The Business School Question

Perhaps the only question in my life I’ve devoted more time to than the afterlife is… whether or not to go to business school.

In many ways, business school seemed to be the logical and correct life choice after working in finance for a few years.

Ever since I started going down the vague track of Business as a career, I have asked people – mentors, bosses, friendly bouncers at the club – what they thought about getting an MBA. It’s not necessarily a hard choice for everyone, but it is a mandatory decision that all business graduates have to make.

I think the business school question is so tough because you have to weigh a lot of decision factors that are difficult to assess when you’re young: how important is having a prestigious career to me? What about when I’m older? What sort of career do I want when I’m in my 30s and 40s? Is paying all that money to go to school going to rob me of my financial freedom during a precious window of time (post-money, pre-kids, which seems like a fleeting, almost mythical 3-5 year span)?

As a disclaimer, I didn’t even end up applying to business school, so my tone may come off as biased and possibly salty. I can feel the full strength of my cognitive dissonance at work. But had you asked me back in college, I would’ve bet that I would have gotten an MBA. Coming to a decision was such a difficult and long process for me, so in many ways this is written like a letter to my younger self.

The Value Proposition of an MBA

The typical benefits of going to business school, which I think are generally accepted, are as follows:

These are good things.

The Quality of Schools is Top Heavy

One important note is that it appears that not all business schools are made equal.

I would say outside of a top (1 / 2 / 3 / 10 / 50… select the number that correlates with however elitist your concentric circles are) number of schools, business school is not worth it for the vast majority of business graduates.

The aforementioned list of benefits don’t seem to exist in full for most programs. The networks and lessons are often redundant with your prior education and it may end up being more of a career distraction than optimizer. Many elite firms only hire directly out of undergraduate programs (which offer cheaper, perhaps higher-quality labor, where the pool of candidates often has fewer life constraints) and won’t consider post-MBAs for new positions. The majority of top private equity firms and hedge funds do not hire people directly out of MBA programs unless that person had direct, comparable experience prior.

In aggregate, law school and business school admissions are generally trending down. 70 percent of two year MBA programs saw a decline in applications in 2018. The highest ranked business schools have seen a second consecutive year of declining MBA applications.

Law school enrollment has sharply declined post-recession and is at levels lower than that of the 1980s. I can’t find a comparably clean graph for MBAs.

In part, I think the decline is driven by how strong the U.S. economy has been – people typically earn when they can and learn when they can’t.

Importantly, I think the decline in the appeal of the MBA has also been driven by the de-emphasis of traditional pedigree, the slow death of the modern office job, and the over-saturation of degrees in the job market. The rising salaries of Big Tech, which at times require no formal education, are changing the game at a rapid clip.

If you’re coming from a different (i.e. non-business) career field, I think much of what I’m saying does not apply. It can make rational sense to get your MBA if you want to completely switch paths, though if that’s your only goal I would seriously recommend more guerilla approaches than business school.

In general, I think you should have a relatively clear idea of what job you want if you’re going to get a MBA.

Cost and True Career Value

The most tangible cost of whether to go to business school is the cost itself. Going to a top U.S. school can cost you upwards of $200k, which is a comically dramatic amount of money for a pre-30 year old to pay. I get that education is supposed to be price inelastic, but it’s hard not to feel like there’s some modest class warfare at play.

Most “above average” 30 year olds only have net worths of ~$250k, which means you’re likely to take on some element of debt to go to school. After grinding for several years, you must reset your bank account for the privilege of working again. Nearly half of the students attending business school will borrow at least $100k in debt.

In pure theory, it can make some sense to pay one big cash out flow to improve your lifetime earnings potential. But when I started to think about it more, I realized that I would be giving up all my savings (and more) at a critical time in my life.

I think giving up all your savings at that age seriously, seriously impacts your risk profile and can restrict the scope of your life paths. There’s an obvious reason why salaries increase so much after getting your MBA and why so many people want to do private equity and management consulting. You need to make more money for it to be “worth it” and to pay off your debt.

I think getting an MBA is a perfectly reasonable cash outflow if you want to remain in a corporate job, but if you want to pursue entrepreneurship, early retirement or other riskier paths, I don’t think it makes as much sense. Stanford, which is probably one of the most entrepreneurial MBAs in the game sends about 16% of its graduates into the entrepreneurial field.

If I’m 28 years old with $0 or -$x and I’m contemplating a wedding, kids and mortgage in the coming years, I would feel strongly incentivized to make money quickly and assuredly.

Embedded in this issue is where I saw most MBA graduates going afterwards. From my monitoring of first-degree connections, I noticed that the overwhelming majority of finance people took similar / identical (or worse paying) jobs after business school.

Many people ended up at the same firm they came from. Some people got squeezed out of their prior firms or fell behind their peers because of how competitive the corporate ladder is. That information made me skeptical on the short-term career benefits of going to school. Many coming from private equity went back to private equity after they realized many of their peers were ogling the very jobs they left.

The typical response, which I agree with, is that you can’t evaluate getting an MBA on a short-term career basis. You go to the MBA to become an enriched person and for the doors it opens in the longer-term. If the MBA gets you one deal, one important business connection or one spouse, then it could dwarf any short-term financial concessions.

Ego and Groupthink

My primary concern was that getting an MBA would steer me towards living and desiring a Conventionally Great life.

You’ll still be the sickest guy from your high school and rack up mad LinkedIn clicks from your parents’ bible study group, but unfortunately I think going down that path really weds you to an orderly corporate life.

Not just for the money reason, but also because you tend to adopt the groupthink goals when you’re part of a community like that. I experienced that echo chamber first-hand when I was an undergrad student and, well I ended up pursuing the most stereotypical career goals.

Envy is at an all-time high when you’re competing with highly similar people. It is so hard to think independently and live honestly when you can easily compare yourself to others on highly visible metrics. I recall how rabidly competitive I was back in college and fear that being back in that environment would bring out a spirit that would be short-term exhilarating, but life-term soul-crushing.

Is Desiring Prestige Bad?

After confronting all of the issues as why not to go to business school, I initially still had a pretty deep desire to go…  just because I wanted to be a sick guy.

I’ve always had a weakness for the allure of prestige. Many of my close career peers (including most people at my most recent employer) are going to the best schools in the world, and it definitely dialed up the imposter syndrome. It seemed like going to Harvard Business School would undo any career wrongs I might have previously committed – a chance to fulfill the prophecy that a younger Matt Ting had etched in the back of his mind. As recently as in investment banking, I remember thinking that I wanted to become this sort of poster boy role model for younger, weaker Asian males – collecting every possible external check-mark while politely adhering to the rules. That sounds dumb when said discretely, but I spent years debating the meaningfulness of this.

After realizing that prestige was my true motivation, I had shamed myself for chasing something so idolatrous. But then I reflected – is it inherently bad to want to be prestigious? Is it bad to want people to esteem you? Is it bad to want money?

If you eliminate these perceivably shallow goals, what does that really leave you with?

My Decision

I’m not really sure when it all “clicked” for me to decide that I wasn’t going to business school.

Very personally, I wanted to be back in Toronto to be with my friends and family, which I thought business school would delay or derail completely. I also accumulated career woes that I decided business school would not actually address. The cementing of my decision was a very gradual build-up over many hours spent at work and grinding in New York. I truly admired the intelligence and discipline of the people who went down that path, but I found myself relating less and less to them. Many of the smartest, most driven people I know ended up choosing that path and I applaud them for it.

For me, it came to a point where I was able to relinquish what others thought about my career.

I concluded that if people “care” about my decision, they really only care in some abstract form of judgement – they don’t “care” enough to really impact my happiness.

And now mentally, it honestly kind of feels like I’m now saving $200k and two years of my life, which has given me the agency to pursue crazy things and take culturally offensive amounts of time off.

Deciding against business school was the decision that really gave me a sense of stability in my life. I suppose I was closing the door on the corporate life I had worked so hard for. That feeling of finality gave me a lot of clarity. The domino effect (or cognitive dissonance) helped me better understand what I want in the future and made me way more comfortable with leaving New York.

Now I can go back to just thinking about the afterlife.

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