not to go, that they will make good alternative use of their time and resources. That means finding some other way to build the skills they need, finding other ways to network, etc.

If that sounds difficult, I have to say I 100% disagree. But if we assume it's difficult and that the person who skips MBA will make poor use of this time and resources, then sure, that would lead me to place higher value on the MBA.

True cost of an MBA, considering lost wages and all that, is at least $400k. That's a lot of money to pay for the convenience of having to think creatively about how to spend your time. Especially when at the end of the day, the MBA doesn't exactly leave you with a finished blueprint either. Far from it.

Oct 10, 2019 - 1:01pm

i don't think MBB is better, it's just different and in my eyes equivalent in the "best track" category

from everything i've seen at my clients and heard, IB>PE>MBA (and possibly back to PE) and MBB>MBA (or MBB>direct promote to associate / EM) are the best tracks in business as far as career earnings, penetration into F500 leadership roles, optionality, etc

when i say "in business" i'm excluding entrepreneurship but that should be obvious

interested to hear if you disagree

Oct 10, 2019 - 4:47pm

Can't comment on the rest but if you're thinking of getting into entrepreneurship now is a great time and do it ASAP. Very easy to raise money at high valuations even if you're not remotely qualified (not saying you are/aren't).

Most Helpful
Oct 28, 2019 - 8:40pm

You should google and go find CompBanker's post from a few years ago about him getting an MBA. He went from banking to a partner track PE role and still went back to B-School.

You're thinking about it the right way, but you're still a 22/23 year old with one year of work experience, so I'll play devil's advocate. If you can get over the opportunity cost, a couple of reasons I think B-School might be interesting to you down the road.

  1. It's a break from work life. Coming out of school, I'm sure you're tired of school and excited to be working in a big city, have some disposable income, no studying, etc. After 2 years of banking a few more of PE, you'll quickly realize that school definetly has it's merits. Even though the cost might be high, the ability to go back to a campus environment, especially one where your peers are pretty interesting accomplished people and everyone wants to socialize, travel, party, spend money, etc for a few years, it's something that might be a welcome break.

  2. You can't place a definitive value on the network you get from a B School, but it definitely is a thing. I was talking to a younger, anti B school co worker about the network that one could build and his response was "well you can do that for free, just look people up on linkedin, ask for coffee/lunch and keep in touch, you do a few of those a week, you'll have a great network... in my opinion that is an entirely different network than what you'd get at B-school, you get an international group, across a variety of industries, and potentially share some really meaningful experiences with people. People meet spouses, best friends, future business partners and B school has the benefit of being a self-selected pool in which to meet those types of people. Again not to say you couldn't use the dating apps to find a date, networking groups to find business partners etc, but it's different than having to do a marketing case study with someone who works at LVMH or going 4 wheeling in the deserts of Egypt with a guy who works for Singapore's sovereign wealth fund. You never know where those connections might come in handy down the road.

  3. MBA provide optionality as well, they kind of raise the floor of what you can do in some sense. If you have an M7 MBA, even if you decide to spend a few years doing entrepreneurship or whatever after and then decide you want to go back into a corporate job. The network plus the branding will allow you to slot pretty easily in most generic good paying corporate, consulting, finance types of roles. If you did 2 years of banking, maybe a little PE, and then try a startup for ~5 years and it fails, your options are probably more limited than someone who did the same, but did an MBA. Again, if you do banking into PE, I'm sure you're smart, well networked, etc so maybe the difference is marginal, but for some, there's a comfort in knowing that worst case, you end up with a 200k+/year corporate finance job anywhere in the US.

With all the being said, there's no need for an MBA in most modern jobs today. It is an extremely high opportunity cost and if what I said above doesn't resonate at all, then you are thinking about it the right way and shouldn't focus on it.

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