Your Non-HBS Degree is Worthless - The MBA Show Episode 18

The GMAT company has good news: every MBA is getting a job. The bad news comes from a study at Kellogg Northwestern: If you didn't go to HBS or Wharton you may have a hard time getting that i-banking job.

(0) CTA: SUBSCRIBE TO US ON ITUNES

(1) Headlines: WE ARE ALL GETTING JOBS
• GMAC, company that makes the GMAT, released it’s annual hiring survey
• Good news: 20% more companies hired at least one MBA than 2009. even better next year
• Nearly everyone is maintain or increasing the salaries they offer MBAs.

The unemployment rate is over 9.4% and home prices are falling, and for MBA’s hiring is up 20%!

Miro: Is that good news?

This is part of a new presentation strategy that I’m trying out. I end every rant with a positive statistic and say everything like it’s good news. Go ahead and try it out with some more stats.

Our national budget deficit this year is $1.5 trilliion
Our national Debt is $13 trillion
64% of companies plan to hire MBA’s next year.

Celebration. Things are looking bright my friend!

http://www.gmac.com/NR/rdonlyres/4E0EF485-A6DE-40EB-B2FB-11747DCF2711/0/2010EmployerPollReport_WebRelease_Amended.pdf

(2) Headlines: YOUR NON HARVARD DEGREE IS WORTH NOTHING

Many people wonder how many schools are the top tier of b-school.

We’ve been doing an informal survey of people and we have found that if you ask students at the 5th ranked business school, they’ll say that there are about 5 elite business schools. And if you ask students at MIT, the 9th ranked MBA program, they’ll say that there are about 9 elite business schools.

But now, for the first time, has scientifically determined the actual number of top-tier schools out there. The number is 2.
Lauren Rivera, an assistant professor of management and organizations at Northwestern University has gained access to the secret hiring practices of several prominent firms and
If you go to Harvard or Wharton, your degree is like gold. You are sporting some killer fairy dust.

Since we don’t know who these mystery companies are, lets just call them G. Sachs. and O’kinsey.

What she found was a hiring culture that is extremely obsessed with pedigree.

No surprises there. But even great schools don’t make the cut:

“Hey, I didn’t go to HBS [Harvard Business School] but, you know, I am an engineer at M.I.T. and I heard about this fair and I wanted to come meet you in New York.” God bless him for the effort but, you know, it’s just not going to work.

What happens to a resume that comes from Rutgers? And the guy says “I’m just being really honest, is basically goes into a black hole.” Yikes.

Miro, this hurts me because

So the take away is if you are going to a non-harvard, you can still get an iBanking job, but don’t expect to be hired because of your degree. You need to bring real skills.

http://poetsandquants.com/2011/01/07/is-an-elite-mba-degree-worth-the-cost/
http://chronicle.com/blogs/percolator/brown-and-cornell-are-second-tier/27565


3) Jargon: Fairy dust
Is that an MBA street drug? Not quite. Fairy dust is what you get when you rub your resume really hard against a top tier educational institution such as Harvard.

So how would someone use this term in a sentence.

Well, suppose someone asks you why you are attending Harvard Kennedy School to get a dual degree along with your MBA. You might respond in the following way. Well Miro, aside form the obvious Harvard fairy dust, I’m hoping to go into politics.

So you’re saying that It’s a way of casually acknowledging that part of the reason that you’re going to Harvard is just so that you can say I went to Harvard. Which everyone knows, but it feels cheap to say it out loud.

(5) Business School Tip of the Week:
- Get two referrals at the end of every conversation. Job networking, business starting. Any question.
Follow-up: can i use your name

You only need one cold introductionn.

Thanks for sitting down with me. Who else should I be talking to about this topic?

(7) What’s on your Radar?
Miro: Nephew’s birthday
Tom: Tutoring Tutoring Tutoring

How Much Money Did You Lose In The Dot Com Boom?

Take a trip back to the go-go late 90s with The MBA Show. While Tom and Miro are on vacation, they look back what life was like when everyone was getting rich and nobody knew what their Internet Start-up did or how it would make any money.

Tech Bubble 1999

Big news.  My company just IPO’d for $50M

what does the company do?

Here’s the pitch content-is-king, get big fast, first-mover-advantage.  

You don’t know what your company does do you?

Not in the slightest, but that doesn’t seem to matter to investors.

So how much money have you made in this game so far?

Billions, you should see my e-trade statement. 

So how much actual CASH have you made so far.

Well none, but that’s simply because I haven’t sold the stock yet.  And why would I do that?  Stocks only go up!

Stocks don’t only go up.  What about the tulip craze or the great depression

This time is different! Any information you need in the world, will be available at your fingertips.  Two years from now, you won’t have: a phone, a TV, you won’t need a photo alumb, you won’t need to buy dog food, you won’t go shopping, and the PORN, my god, THE PORN!

Miro, this is the internet:

picture of naked person slowly downloading … it frose.  [both: ahh, damn]

Business School tip of the week:

Both: Drop out.

MBAs Sure Did Love Coke In The 1980s - The MBA Show Episode 16

While they are away on vacation Miro and Tom dip into the MBA Show archive for this classic episode on Corporate Raiders from the 1980s.

LBO (1981)

(4) Jargon: LBO

LBO: like a regular business, except set to the musical soundtrack of the hit movie wallstreet

Seriously though, a leveraged buy out is where one company takes out a loan and uses that loan to buy another company.

Famouslt used in hostile take overs. Where the management doesn’t want to sell, and so another company. A Raider, takes out a loan so big that they offer the individual shareholders of the company a price they can’t refuse.

And what’s great about this type of play is that once you buy that company, you can take any cash that they have on hand and use it to pay off the loan you took out!

For example:

show business card and then structure of new business with giant debt card underneath.

Returns are multiplied by 10 times! 1% becomes 10%.  10% becomes 100% We CAN”T LOSE!!!  What if we lose money?  [pause]  WE CAN”T LOSE!

* What if we DO lose money?  

I don’t know, what if we quit our jobs and start non-profits?  [pause] hahah

So this shows why you don’t want to sit on a mountain of cash? Because people will buy your company and finance it with that same cash.

But isn’t this irresponsible?

no, irresponsible would be giving huge mortgages to people with no credit, no down-payment, and no job.

that is a rediculous example.  Something like that could bankrupt the entire financial system.  WHat bank would be stupid enough to do that?

I know, what’s on your radar?

A ton of coke.

Well, it is the 80’s

Finally, A Professional School For The C Student - The MBA Show Episode 15

Harvard awards the first MBA : (1908)

How are you going to teach business?  It’s not a real science like metallurgy or phrenology.

Harvard is hiring former executives to teach people how they became successful.

Give me an example of how this might help me?

Well, the classic example is this:  Your family’s whale oil business has fallen on hard times because of those hippies and their green, all-natural oil that comes right out of the earth. So, you got to school to find out how to compete.

So, will all the teachers be former whaling executives?

Some of them will be, but you’ll really be learning from people in other industries who have solved similar business problems before already.

This is a total scam.  You can’t teach business in a classroom.  You have to get our there and learn by doing at your father’s company.  You can’t learn your way into the aristocracy.  We’re at the top now, and we’ll always be at the top

what about those people who aren’t at the top?  

You mean the jews and the irish?  They’ll never own companies.  They don’t have the moral fiber for such a lofty persuit.

I’ll drink to that!  To WASPy christianity.  To the the rich getting richer.  Here’s to C-students finally having a professional school that they can attend.

(2) Undermining the constitution. States make a move to amend the constitution to allow something called an “income tax”.  [Fade to black] 

Son of a bitch!

Witness the Invention of Capitalism - The MBA Show Episode 14

While they are away on vacation Tom and Miro dig through The MBA Show archive to present great moments in business history. This week: a trip to 1776 for the invention of Capitalism.


Headlines: Adam Smith: The Wealth of Nations

I do say, my dear fellow, that I expect this to change business in a big way.

Tom: Could you start out by explaining how business works right now?

Here’s how business works now.
1. Be rich
2. Get a boat from the king to transport goods
3. Profit

So what does this change?

The main thing that changes is step number 2. Instead of renting your boat from the queen, you would get together with your rich buddies and buy your own boat.

So won’t there be boats everywhere? we’ll have too many boats.

No, we’ll have the optimal number of boats.

I don’t understand?

Have you read the book?

Read? You know I’m not literate. Just tell me the main take-aways.

So the basic idea is this:

If you let the government allocate resources, you end up with a non-optimal distribution of capital. Instead, if you do nothing, and allow people to compete over resources among one another, then you will arrive at a more efficient distribution of capital.

So you’re saying it’s a bad thing? Any idiot can make money by having a good idea, even if they don’t start out rich? I don’t like the sound of that at all.

The only way to make outsized returns is to do things more efficiently.

BREAKING NEWS:

Just signed the declaration of [What?!] Oh I don’t like the sound of that? Ah, it’ll probably amount to nothing.

Wharton Gives Free Classes for Life | The MBA Show - Episode 13

The University of Pennsylvania Wharton School announces the biggest overhaul to its curriculum in 17 years.  Wharton will now be offering free continuing education classes to its graduates for life.  Miro explains the difference between "golden handcuffs" and a golden shower.  Tom reveals his plans to work at Goldman Sachs for 5 years and buy three swimming pools to match.


(1) Headlines: Wharton, biggest curriculum change in 17 years

• Wharton changes it’s curriculum for the first time in 17 years

1. Most interesting things: Free School For Life

• One free exec ed class to grads once every 7 years
• One week intensive class for free open to grads every 7 years for life!!

Tom: Wow, the creepy alumni problem has been solved.  We all have that weird feeling when we run into 2010’s at MBA events. This is not what i want.  I’m a banker!  I have important things to do!  What I need is an online class that I can watch on one of my bloomberg screens.

Miro: Why is that better

Tom: My time is really valuable.  I don’t have time to fly all over creation and take a week off of work to shake hands with old buddies.  This is just an alumni reunion.  What I need is some up-to-date business information that will keep me sharp, and I’d rather get that from my Hampton's house, than have to leave my family for a week.

Miro: Value of your MBA is the network

Tom:  But I know who my friends are.  I can tell because they’re all wearing Hermes.

MIro: You talk to your friends, this is netowrking of 2nd level
    And Development is here getting the donation, that’s what makes this NPV positive.  Development will be all over this like ...

2. Biggest change for students: More Flexible Core .. Kinda

• Going from a full year of everyone taking the same classes, to 4 shared classes and a choice of classes in six different areas where you have to take one class in each area

Tom: Oh, this is great.  Give the freedom to choose back to students.  Miro, you know I’m pro-choice.  I believe it’s the student’s right to choose.  It’s my education.  I should have the right to do what I want with it.  I was born wearing a suit vest.  I worked for three years at goldman.  The last thing I need, is an intro finance course.

Miro: But, Tom the value of these classes is having you in there to make these classes better. Having you in finance enhances the education of everyone. And when it comes to marketing, it’s my turn.

The reason you get an MBA is to be able to say to the world, that I have a broad range skills across every major domain in business. You hire me, you know what I will know.

Tom: you’re absolutely right Miro.  In fact, the entire point of using a cookie cutter is so that all your cookies come out exactly the same.  If anything, they should have gone even further.  A 5 class core would have been even better.

3. More coaching and experiential learning

• Mandatory two-year leadership coaching (quarterly coaching + 360-feedback)
• Classes in other countries.

• Miro, Apparently Wharton figured out that you can’t teach leadership by just talking abut it. It take experiential learning and coaching.

Wait a minute.  I feel like I’ve heard this somewhere before. [What do you mean Tom?]

Flashback!  The MBA Show, Episode 10.  Cue low budget transition!

The MBA Show, episode 10

Pull out flashback of us from episode 10:

You know what this means Miro?  I think we all know what this means Tom.  The entire faculty at Wharton...

Together: Watch The MBA Show!!!!!

You’re welcome America.

So, Wharton went the right direction three times here.  (Continuing Ed., Flexible Core, Experiential Learning)  So I’d like to give them three thumbs up. Tom: two thumbs, Miro, third thumb.  [stall]

4) Jargon: Golden Handcuffs
Before we get started.  I just want to be clear that the term golden handcuffs has nothing to do with the fuzzy kind of handcuffs or the golden kind of showers.

Golden Handcuffs a term that people use to refer to the promise of money that keeps someone from leaving their job.

For example, when I’m five years into the job at Goldman and my mansion needs another swimming pool, it’s the million dollar bonus that I’ve got coming that prevents me from doing something foolish such as leave banking to do something with social value like teach high school.

Miro: And people usually use this to refer to high paying jobs seem like they would offer more flexibility, but you see this at start-up companies too. Stock Options that vest over time are that same promise of money in the future, that keeps you working hard and prevents you from leaving.

(4) Contest Announcements:

• 2011 Rice Business Plan Competition  - Feb 4 - http://alliance.rice.edu/alliance/RBPC.asp

• The Wake Forest - 36 hour - MBA Marketing Summit Case Competition - Registration open - 4-7 full time MBA students per team - http://business.wfu.edu/default.aspx?id=608

• Hult Global Case Challenge - Early Bird Deadline: December 17, 2010 teams of up to 5 - The global clean water crisis- - http://www.hultglobalcasechallenge.com/

• The MITClean Energy Prize - Dadline due Feb 25 - Energy or energy-efficiency related business plan, at least one U.S. University student, Have not received funding - http://www.mitcep.org/

• YEi French American Entreprenurship Competition - Apply by Dec 31- French Entrepreneurship Accelerator -  www.yeifrance.com

• Purdue Global Supply Chain Management MBA Case Competition  - Early DiBird Deadline Dec 17 - up to 2 teams of 4 member from each school - $6K  in prizes  - Purdue Global Supply Chain Management MBA Case Competition  - Up to 2 teams of 4 member from each school - $6K  in prizes http://www.krannert.purdue.edu/centers/dcmme_gscmi/conferences/student_competition_S11.html

(5) Business School Tip of the Week:

PARTY

(6) We will be taking a vacation from the show for the next few weeks.  Join us at the start of next season.  In the interim, look for classic clips from The MBA Show.

We’re very exited: we went throught he archives and found some clips dating far back as the late late 1800s. It’s going to be great.

(7) What’s on your Radar?

• Miro: The holiday parties begin.
• Tom: Mystery Weekend

The MBA Show Episode 12 - B-Schools Figure Out What Women Want

(0) CTA: iTunes

(1) Headlines: Business Schools Accepting Nerds

Miro: Kaplan surveyed 288 business schools and 39% now accept the GRE up from 24% last year. Some top schools accepting it include: HBS, Stanford, Columbia.
You know what this is about tom?
Tom: What?
Miro: getting more female applicants.

That’s what I’ve been doing wrong!  Ladies, TheRealTomRose is now accepting the GRE.  Aaand, that doesn’t make any sense at all.

So follow my convoluted logic here.  Its used to be that Bschools looked for 5 years experience.  But at 27, women are thinking about having kids soon, so the math for getting an MBA doesn’t make sense.  So to get women, schools need to go younger and that’s where you find the GRE.

So you think that the GRE is a weapon being used to get women applicants.

Yes. bababa

So let me see if I can summarize your point!  Damnit!  Is nothing sacred.  Is there no point place men have an unfair advantage anymore?  I want to pee standing up.  I want to get paid more for the same damn job.  And I want to get and MBA and look down through the glass celing as those baby crazed hippies and their GREs!  Is that your point?

My point is, If you want more women applicants you have to recruit younger.

So ETS isn’t just selling the GRE.  They’re selling a product bundle.  For one low fee, you get the GRE, an MBA and... a baby!


(2) MBAEI

We are announcing the first quantitative measure of MBA Exuberance, conducted by The MBA Show.  We are tracking across the country, how MBAs feel about their job prospects.  We asked people on a 0-100% scale how confident they are that they will receive a satisfactory job offer. (100% meaning they already have one. 0% meaning they are hoping to become a VC.)

Why does it matter how exuberant we are?

Well, we all know that MBAs really care about getting jobs.  But one thing they care about even more is whether their peers are getting jobs before they are.  

Well how do they feel?

The current number is 79.  Wooo hhooo celebrate:

Miro: [Taps tom] What does that mean

Tom: Could you imagine the disaster if it has been a suicidal 77?  Or the coked out euphoria of an 81.  

Miro: But how can you possibly distill all the emotion of the job search into a single number.

Tom: But isn’t it basically the job of an MBA to take an extremely complicated set of data and distill it down into a single meaningless value that can be presented to the Board of Directors.   

[Awkward pause, followed by laugh.]

One thing you really want to do here is compare the MBAEI against schools.  For example, Harvard students report an average MBAEI of a dismal 73 compared with Tuck students who report an average MBAEI of an exuberant 90.

So, we want to hear from you!  Visit www.thembashow.com and click on MBAEI to take the survey and add your data to the national results.


(3) Jargon: “HHI” - Herfindahl-Hirschman Index
http://www.justice.gov/atr/public/testimony/hhi.htm

HHI is a measure of market concentration.  You have heard about this in Econ class and Strategy class.  The number varies from 0 to 10,000.  10,000 is a high concentration market (monopoly), and 0 is a low concentration market (perfectly competitive).

So higher is better?  

Yes.  If you’re a business owner, you want to be in a highly concentrated market so that you can command higher prices.

But what if you’re a consumer?

Well that’s just rediculous..If you are a CONSUMER, you want a low-concentration market so that competition keeps prices down.  And in fact, people have heard about HHI because of anti-trust cases.  The feds use HHI to judge whether a merger will make a market too concentrated.

So the federal gov’t is deciding whether to prosecute based on a spreadsheet.

Yes.

And companies will run this on a merger to see whether they are stepping on any toes?

Yes. 100% of the time.  It’s like a pregnancy test.  If you think you might need to know, then you definitely need to know.

"HHI" means the Herfindahl-Hirschman Index, a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers.  For example, a market with only one firm would have an HHI of 10,000.  A market with tons of tiny firms might have an HHI of 50.

The HHI takes into account the relative size and distribution of the firms in a market and approaches zero when a market consists of a large number of firms of relatively equal size. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.

“Markets in which the HHI is in excess of 1800 points are considered to be concentrated.” Transactions that increase the HHI by more than 100 points in concentrated markets presumptively raise antitrust concerns under the Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission. See Merger Guidelines § 1.51.

http://en.wikipedia.org/wiki/Herfindahl_index
A HHI index below 0.01 (or 100) indicates a highly competitive market.
A HHI index below 0.1 (or 1,000) indicates an unconcentrated market.
A HHI index between 0.1 to 0.18 (or 1,000 to 1,800) indicates moderate concentration.
A HHI index above 0.18 (above 1,800) indicates high concentration[1].


(4) Contest Announcements:

• 2011 Rice Business Plan Competition  - registration open nov 15 - closes feb 4 - http://alliance.rice.edu/alliance/RBPC.asp

• The Wake Forest - 36 hour - MBA Marketing Summit Case Competition - Registration opens Nov 11the for the Competion in February - 4-7 full time MBA students per team - http://business.wfu.edu/default.aspx?id=608

• Hult Global Case Challenge - Teams of up to 5 - the global clean water crisis- Early Bird Deadline: December 17, 2010 - http://www.hultglobalcasechallenge.com/

• MIT $100K Executive Summary Competition - 2 page exec summary - due today at 6 pm at mit100k.org

(5) Business School Tip of the week:

Sleep

Scientists better understand the importance of sleep

Other: Did you hear that Yogi Bear Market?
One: Did you hear that Ben Bearnanke?

• helps us consolidate and retain memories
• 2 weeks of 6 hour sleep gives you the response time of someone legally drunk

(6) What's on your Radar

Miro: Holiday parties! Tazo chocolate tour.

Tom: EdCamp at Columbia