6 ms·

Business school will cost you five years. Can you afford to wait?

43 points by jaf12duke 15y ago

suyash 15y ago
Is it even worth getting an MBA now if you're a developer in silicon valley. I'm talking in terms of putting so much money out there for MBA and then is there a big difference in salary afterwards?
- dj_axl 15y ago
  > is there a big difference in salary afterwards? Yes, if you're good and that's what you want to do. I know someone who knows someone who went to UC Irvine (not one of the top 10) and got a $40,000 signing bonus, which on average wipes out a UC Irvine MBA's outstanding debt.
  - randomdata 15y ago
    Don't forget about opportunity cost. Even at minimum wage, you would have made $80,000 by working a full time job instead of going to school, assuming a four year program. If his tuition costs were an additional $40,000, you would need a $120,000 (plus any gains that could be accumulated from that $120K) bonus to recoup the expenses. Not to mention that if you really are good, you probably would have made far more than minimum wage during those four years, so we could probably assume, even conservatively, $150-$200,000 for the real cost of the education. Can a graduate expect to earn $200K more in the all important early stage of the career† over someone who is equally skilled and connected without a degree? † Early stage being the most important time to collect due to the rules of compounding interest. An extra $200K made in the last year of your career is far less valuable.
    - ylem 15y ago
      Aren't some people doing this as evening courses--given the state of the economy? If so, the opportunity cost is wiped out--it's more a question of the debt amount, relative to the salary increase....
      - randomdata 15y ago
        It is still lost opportunity. If you have the drive and desire to work hard in the evenings, you could just as easily pick up another job instead of going to school, bringing us back to square one. Some things are more important than money. I enjoy learning new things as much as the next guy, so I often value education above income. However, I am not sure it is a wise choice if money is your only motivator.
    - FelixP 15y ago
      |assuming a four year program. Virtually all full-time MBA programs are two-year programs. Here's an example of the math a prospective MBA student might consider: Current cash comp (incl. bonuses) = ~$120k/year Length of program = 2 years ------------------------------ Total expected comp lost for next two years = ~$240k (figure $160k after taxes) Tuition = ~$60k/year Living expenses = ~20k/year ------------------------------ Total two-year costs = $160k Internship earnings est = $20k ------------------------------ Total two-year net impact = ~$380k ($300k after taxes) (Note that this doesn't factor in things like student loan interest)
- michaelochurch 15y ago
  Not sure, but to play devil's advocate, most people here have put far more than 5 years into technical talent. The problem is that the real world runs on connections, not capability. I don't think it's unreasonable to dedicate 5 years to networking and become more "well-rounded". The open question is whether those connections are going to be worth anything in a decade, or whether it will be better to be "connected" to some other set of people. Completely unpredictable. I don't think you learn how to run startups in an MBA program, but top MBAs are the only way to get into top VC firms under 30, and that will help you a lot in the fundraising process. People are less likely to throw multiple liquidation preferences at people they personally know and consider "one of us". What I will say is that it's probably not worth into pursue an MBA at a non-top school. You know law school's "top 14"? For MBA programs, there are 3 or 4. If their graduates aren't getting into top venture capital firms, don't apply.
  - ctingom 15y ago
    How does ambition fall into the connections and capability mix?
    - philwelch 15y ago
      You use ambition to build connections and capability.
  - csomar 15y ago
    Can an environment based on connections and not capabilities be sustainable. May be. It's possible. But you have to be careful that another environment (which is start-ups) sucks some of your market share and many of the competent people out there (going as founders or co-founders). At some point, you'll finally collapse and over paying those "well-rounded" people no longer pay-off if they don't have an equivalent experience. So you need: 1- Good Skills for the business; at any time. 2- Good Connections for the business; this business and this time. You are good to go. If you can't make 1+2 happen, then definitively pick up 1. It's the safest bet in the long run and you can get back (and stronger) to 2 at any time. I dropped 1 at one company and focused on building my technical skills. I have never regretted it, I'm actually doing it again.
- wtvanhest 15y ago
  An MBA won't help you develop software better so I'm not sure how you could increase your salary that way unless you want to work on the business side of a big company. I would doubt highly that there are organizations interested in paying any more for a software developer for an MBA. In general, it is important to ask yourself what you want to do 50 hours a week and do that rather than to look at starting salaries for post MBAs.
  - krschultz 15y ago
    There shouldn't be any organization interested in paying any more for a software developer for an MBA to write software. But a manager that understands how long it takes to write software is worth more than a biz-undergrad+MBA manager in a software company.
    - wtvanhest 15y ago
      He didn't ask what undergrad degree to get.
      - wtvanhest 15y ago
        To the down voter... My point is important. There are different paths to take, and my experience with people getting MBAs is that they fit in to 1 of 3 groups: 1) Business person who wants to continue being a business person. (by far, they get the biggest value in salary bump on average) Their skill set before the MBA fits perfectly with their improved skills and degrees. They are highly sought after by employers and the MBA program is designed to help them get jobs. 2) Technical person (including all types of engineers, many non-programmers) that are in a technical field because they saw a good $50k-$70k entry salary out of undergrad and wanted a safe job. They saw the higher avg salary post MBA, did some quick math and determined making $120k-$160k post graduation and taking a 2 year vacation would be cool (they saw their business friends do no work in undergrad compared to them.) 3) A strange, hyper-motivated group that comes from all types of backgrounds. They want to start a company and it is in their blood. They can't shake it, they read hacker news, they study hard, they participate in class, case competitions, networking events etc. They are the exception, but they will found something. It may not be the next google or even a tech startup at all, but it will be something. Group 1) Gets the 2nd best offers from big and small companies, they get to do cool jobs for the most part. Group 2) Depends somewhat on the person, but they are at a disadvantage and they thought they were smarter than the business people, but the business people know business and typically best the technical people in interviews. They do fine if they leave their comfort zone, but if they don't they are screwed. Group 3) gets the best offers, best connections and enjoys it the most. If you believe you are in group 1 or 3, your return on an MBA is amazing. If you are in group 2, it is questionable. But, if you only did the tech job for the money, an MBA probably won't solve your problems, nor will any other degree. --I see constant posts about MBAs, and how bad they are for people. They are bad for the wrong people, they are amazing for the right people.
deleted 15y ago
[deleted]
joe42 15y ago
(At risk of hijacking this thread) I'm a first-year physics grad student (so ~5 years to go, for a PhD), and I'm pretty sure what I want to do is software engineering, SV-type stuff, and I've been seriously considering quitting the physics thing for most of the past year. Compared to business school in the post: * I've got about 5 more years of school, * school isn't costing me anything (I get a ~$20k/yr stipend; no tuition), * I'm not enjoying myself at all (lots of hard core classes, required to pass preliminary tests in a limited number of sittings, boring city, boring people, boring school, no friends), * the payoff is slim-to-none. I can't find evidence that a physics PhD is worth much in, say, software engineering. An MIT PhD student just told me he's heard ~$120k typical-ish starting salary in software engineering with a physics PhD (and he was trying to talk me into staying). That doesn't sound worth it at all! "Starting" salary!--if you don't count the 5-7 years of school (basically work). I could go on, but I'm interested if anyone's got an opinion or some advice. It's a bit similar to the MBA decision.
- SatvikBeri 15y ago
  Imagine that you're not part of a company or a PhD program, and you're choosing between spending 5 years to get a Physics PhD and go into software, or going into software directly. Which sounds more appealing to you?
  - joe42 15y ago
    That's pretty much the decision I had to make a year ago, and I ended up in the PhD program. But if I knew then what I know now (that I'd not be having a good time), I'd be leaning closer to the software job. The remaining unknown (to me) is what the degree is worth, in the end. Really, I suppose, I'm just not looking forward to telling everyone (friends and family) that I'm quitting. It's admitting a defeat/failure/mistake, and that's hard, so I'm trying to find a good reason to stay.
    - daegloe 15y ago
      Nah, you're not defeated. Just the opposite. You're empowering yourself by taking command of your life decisions. We all make mistakes along the way, but learning from those mistakes and course correcting are the biggest wins we can ask for. You should be proud and wear your decision like a badge of honor. As the Aussies say, good on ya!
PabloOsinaga 15y ago
I am the guy profiled in that article. I spent 5 years in "business school" before doing my startup. (1 year prep, 2 years of b-school and 2 years at McKinsey) I have to say, though, that the overall experience is being very useful to me and my startup. I believe this is in big part because Kormox is an enterprise-software startup (pg says they are all about sales, and I kind of agree) - I've learned how to navigate corporate bureaucracies, I've built a huge network in corporate america. I believe I can execute on this contrarian play - (all the cool hackers are doing consumer-oriented startups nowadays), with an experience/background that is helpful. So while I believe that if you have a rush for an opportunity you should go for it no matter what, any experience is very helpful to build up unique paths for executing on plays that make the most sense for you.
- FelixP 15y ago
  How applicable has your experience @ McKinsey been in the startup space versus your experience in business school? Also, which program did you attend (if you don't mind sharing)? FYI, there is a typo ("trully") on this page of your site: http://www.kormox.com/Home/OurTechnology http://www.kormox.com/Home/OurTechnology
  - PabloOsinaga 15y ago
    The experience in McKinsey I think has been particularly helpful - but again, because I am doing an enterprise-software startup - which requires to work closely with corporate-customers. Thanks for highlighting the typo
- beatle 15y ago
  Techies love to downplay the value of an MBA because they are insecure. Just because Jobs, Zuckerberg, Gates, Ellison, Page/Brin, etc. created world-class companies they think MBAs are worthless. MBAs are indeed worthless if you're Jobs, Zuckerberg, Gates, etc. BUT YOU'RE NOT. There are thousands of world-class companies (Fortune 1000, small businesses, start-ups, etc.) that were founded/run by MBAs. the VCs, Investors, etc. who funded your worthless start-ups have MBAs. Every Arrogant techie should remember this: For every successful start-up, there are 1000's other start-ups that failed because the techie founders did not have the business knowledge or experience to execute, manage and lead their companies.
goatcurious 15y ago
The post is spot on but it skips a few considerations which must be highlighted. Specially if you are already in an MBA, like I was. - I just was not sure what I wanted to do in life when I signed up for the MBA. The time away from active professional life at business school allowed me to figure out what really matters to me. Yes, I did get time outside of classes, recruitment, and parties for this self discovery. The exposure to some great entrepreneurs who came to speak at campus definitely helped. - Once I had figured I wanted to be an entrepreneur, business school was actually not a bad place to get started. Stressing on the assumption that I was motivated enough to be focused - the support system for starting up does exist, and it’s not bad. My school had a program modeled after the YC program. I was still clueless so I helped a friend who was in the program: he is running his startup full time now, and is profitable too. - Now on not losing the last 2 years part. My MBA was sponsored by my consulting employers but I broke the contract. I knew I won't be able to find any time to work on my startup while doing consulting. But this also meant I suddenly had a loan of the entire school fees. I cut down on my lifestyle, and I'm well on track to completely pay off the loan within 1 year (8 months since school, and I’m 70% done). And yes, my corporate job allowed me time to find an idea and actively work on it: I code with my partners; talk to customers; develop content; and we successfully tested out the demo experiment (and now dreaming of getting into YC). So all in all, MBA can be helpful or can be made irrelevant. You don’t always have to wait.
- throwaway1979 15y ago
  Congrats on being almost done with the student loan payments! Was the debt in the six figure range? Curious if you have any strategies to share. My fiance has a boatload of student debt that keeps me awake at night :(
  - goatcurious 15y ago
    Hey thanks! Yes close to that. I threw in my entire joining & relocation bonus. Had also worked part time in the last semester, that went in too. And now, I have cut down all expenses apart from rent and food (I cook a lot, don't go out drinking).
rdl 15y ago
Not to detract from your central point, but someone is a native or fluent English speaker and can't get >700 on the GMAT with a week (or less) of review, that person is probably not going to be a very successful startup founder, either. Even 2 year opportunity cost makes an MBA a bad idea for a startup founder in a normal market, although doing one in a time like 2001-2003 or 2008-2010 seems like it would be defensible.

43 points by jaf12duke 15y ago

Is it even worth getting an MBA now if you're a developer in silicon valley. I'm talking in terms of putting so much money out there for MBA and then is there a big difference in salary afterwards?

dj_axl 15y ago
> is there a big difference in salary afterwards? Yes, if you're good and that's what you want to do. I know someone who knows someone who went to UC Irvine (not one of the top 10) and got a $40,000 signing bonus, which on average wipes out a UC Irvine MBA's outstanding debt.
- randomdata 15y ago
  Don't forget about opportunity cost. Even at minimum wage, you would have made $80,000 by working a full time job instead of going to school, assuming a four year program. If his tuition costs were an additional $40,000, you would need a $120,000 (plus any gains that could be accumulated from that $120K) bonus to recoup the expenses. Not to mention that if you really are good, you probably would have made far more than minimum wage during those four years, so we could probably assume, even conservatively, $150-$200,000 for the real cost of the education. Can a graduate expect to earn $200K more in the all important early stage of the career† over someone who is equally skilled and connected without a degree? † Early stage being the most important time to collect due to the rules of compounding interest. An extra $200K made in the last year of your career is far less valuable.
  - ylem 15y ago
    Aren't some people doing this as evening courses--given the state of the economy? If so, the opportunity cost is wiped out--it's more a question of the debt amount, relative to the salary increase....
    - randomdata 15y ago
      It is still lost opportunity. If you have the drive and desire to work hard in the evenings, you could just as easily pick up another job instead of going to school, bringing us back to square one. Some things are more important than money. I enjoy learning new things as much as the next guy, so I often value education above income. However, I am not sure it is a wise choice if money is your only motivator.
  - FelixP 15y ago
    |assuming a four year program. Virtually all full-time MBA programs are two-year programs. Here's an example of the math a prospective MBA student might consider: Current cash comp (incl. bonuses) = ~$120k/year Length of program = 2 years ------------------------------ Total expected comp lost for next two years = ~$240k (figure $160k after taxes) Tuition = ~$60k/year Living expenses = ~20k/year ------------------------------ Total two-year costs = $160k Internship earnings est = $20k ------------------------------ Total two-year net impact = ~$380k ($300k after taxes) (Note that this doesn't factor in things like student loan interest)
michaelochurch 15y ago
Not sure, but to play devil's advocate, most people here have put far more than 5 years into technical talent. The problem is that the real world runs on connections, not capability. I don't think it's unreasonable to dedicate 5 years to networking and become more "well-rounded". The open question is whether those connections are going to be worth anything in a decade, or whether it will be better to be "connected" to some other set of people. Completely unpredictable. I don't think you learn how to run startups in an MBA program, but top MBAs are the only way to get into top VC firms under 30, and that will help you a lot in the fundraising process. People are less likely to throw multiple liquidation preferences at people they personally know and consider "one of us". What I will say is that it's probably not worth into pursue an MBA at a non-top school. You know law school's "top 14"? For MBA programs, there are 3 or 4. If their graduates aren't getting into top venture capital firms, don't apply.
- ctingom 15y ago
  How does ambition fall into the connections and capability mix?
  - philwelch 15y ago
    You use ambition to build connections and capability.
- csomar 15y ago
  Can an environment based on connections and not capabilities be sustainable. May be. It's possible. But you have to be careful that another environment (which is start-ups) sucks some of your market share and many of the competent people out there (going as founders or co-founders). At some point, you'll finally collapse and over paying those "well-rounded" people no longer pay-off if they don't have an equivalent experience. So you need: 1- Good Skills for the business; at any time. 2- Good Connections for the business; this business and this time. You are good to go. If you can't make 1+2 happen, then definitively pick up 1. It's the safest bet in the long run and you can get back (and stronger) to 2 at any time. I dropped 1 at one company and focused on building my technical skills. I have never regretted it, I'm actually doing it again.
wtvanhest 15y ago
An MBA won't help you develop software better so I'm not sure how you could increase your salary that way unless you want to work on the business side of a big company. I would doubt highly that there are organizations interested in paying any more for a software developer for an MBA. In general, it is important to ask yourself what you want to do 50 hours a week and do that rather than to look at starting salaries for post MBAs.
- krschultz 15y ago
  There shouldn't be any organization interested in paying any more for a software developer for an MBA to write software. But a manager that understands how long it takes to write software is worth more than a biz-undergrad+MBA manager in a software company.
  - wtvanhest 15y ago
    He didn't ask what undergrad degree to get.
    - wtvanhest 15y ago
      To the down voter... My point is important. There are different paths to take, and my experience with people getting MBAs is that they fit in to 1 of 3 groups: 1) Business person who wants to continue being a business person. (by far, they get the biggest value in salary bump on average) Their skill set before the MBA fits perfectly with their improved skills and degrees. They are highly sought after by employers and the MBA program is designed to help them get jobs. 2) Technical person (including all types of engineers, many non-programmers) that are in a technical field because they saw a good $50k-$70k entry salary out of undergrad and wanted a safe job. They saw the higher avg salary post MBA, did some quick math and determined making $120k-$160k post graduation and taking a 2 year vacation would be cool (they saw their business friends do no work in undergrad compared to them.) 3) A strange, hyper-motivated group that comes from all types of backgrounds. They want to start a company and it is in their blood. They can't shake it, they read hacker news, they study hard, they participate in class, case competitions, networking events etc. They are the exception, but they will found something. It may not be the next google or even a tech startup at all, but it will be something. Group 1) Gets the 2nd best offers from big and small companies, they get to do cool jobs for the most part. Group 2) Depends somewhat on the person, but they are at a disadvantage and they thought they were smarter than the business people, but the business people know business and typically best the technical people in interviews. They do fine if they leave their comfort zone, but if they don't they are screwed. Group 3) gets the best offers, best connections and enjoys it the most. If you believe you are in group 1 or 3, your return on an MBA is amazing. If you are in group 2, it is questionable. But, if you only did the tech job for the money, an MBA probably won't solve your problems, nor will any other degree. --I see constant posts about MBAs, and how bad they are for people. They are bad for the wrong people, they are amazing for the right people.

deleted 15y ago

[deleted]

joe42 15y ago

(At risk of hijacking this thread) I'm a first-year physics grad student (so ~5 years to go, for a PhD), and I'm pretty sure what I want to do is software engineering, SV-type stuff, and I've been seriously considering quitting the physics thing for most of the past year. Compared to business school in the post: * I've got about 5 more years of school, * school isn't costing me anything (I get a ~$20k/yr stipend; no tuition), * I'm not enjoying myself at all (lots of hard core classes, required to pass preliminary tests in a limited number of sittings, boring city, boring people, boring school, no friends), * the payoff is slim-to-none. I can't find evidence that a physics PhD is worth much in, say, software engineering. An MIT PhD student just told me he's heard ~$120k typical-ish starting salary in software engineering with a physics PhD (and he was trying to talk me into staying). That doesn't sound worth it at all! "Starting" salary!--if you don't count the 5-7 years of school (basically work). I could go on, but I'm interested if anyone's got an opinion or some advice. It's a bit similar to the MBA decision.

SatvikBeri 15y ago
Imagine that you're not part of a company or a PhD program, and you're choosing between spending 5 years to get a Physics PhD and go into software, or going into software directly. Which sounds more appealing to you?
- joe42 15y ago
  That's pretty much the decision I had to make a year ago, and I ended up in the PhD program. But if I knew then what I know now (that I'd not be having a good time), I'd be leaning closer to the software job. The remaining unknown (to me) is what the degree is worth, in the end. Really, I suppose, I'm just not looking forward to telling everyone (friends and family) that I'm quitting. It's admitting a defeat/failure/mistake, and that's hard, so I'm trying to find a good reason to stay.
  - daegloe 15y ago
    Nah, you're not defeated. Just the opposite. You're empowering yourself by taking command of your life decisions. We all make mistakes along the way, but learning from those mistakes and course correcting are the biggest wins we can ask for. You should be proud and wear your decision like a badge of honor. As the Aussies say, good on ya!

PabloOsinaga 15y ago

I am the guy profiled in that article. I spent 5 years in "business school" before doing my startup. (1 year prep, 2 years of b-school and 2 years at McKinsey) I have to say, though, that the overall experience is being very useful to me and my startup. I believe this is in big part because Kormox is an enterprise-software startup (pg says they are all about sales, and I kind of agree) - I've learned how to navigate corporate bureaucracies, I've built a huge network in corporate america. I believe I can execute on this contrarian play - (all the cool hackers are doing consumer-oriented startups nowadays), with an experience/background that is helpful. So while I believe that if you have a rush for an opportunity you should go for it no matter what, any experience is very helpful to build up unique paths for executing on plays that make the most sense for you.

FelixP 15y ago
How applicable has your experience @ McKinsey been in the startup space versus your experience in business school? Also, which program did you attend (if you don't mind sharing)? FYI, there is a typo ("trully") on this page of your site: http://www.kormox.com/Home/OurTechnology http://www.kormox.com/Home/OurTechnology
- PabloOsinaga 15y ago
  The experience in McKinsey I think has been particularly helpful - but again, because I am doing an enterprise-software startup - which requires to work closely with corporate-customers. Thanks for highlighting the typo
beatle 15y ago
Techies love to downplay the value of an MBA because they are insecure. Just because Jobs, Zuckerberg, Gates, Ellison, Page/Brin, etc. created world-class companies they think MBAs are worthless. MBAs are indeed worthless if you're Jobs, Zuckerberg, Gates, etc. BUT YOU'RE NOT. There are thousands of world-class companies (Fortune 1000, small businesses, start-ups, etc.) that were founded/run by MBAs. the VCs, Investors, etc. who funded your worthless start-ups have MBAs. Every Arrogant techie should remember this: For every successful start-up, there are 1000's other start-ups that failed because the techie founders did not have the business knowledge or experience to execute, manage and lead their companies.

goatcurious 15y ago

The post is spot on but it skips a few considerations which must be highlighted. Specially if you are already in an MBA, like I was. - I just was not sure what I wanted to do in life when I signed up for the MBA. The time away from active professional life at business school allowed me to figure out what really matters to me. Yes, I did get time outside of classes, recruitment, and parties for this self discovery. The exposure to some great entrepreneurs who came to speak at campus definitely helped. - Once I had figured I wanted to be an entrepreneur, business school was actually not a bad place to get started. Stressing on the assumption that I was motivated enough to be focused - the support system for starting up does exist, and it’s not bad. My school had a program modeled after the YC program. I was still clueless so I helped a friend who was in the program: he is running his startup full time now, and is profitable too. - Now on not losing the last 2 years part. My MBA was sponsored by my consulting employers but I broke the contract. I knew I won't be able to find any time to work on my startup while doing consulting. But this also meant I suddenly had a loan of the entire school fees. I cut down on my lifestyle, and I'm well on track to completely pay off the loan within 1 year (8 months since school, and I’m 70% done). And yes, my corporate job allowed me time to find an idea and actively work on it: I code with my partners; talk to customers; develop content; and we successfully tested out the demo experiment (and now dreaming of getting into YC). So all in all, MBA can be helpful or can be made irrelevant. You don’t always have to wait.

throwaway1979 15y ago
Congrats on being almost done with the student loan payments! Was the debt in the six figure range? Curious if you have any strategies to share. My fiance has a boatload of student debt that keeps me awake at night :(
- goatcurious 15y ago
  Hey thanks! Yes close to that. I threw in my entire joining & relocation bonus. Had also worked part time in the last semester, that went in too. And now, I have cut down all expenses apart from rent and food (I cook a lot, don't go out drinking).

rdl 15y ago

Not to detract from your central point, but someone is a native or fluent English speaker and can't get >700 on the GMAT with a week (or less) of review, that person is probably not going to be a very successful startup founder, either. Even 2 year opportunity cost makes an MBA a bad idea for a startup founder in a normal market, although doing one in a time like 2001-2003 or 2008-2010 seems like it would be defensible.