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Elite Grads In Business Flock To Tech (wsj.com)
40 points by jkuria on Nov 10, 2013 | hide | past | favorite | 44 comments

This phenemona has a name. It's called the MBA index.

It truly is one of the greatest contra-indicators I have ever had the pleasure of observing first hand. It's a wonder to behold.

> When expensively educated, fashionable young graduates start showing up in your field, you're in a bubble.

- Kevin Marks, http://epeus.blogspot.com.au/2005/12/key-indicator-for-bubbl..., derived from Liar's Poker, by Michael Lewis.

> This year, some 37% of Harvard Business School's graduate found work on Wall Street, up from 30% a year ago and 26% for the Class of 2004. The trend suggests that Wall Street is becoming bloated and the American economy is ripe for a slowdown.

Mr. Soifer, who retired from Brown Brothers in 2000 and now runs his own consulting firm, appears to be on to something. He advised his friends and colleagues to sell back in 2000, when 30% of the HBS graduating class took jobs on Wall Street. Before that, the last long-term sell he sent was in 1987.

Source: http://www.nysun.com/business/equities-swing-with-harvard-mb...

> Mr. Soifer notes that the Harvard M.B.A. indicator has historically been more prolific as a source of “sell’ signals, showing strong results in 1987, 2000-02, and 2005-08, than “buy” signals. In fact, the last time it reached the 10 percent “buy” level was in the early 1980s, when the Dow Jones industrial average traded below 1,000.

The all-time low was reached in 1937, when only three graduates — about 1 percent — braved the market and ventured into the securities industry.

Source: http://dealbook.nytimes.com/2009/11/05/a-contrary-indicator-...

Just wanted to say thanks for expanding on Kevin Marks's quote with more sources. This is interesting stuff.

Bypass paywall with a google.com referrer: http://google.com/url?q=http://online.wsj.com/news/articles/...

Note that you might have go incognito or clear your cookies if you already tried the direct link and failed (I can't believe how far they'll go to block everyone but search engines).

This is yet another reason to read the comments before jumping straight to the article. :-)

dirty seo tactics that are ignored by search engines for bigger sites.. :/

This is called "First Click Free" and it is explicitly sanctioned (and encouraged) by Big Daddy G: https://support.google.com/webmasters/answer/74536

If that doesn't work, just google the title and it should give you access.

"When expensively educated, fashionable young graduates start showing up in your field, you're in a bubble." Michael Lewis


"Students are asking, "Where's the place that I can drive innovation? Where's the place that I can have the most impact?"

Sounds like those students are just rationalizing. They're going into tech mainly because the tech field has been on fire lately, and the risk of trying out the tech field is low. After all, they're still getting paid pretty well.

Once the tech bubble bursts, they'll be hovering around fields that pay the most.

You are not going to be driving innovation by working for Linkedin, Facebook, and Microsoft.

I note that Bubble 1.0 was full of fresh young business school grads. At the time, I thought of them as "the locusts". It was worth a lean year or two to get rid of all of them (and all of the other people) who came here looking for the big payout. The people who stayed were the ones who were serious about the field.

It's a little sad that I wouldn't mind another tech downturn, but that's where I am.

I don't think Michel Lewis ever said that. See my earlier comment below.

I noticed a different effect happen too -- tech people from high ranking CS schools flock to Excel-spreadsheet-on-Wall-Street positions as I call them.

They supposedly spent 4 years studying the hell out of self-balancing trees and kernel process schedulers and then work for a Goldman Sachs like place building excel spreadsheets and writing reports.

Seems to be a case of career osmosis. Uncomfortable with the growing popularity of the tech sector, and noticing a distinct exodus of Wall Street-types (who will arrive late to the tech gold rush), they swoop in to fill the gap.

Hopefully they'll attempt to negotiate for better salaries and more reasonable hours, but, according to all my Wall Street friends, this tends to be an effort in futility.

The best of the best will always put in absurd hours doing the tedious work you describe. They need to show off this way to win distinction. In theory, hacker types could buck the system, but that system in high finance, which awards face time and man hours like few other places, is pretty damn robust.

Wall Street's issue is one of filtering. Because they are the easiest perceived place to make money, they have to set up absurd barriers to maintain staffing qualities.

The tech world is also at risk of going in this direction as well as the wider economy collapses and startups actually start to look like a somewhat conservative career path. The symptoms are all around us. Look at the proliferation of accelerators and short-form bootcamp style tech programs. Google-style hiring process starts to make a lot more sense in this kind of environment.

I did undergrad CS & OR at Columbia before going into banking... it really depends on what you're interested in

And it also depends on just how far you go in finance - IBD at a bulge bracket is very different from some nonsense boutique

For me, banking paid better and provided more interesting work

hint: not all CS majors are programmers or computer people at heart. some are doing it because of the opportunity to make high/safe incomes post-college. And the natural programmers, the people that truly love building stuff with computers and software tend to just do it anyway, before/after/outside/regardless-of college.

Personally I don't want people in my domain if they aren't interested in building cool shit and making technology better. If they are, well good for them. Hard for me to see someone who might have been interested in finance compatible with the people I work with though. Maybe they just all want to start startups or get into venture capital.

With all due respect... Even a great technical CEO can use the following, even if they're not explicitly motivated by building cool shit and making technology better:

- For pre-IPO firms: Someone plugged in to all the investment bankers and investment managers, who has both an analytical and visceral feel for how tech firms are valued.

- For firms with Enterprise customers: Someone who has a large rolodex of non-IT customers with P&L responsibility, who knows how to do their jobs as good as them.

- For medium sized firms and above: Someone who knows every last legal issue around HR.

It would be great to find folks like this who also have CS degrees and are passionate about technology. But folks with MBAs that fit these profiles but don't love the technology itself can still be valuable.

I don't think he's intending to contest those needs. I also don't think he meant to imply that they should have CS degrees. Obviously I can't speak for leokun, but my impression was that he simply doesn't want to see the industry flooded with people who only want to make a quick buck without caring the slightest bit about what they're actually doing. At the risk of generalizing far too much, the people who used to go to Wall Street didn't exactly have a reputation of caring about what they were contributing to the world; it's those same people who are now flocking to the tech sector.

It's a viewpoint I can sympathize with. As someone who doesn't expect to get rich off an IPO or acquisition and therefore will be spending most (all?) of my working life in this industry, I'd prefer to work alongside competent people (whether that be in development or business) who aren't just trying to get rich quick.

An MBA is a degree. What you're talking about comes with experience. The traditional way of doing it is to hire a programmer who's spent some time in management - they have the experience, and they can also understand the domain.

A person can have multiple interests.

The coolest thing I've ever built was a direct result of a finance guy who saw the potential, and then managed to put together the financing package to actually let me build it.

I wonder how many (if any) of these MBAs had some tech experience before the degree.

Tech companies, which once may have dismissed business-school graduates as smooth talkers with PowerPoint skills, are warming to M.B.A.s who may be able to help lead their fast-growing operations as they mature. At the same time, Wall Street has offered fewer opportunities for ambitious young graduates.

also related> http://www.thecrimson.com/article/2013/8/8/hbs-employment-te...

such public info might not portend upside to the equity, tho

As a student in an okay program (with many friends in the truly elite ones), I will say "not many". It's very rare to find someone here who lives and breathes the entrails of technology and data rather than just the nice and shiny and sexy parts of it.

That being said, I know some from finance and marketing tyle backgrounds who are totally gung-ho about data and have track records of getting their hands dirty, so I'd say that if you're intent on finding students with non-tech backgrounds who have the cultural instincts for tech, you can find them (maybe about 3% of the class).

edit: That being said, many of my peers would be fantastic at roles like BD.

We exist. I graduated from Booth recently and was a developer in the PnP subsystem team at Microsoft for over 6 years prior to b-school. In my class I had a hardware engineer (VLSI) and a telecom systems architect among others with strong technical backgrounds.

I've moved into a PM role now but still code everyday and join the dev team in deep technical discussions whenever I get a chance.

Look at the Haas (U.C. Berkeley's) Evening-Weekend MBA program (I'm currently enrolled, and am a Software Engineer in my day job, Founder of a startup on the side where I wrote all code). Link: http://ewmba.haas.berkeley.edu/community/students/classprofi...

Engineers and people with tech background are the biggest single block.

"Tech companies, which once may have dismissed business-school graduates as smooth talkers with PowerPoint skills, are warming to M.B.A.s ..."

I'm not buying it.

This seems to be as much a reflection of the finance industry's loss of luster as technology being wonderful and whatnot.

The most reliable indication of a bubble is when 30% of Harvard grads head into an industry. Top university networks are the first to sniff out unfairly strong financial returns and to take advantage.

I think this is pretty interesting and it even makes intuitive sense, but I'm curious if it has been validated in any way through historical analysis?

Yes, I think I red it in "Ahead of the Curve" ( http://www.amazon.com/Ahead-Curve-Harvard-Business-School/dp... ) and the author backed it up with data from the most recent tech and financial bubbles. The exact quote escapes me.

For all the good that tech does for the world, can we stop the judgment of why people are entering the careers they choose, whether it's finance, tech, or otherwise? Let's judge a person not by the content of their background, but by their actions and what they accomplish. Even if someone's primary motive is to make money, it's too hasty to judge that person without understanding their background and why they're motivated thusly.

Personally as someone who has done both business and technical work, I'm saddened every time this topic comes up. The less judgmental voices get down voted and drowned out, while the posts that generalize based on anecdotal experience prevail. I wish we could just stop having this discussion, as I don't think it adds at all to the benefit of the tech community.

Obvious disclaimer: not all MBA's ...

I graduated with a BS in Business (Supply Chain) because I knew I wanted to be involved in startups someday, but I've had nothing but big corporate jobs since then. For the longest time, I've held this idea that because all of the bigwigs got their MBAs, and they got them from top schools, that that was what I needed to do. In other words, to become the person I wanted to be, I had to go get an MBA.

My thoughts have tempered as I moved progressively towards more technical roles: Business Intelligence, Ops Research, Systems Architecture, etc. In fact, I've started to grow a disdain for the average MBA, not unlike the disdain you hear from a lot of people with backgrounds in CS. The thing is, I've never been anything but a business-end guy...I shouldn't feel that way about business-guys.

My own observation on the cause has to do with the toolsets that are given to your typical MBA. Their Root Cause Analysis tools assume that everything has a singular root cause, but those analyses fail when the problem is of combinatorial complexity, where you often have multiple root causes for a problem. Business optimization tends to fall solely on LP models, which again, fail under combinatorial complexity scenarios. Pareto analysis is fine until you have pareto'd your entire business and all that you have left are a bunch of bugs and quality flaws that only affect a tiny minority of orders by themselves, but 100% of orders in aggregate. The entire MBA toolset itself seems to be a result of pareto optimization (a set of tools to use for 80% of the scenarios you will come across as a business leader).

Furthermore, I now feel as though the wisdom of any singular person can very easily become overrated, and in the case of top level execs, is almost invariably overrated. As I became involved with Business Intelligence at my last job, I kept running into execs who always had the same mindset: just give me the data, and I will make the decision that will save the day. The problem is, the skillset to extract, transform, prettify, and graph out data is very often the same skillset that can make provably optimal decisions, or at least better-than-human decisions. Why should they spend so much of their time satisfying executive egos by giving them a precious jewel of data that they will just blow with a swagged decision, when they could be applying Machine Learning or Mathematical Optimization instead?

Your average smart guy with an MBA will continue to provide value in specific scenarios. The Technology industry (as long as "Technology" implies working with intractably difficult problems) will rarely be one of them. And just for good measure, I'll caveat that one more time, especially since my current employer has a ton of exceptions: not all MBAs ...


Search "Elite Grads In Business Flock To Tech" on Google. The first hit will work.

why it works from search result referral and not directly?

Because it's a strategy that works.

So, it's working for the tech-savvy using these little hacks, right? That means a certain article is going to gain traction, get people talking on social networking sites, and in turn seduce more people into wanting in on those discussions. But the people who aren't in on these hacks are met with a dilemma: be a part of the in-crowd, or just go away. As it turns out, this human wanting to be in on what everyone else is talking about is very strong, so a lot of people end up buying it. For others, it's the convenience factor of not having to google every article and find it that way... in both cases, a key force was the content not being totally unaccessible, but being there in some small way as a teaser. I should point out that it's working out exceeding well for the NYTimes. WSJ has been doing it for a long time, and the Economist just recently started doing it too. I expect even more will soon follow. It's an interesting and clever evolution of the freemium model in some ways.

Google basically requires that sites show the Google crawler what the user will see when they click the link. Showing Google the content-less paywall page would be Google-suicide, so instead they show the article if your referrer is Google.

There are a few comments in here that demean the supposedly greedy MBAs who come in with no technical enthusiasm or know-how just because the salaries are high. However, I think it's quite possible that this trend is very positive for the industry, and for the world. The financial and social importance of internet companies is becoming more apparent to the mainstream citizen, and as a result, clever people are thinking more and more about how to manage and strategize in this space.

Here's the problem:

There's a certain type of person whose apparent intelligence is exaggerated by the reward system of lifetime in a Victorian-era education system that emphasizes obedience and checklists. Such people whether created by nurture or nature, are disproportionately represented in the MBA world. However the type of skills developed there are all about thriving within existing systems, whereas to build a successful startup requires a completely different kind of thinking.

I'm not painting MBAs all with one brush either, there are many brilliant ones I've worked with. But there are also many who think they are hot shit because of a lifetime of being "gifted" and "elite" far out of proportion to their actual ability to contribute to a tech startup.

MBAs don't hold a monopoly on cleverness.

Sounds like you have a MBA.

Looking for easy money.

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