
For business school graduates, investment banking is out and consulting is in - sebgr
http://www.economist.com/news/business/21623673-graduates-worlds-leading-business-schools-investment-banking-out-and-consulting
======
Someone1234
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.

~~~
ironchef
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.

~~~
michaelochurch
_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...](http://michaelochurch.wordpress.com/2014/01/05/vc-istan-8-the-
damaso-effect/)

~~~
mjmahone17
Interesting. Looking at Michael O. Church's premise, I wonder if it might be
possible to bootstrap a professional organization by (initially) inviting only
those engineers who already work at a level we'd consider professional:
basically, the false negative rate here would need to be <~5%. One option
might be to pick only those who have worked, for 2+ years, at a level above
"terminal" levels: [http://www.quora.com/Engineering-
Ladders](http://www.quora.com/Engineering-Ladders)

So the initial invite would be for E6s+ at a few organizations (Google,
Facebook, others?). Those people would know others they can vouch for, at
either the "senior" level (the E6+ level) or at a "junior" level, but who are
on a trajectory to make the "senior" level, eventually. At some point, this
group would need to establish either which schools, or which certifications
(i.e. MOOC programs) qualify someone for "aspiring junior" or similar roles,
much like the bar. Or it could be entirely "project based", i.e. you show the
organization some work you've accomplished, and the source code, in order to
qualify. I haven't fully thought this through, so I don't really know how to
get this right.

Given enough cachet, this should allow SDEs to form partnerships, with
relatively little "reputation verification" required from their clients, much
like how for most lawyers and doctors, people don't really care which one they
go to (at least at first), just that they're seeing someone qualified.

------
hammock
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...](http://www.washingtonpost.com/blogs/on-
leadership/wp/2014/10/10/peter-thiel-on-what-works-at-work/)

~~~
enraged_camel
"... 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. :-)

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

------
leroy_masochist
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".

~~~
Balgair
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.

~~~
crimsonalucard
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.

~~~
Balgair
No, the skills are a part of the vocab too, so to speak. Accounting, for
example, has definitions as well as methods. If your department uses MatLab
then trying to get the other department that only uses Excel is going to be
hard. It's not just 'software' issues either. The ethos, the rounding of
fractions of a cent, knowing when to run an internal audit, how to deal with
Janet's crappy way of writing 9 and 4, all those little tricks and 'common
sense' things need to be sussed out in a huge bureaucracy. Multiply this over
hundreds of different fields of work, states and nations and you see why a
training course that is not just 1 weekend long is needed.

Glad to hear your company is well run though.

------
sshah1983
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.

------
pptr1
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
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.

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

------
jordanpg
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.

~~~
gaius
A meaningful system, one that _gets stuff done_ in the real world, comprises
people, processes and technology. All are hackable.

~~~
sutterbomb
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.

~~~
jordanpg
I suppose this is true, but I'm talking about what these MBAs coming out of
top-tier programs are all about. In my experience, they're not interested in
technical challenges, they're interested in money and status.

That is why the Economist can write headlines like this in the first place; in
other words, why the "interests" of MBAs can shift at all. I don't think that
legions of MBAs were going into investment banking because it was just so
fascinating to them, and I don't think that's why they're gravitating to SV,
either.

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

------
suprgeek
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

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

------
greenpinguin
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...](http://en.wikipedia.org/wiki/History_of_investment_banking_in_the_United_States)

------
mathattack
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. :-)

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

------
applecore
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.

------
bluedevil2k
MBAs follow the money, and right now that's in tech and consulting and not as
much in finance.

------
bsg75
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
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.

------
alimoeeny
I think it is not just MBAs.

------
vparikh
That is when you know tech is in a bubble

------
vparikh
Thats when you know you have a bubble.

