For business school graduates, investment banking is out and consulting is in

http://www.economist.com/news/business/21623673-graduates-worlds-leading-business-schools-investment-banking-out-and-consulting

by sebgr • 12 years ago

86 69 12 years ago

economist.com

pptr1• 12 years ago

On a contrarian point of view it is probably a good time to be on wall street and it is probably a bad time to be in tech.

rjtavares• 12 years ago

Applying the same contrarian point of view, it's probably a good time to work for a record label or a physical bookstore.

I don't think IB is on the same level of obsolescence as those industries (it's not obsolete at all, although banking as a whole has surely changed since 2008), just pointing out the flaw in that reasoning.

cylinder2• 12 years ago

Either way they're just looking to be middlemen. Industry doesn't matter.

ramayac2• 12 years ago

Interesting, I'm a Programmer (Systems Engineer) with an MBA, and right now, I don't know where to go.

throwaway1979• 12 years ago

Did you do a full time MBA or part time? What was your motivation for doing your degree?

Eric_WVGG• 12 years ago

Anecdotally, I work in tech in New York City, and holy shit do I see a lot of this.

alimoeeny• 12 years ago

I think it is not just MBAs.

bluedevil2k• 12 years ago

MBAs follow the money, and right now that's in tech and consulting and not as much in finance.

Someone1234• 12 years ago

That's unfortunate. MBAs are toxic to businesses. They're the classic middle-manager, the random internal goal creators, the inefficiency masters, and so on. They also, as this article makes clear, only care about short term profitability over long term growth or stability (as they won't be there in five years anyway!).

You can look at tons of formally successful businesses that took in too many MBA types and lost their edge (e.g. IBM, Microsoft, HP, Cisco, et al). Google is also starting to go in that direction. Amazon has actually been fairly successful in avoiding that culture (partly due to their own internal culture being almost anti-MBA philosophy).

I'd happily hire an accountant, a lawyer, or even an economist. They're all specialists who bring different knowledge and perspectives to the table. I'd avoid hiring an MBA as they're largely useless people who just want to gum up the works with bullshit.

Engineers for engineering managers aren't perfect, but at least they aren't so far removed as MBAs are. At least once in their lives they knew what it took to deliver, and I'd prefer to train up an engineer into a decent manager than take in a pre-trained MBA.

soundlab• 12 years ago

This kind of seething diatribe is what's wrong with HN.

VLM2• 12 years ago

Because it provides rational experience based opposition to saccharine one sided propaganda?

In an ideal world we'd need neither, but in a world exclusively made of extremes...

ironchef• 12 years ago

I'll play devil's advocate as your brush strokes are hyperbolically broad. Couldn't one just as simply say "Programmers are toxic to business. They're classically myopic optimizing for 'fun' technical stacks without understanding the business they're working in." That's obviously untrue as well. I've been lucky enough to work with some very good folks who are MBAs. I would suggest the issue you're seeing is similar to what we try to avoid in the tech culture. We want to hire the best engineers out there...not the average code monkeys. Similarly, if you hire great MBAs they should not be toxic to businesses.

michaelochurch2• 12 years ago

Similarly, if you hire great MBAs they should not be toxic to businesses.

I agree. We get burned by the Damaso Effect: the good MBAs work on billion-dollar private equity deals and the ones who fail out end up going West and managing nerds. Further reading: http://michaelochurch.wordpress.com/2014/01/05/vc-istan-8-th...

GuiA• 12 years ago

Elon Musk:

"I wouldn't recommend an MBA. I'd say no MBA needed. An MBA is a bad idea. [...] It teaches people all sorts of wrong things. [...] They don't teach people to think in MBA schools. And the top MBA schools are the worst. Because they actually teach people that you must be special, and it causes people to close down their feedback loop and not rigorously examine when they are wrong. [...] I hire people in spite of an MBA, not because of one. If you look at the senior managers of my companies, you'll see very few MBAs there."

http://www.aps.org/publications/apsnews/201311/profiles.cfm

was_hellbanned• 12 years ago

Couldn't one just as simply say "Programmers are toxic to business. They're classically myopic optimizing for 'fun' technical stacks without understanding the business they're working in." That's obviously untrue as well.

Is that untrue? I'd say it's true, and it's exactly why you need a skilled manager to keep an eye on the big picture. Programmers are professional rabbit-hole chasers, and it's extremely easy to lose sight of the business goals.

The difference is that the programmer, if properly wrangled, creates real value. The MBA, in my opinion, primarily creates the impression of value.

michaelochurch2• 12 years ago

Amazon has actually been fairly successful in avoiding that culture (partly due to their own internal culture being almost anti-MBA philosophy).

Amazon has stack ranking, which is the most toxic MBA/McKinsey innovation (although most good MBAs in 2014 recognize it as toxic and best avoided) of the past 25 years.

jdhawk• 12 years ago

Sadly, MBA is billed as a "career changer" for a lot of people that either a) had technical degrees and ended up hating their life as an engineer or b) people with a complete and total lack of any real skill set beyond some generic "soft skills" and vocabulary learning who couldn't apply nut to bolt.

Type A's generally crush the accounting, finance, and enter into banking or back into tech as a Operations centric manager.

Type B's go off to become the organizational gunk that you expect. They're just dangerous enough with some generic managerial skills, but they have learned a whole new level of meaningless vocabulary, spent a few years polishing their XLS, PPT and Public Speaking chops, and are ready to continue to be dumbasses for the rest of their career, but with more pay.

source: jdhawk, MBA.

slantyyz4• 12 years ago

> MBA is billed as a "career changer"

This is the true problem. There's a false perception of what a business education actually provides people.

All it does is provide you with some knowledge. Whether that knowledge is applicable to your real professional career is up to the person receiving the education. And not all MBAs are equal, since there are multiple disciplines within the degree itself.

I got my MBA before the proliferation of the high priced "executive MBA", so I can't necessarily speak for the more recent MBA grads, but from my time, you didn't really acquire any real world skills from the degree. You basically acquired some knowledge that could help you understand certain situations you'd get in. There definitely was nothing that made a person behave or operate a certain way in a business situation.

The problem with the perception of MBAs is that it is somewhat conflated to the level of a profession or certification by people who don't know any better. Assuming that an MBA grad is a business expert is like assuming an English major is a grammar expert. It might be the case, but most likely, it's not.

thecage411• 12 years ago

For someone in type A, how do you decide if it's worth pursuing an MBA vs moving into technical management without an MBA vs sucking it up?

UK-AL• 12 years ago

I routinely see amazon look for MBA graduates.

eroo• 12 years ago

This is empirically false. A recent look at 39 $1B+ companies founded in the last 10 years: 33% had an MBA founder, to say nothing of the MBAs that have played significant early-stage exec roles (e.g., Facebook's Sandberg, Evernote's Gullicksen)[0]

Amazon also does not appear to be "anti-MBA."[1]

A broader misunderstanding comes from the fact that MBAs are all a particular "type." Top MBA programs are going to have everything from engineers to Peace Core volunteers. Is there any reason to suspect comp. sci. majors who spent 3 years at [insert reputable tech, consulting, banking firm here] and then went to get an MBA are systematically worse for tech jobs than those who did not?

[0] http://bostonvcblog.typepad.com/vc/2013/11/unicorns-and-mbas...

[1] http://www.amazon.jobs/team/university-mba-graduate

mbesto• 12 years ago

I met a woman who was doing the Sloan program at Wharton who's boss told her "get an MBA or you won't move up in the company". She then went on to explain that everyone higher than her was an MBA.

To further the whole discussion - MBA's are typically very good at optimizing businesses at later stages. These typical results are usually just as anecdotal as the argument "MBAs are toxic". In other words, YMMV, and generally speaking MBA programs pick strong work candidates, but it doesn't universally mean they are all the best.

josu• 12 years ago

You can look at tons of formally successful businesses that took in too many MBA types and lost their edge (e.g. IBM, Microsoft, HP, Cisco, et al). Google is also starting to go in that direction. Amazon has actually been fairly successful in avoiding that culture (partly due to their own internal culture being almost anti-MBA philosophy).

If you don't back that statement with some data, it is really difficult to believe.

Engineers for engineering managers aren't perfect, but at least they aren't so far removed as MBAs are. At least once in their lives they knew what it took to deliver, and I'd prefer to train up an engineer into a decent manager than take in a pre-trained MBA.

So an engineer with an MBA is a worse engineering manager than an engineer without an MBA? MBAs come from various fields.

raverbashing• 12 years ago

The MBA is not the problem.

Not understanding the business of the company is the problem. It usually helps having a technical background, true, but that's not always necessary.

Not to mention once in a while we get a story on HN about someone who knows about the technical side but fumbles on the business side and having trouble because of it.

boulos• 12 years ago

Ben Horowitz had a good post about this a couple of years ago (http://www.bhorowitz.com/is_now_the_time_to_hire_mbas).

tl;dr: People with MBAs ran some of the great companies of the 80s, pushing up demand and graduation rates in the 90s (every company suddenly wanted some), but in the last few years the curriculum has become more focused on startups.

slantyyz4• 12 years ago

Full disclosure, I have an MBA.

The problem with your "MBAs are toxic to businesses" theory is that you're not separating the people from the degree.

Like any degree, the MBA is just a tool. There's a difference between hiring a tool (in the pejorative sense) and an otherwise smart person who has a tool. Anyone who hires a tool gets what they deserve.

The pedantic MBA is everything that the stereotype makes him/her out to be, but you can basically say that about any pedantic person. I would argue that most MBAs don't even fit the stereotype. The MBAs that fit the stereotype usually identify themselves strongly with their education, and they're in the minority.

leroy_masochist2• 12 years ago

"The MBAs that fit the stereotype usually identify themselves strongly with their education, and they're in the minority."

Exactly.

I've noticed over the years that one can find people whose self-esteem is grounded in their MBA across the entire spectrum of selectivity, from the top-5 programs to online degree mills. Regardless of where they went, it's a very good heuristic indicator that you should STAY AWAY.

crimsonalucard2• 12 years ago

Here's my two cents.

What will happen if you give two kids straight out of university a shot at being a manager? One guy has a business degree and the other has a CS degree.

I believe both kids will have an equal chance of being great or being really bad regardless of the degree. Although, The CS guy might have a slight edge because he understands what's going on at the technological level.

On the other hand if you decide to give both kids a shot at being a programmer, the kid with a CS degree has a astronomically higher chance of becoming successful.

Programming is a skill that is acquired time and training. Where management comes from is more ambiguous. Both skills are mutually exclusive; you can be good at both, bad at both or only good at one.

baq• 12 years ago

the headline is another way of saying 'tech is officially in bubble mode'

hammock• 12 years ago

Peter Thiel, last week, on MBAs getting jobs:

The conceit of the MBA is that you don’t need to have any substance at all. It’s just this management science, and you can apply that equally well in [any company].

At the end of [their MBA program], a large number of people go into whatever was the last trendy thing to do. They’ve done studies at Harvard Business School where they’ve found that the largest cohort always went into the wrong field. So in 1989, they all went to work for Michael Milken, a year or two before he went to jail. They were never interested in Silicon Valley except for 1999, 2000. The last decade their interest was housing and private equity.

http://www.washingtonpost.com/blogs/on-leadership/wp/2014/10...

enraged_camel• 12 years ago

"... They were never interested in Silicon Valley except for 1999, 2000..."

I wonder if this means that MBAs starting to flock to the tech sector again is an indicator that another crash is coming. :-)

JonnieCache• 12 years ago

The phrase "dumb money" springs to mind.

Maybe MBAs are the new cab drivers, or dentists, or however the phrase goes.

TeMPOraL• 12 years ago

Maybe causation goes the other way around; maybe it's the influx of MBAs that crashes the sector... ;).

justaman• 12 years ago

Not a crash... more a decentralization.

pessimizer• 12 years ago

Scary day; two convincing signs of a looming techpocolypse: this and https://news.ycombinator.com/item?id=8447971

vparikh2• 12 years ago

Thats when you know you have a bubble.

vparikh2• 12 years ago

That is when you know tech is in a bubble

sshah1983• 12 years ago

I don't think it's ever fair to generalize and hate on people just because they have a specific degree. Sometimes grad school is a good place to reboot your career and I'm of the belief that education is never a bad move.

There's plenty of insanely smart people I know who have an MBA and can get their hands dirty and hustle (versus the stereotype that they can just build a powerpoint on execution but can't actually deliver). It's just a matter of finding the right people.

jordanpg2• 12 years ago

To me, "business" in any generic sense just seems incredibly boring. It always has, it always will. I could care less about what the trends are or where I perceive the money is.

In contrast, "technical challenges", have and will always be of interest to me, even if they are pointless, like the Euler Project or going to ground on some obscure syntax question.

It seems likely that sharp graduates coming into tech because they perceive they can make a lot of money there or because they perceive it is a good launching pad into an executive lifestyle is not going to be a net benefit to the technical community in the long run. This group of people, as a whole, will never share in the ESR-style hacker ethos.

gaius2• 12 years ago

A meaningful system, one that gets stuff done in the real world, comprises people, processes and technology. All are hackable.

sutterbomb• 12 years ago

This is very true and too many people overlook it. Many "generic" challenges faced by "business" are similar in nature to technical challenges.

For example, a common business challenge is organizational design.

How do we create an organizational structure that serves the needs of the business and the people who work there? Well to start, what are the basic inputs and outputs of the business? What is needed to transform those inputs to the outputs in a manner that is efficient, adaptable, safe etc. Are there common groups of people that tend to work on common inputs and create common outputs ? Within those groups, are there specific people needed to do specific tasks? Imagine person A, in group A, needs an output from person B in group B. Does person A need to know exactly how the output was created? If you've got this far, hopefully you realize the parallels I'm drawing.

Same types of thought experiments can be applied to all kinds of operational and financial aspects of running a business- most are clear optimization problems. It's unfortunate that too many "hackers" hear the word business and assume it's about boozy dinners with other business people, or boring powerpoints that tell us nothing.

There's plenty of interesting challenges in business, and strong MBA-types are often better prepared to address them because they understand the various design patterns available to them.

applecore• 12 years ago

For those in the know, the prospects for an investment banking career just haven't been the same since 2008—2009, so it's not surprising to see graduates go elsewhere.

greenpinguin• 12 years ago

not sure if this is the correct headline. finance overall is less popular but in 2008/9 most investment banks where either bought by "normal" banks or where simply allowed to convert their bank type from investment to "normal":

Goldman Sachs and Morgan Stanley "abandon their status as investment banks" by converting themselves into "traditional bank holding companies", thereby making themselves eligible to receive billions of dollars each in emergency taxpayer-funded assistance.

http://en.wikipedia.org/wiki/History_of_investment_banking_i...

suprgeek• 12 years ago

There are two serious problems with this:

- Many "Managerial" people flocking to Tech only and solely because they see it as a shortcut to making a quick buck. When a field becomes inundated with people who are not core to the field but still wield power - guess what is going to happen

- Many MBAs are convinced that there is some mystical science of "Business Administration" that applies equally well in any company irrespective of size, type of business, types of customers etc. This has led to some spectacularly BAD decisions and programs that could be ruinous in the medium to long term but look good on the shorter timescales.

A crash in the "Tech Sector" has now become a real possibility in the next 1-2 years

gaius2• 12 years ago

Just for arguments sake: aren't we convinced there is a mystical science of "systems administration" that applies equally well in any company...?

leroy_masochist2• 12 years ago

I figured this would be a lively comments section. MBA-hatred might be the most common blind spot in the Valley, and it bums me out.

Within the historical context, the animosity makes sense; during the 99-00 bubble, fast-growing companies that were founded and led by engineers realized that they couldn't grow managers organically and maintain their growth rate -- so, they recruited MBAs from the top schools, especially HBS and Stanford. In so doing, they made a categorical error -- they inferred that all Harvard MBAs are, at a minimum, competent managers in the same way that all Stanford CS master's degree holders are, at a minimum, competent programmers. Many people got burned for making this assumption.

Anecdotal evidence suggests that the MBAs who "answered the call" and/or beat down the doors of hot startups in the bubble years exemplified the worst of the MBA stereotype: arrogant, entitled pricks whose life plan from high school was get the right grades, do the right extracurricular activities, go to the right college, get the right grades, get the right internship, get the right job, kiss everyone's ass and get good evaluations, get the right GMAT score, get into HBS, and then be anointed as the elite, highly-paid business person that they were born to be. They were process-oriented people who didn't care about creating value, they just wanted their slice of the pie.

I'll be honest, I knew a few people like this in business school, but they were a small minority. It's unfortunate that people who meet this stereotype have punched above their weight when it comes to making an impression on popular opinion in the Valley.

In my case I got a lot out of going to business school. It was a great transition from military service: I got a comprehensive crash course on a lot of relevant topics, got a recruiting platform from which I got a good job where I subsequently learned a lot, and got a broad and deep network of a lot of people (most of them not douchebags) across a wide set of industries.

On the topic of the article itself....I think the author is trying to squeeze the data too hard. The story here is not "i-banking no longer cool for trend-following MBAs", it's "i-banks are cutting costs and realizing that it's cheaper to hire more people out of college and try to keep them around longer".

Balgair2• 12 years ago

Thank you for the viewpoint.

MBAs, as used to segregate people in a bureaucracy, are a good idea. Your company has a pretty good idea that you have heard of accounting and it's theory, marketing as a profession, and the business and it's place in law and society having done an MBA. Yes, to many people, this is 'common sense' but with thousands of people working for you 'common' is very hard to come by. MBA degrees fill a function, to get everyone the same vocab, ideas, and implementations of those things. It leads to group think by design, it has to. You simply cannot have 500 people working together with different definitions or fuzzy ideas of what accounting actually does. It would be chaos.

MBAs are a symptom of bureaucracy, not a cause of it. Group Think as well, you have to have standard definitions, processes, and procedures. The issue is when you loose sight of that need and create orthodoxy.

crimsonalucard2• 12 years ago

So your saying MBA's teach zero skills save for vocabulary necessary to enforce bureaucratic segregation? I guess you can say the same thing about law.

I don't see the same thing happening at my company though. Concepts discussed at the management level are usually communicated in a way any layman can understand.

bsg75• 12 years ago

The article seems to imply MBAs are consulting right out of business school, in other words without experience? The education is valuable, but unless consulting is very different in the "business" side of things, this sounds dangerous.

mikeyouse• 12 years ago

Most MBA programs only accept students with several years of work experience. There are always a few straight from undergrad, but the vast majority aren't. Typically , fresh MBA grads that are 'consulting' are just juniors on the projects. They are basically just excel monkeys for a few years until they gain more specific experience.

omalleyt• 12 years ago

The bulk of people in the consulting industry are undergrads right out of college. Source: in consulting

mathattack• 12 years ago

The subject (due to length constraints) unfortunately left out technology too.

For all the knock that MBAs get, it's worth noting that to make money and survive, businesses must do two things:

1 - Create Value

2 - Capture Value

Many of the people here excel at #1, but there are plenty of CS majors who don't create any value. Good MBAs help in capturing value. This can come from turning the business into a monopoly (a goal of Peter Thiel) or from figuring out how to incentivize a sales force. These are things generally not well understood by great programmers.

That said, MBAs also tend to be a tailing indicator. Which tells me that it's probably time to be a banker, and look for cash over equity for the next few years. :-)

For business school graduates, investment banking is out and consulting is in

Related Stories