The MBAs are fleeing, should SF be worried?(techcrunch.com)
techcrunch.com
The MBAs are fleeing, should SF be worried?
http://techcrunch.com/2014/11/09/the-mbas-are-fleeing-should-sf-be-worried/
12 comments
From the same report. Finance has median 150k base pay, median 40k signing bonus, median 100k other guaranteed income. Tech has 125k, 20k, and 20k. Sounds less likely that they're making some informed decision on the future of Tech, and more likely that they're going where the money is at the moment. Those numbers are very different.
Actually, that hasn't changed in the last year. A more significant fact is that in 2012 24% of MBAs went to tech, in 2013, 32%, and now in 2014 it's back down. There weren't any huge shifts in the industry in the last two years, so the data seems inherently noisy, determined by the acts of 20 people who go either to one or the other.
Poor article. Looking for a story.
Actually, that hasn't changed in the last year. A more significant fact is that in 2012 24% of MBAs went to tech, in 2013, 32%, and now in 2014 it's back down. There weren't any huge shifts in the industry in the last two years, so the data seems inherently noisy, determined by the acts of 20 people who go either to one or the other.
Poor article. Looking for a story.
Yes, excluding outliers, finance has always paid better. I'd guess the brief migration from finance to tech was simply because finance became very unfashionable for a little while. Meanwhile, headline-grabbing IPOs were making it seem like everyone in Silicon Valley was making easy money.
As an equation it would look like:
finance_pay - judgement_of_society > tech_pay + lottery*Pr[winning_lottery]
where judgement_of_society has rapidly declined, and people are realizing that the true value of Pr[winning_lottery] is smaller than their estimate.
As an equation it would look like:
finance_pay - judgement_of_society > tech_pay + lottery*Pr[winning_lottery]
where judgement_of_society has rapidly declined, and people are realizing that the true value of Pr[winning_lottery] is smaller than their estimate.
I have a strong conviction that out of all the professional postgraduate degrees out there, a MBA is the most "rational" for people to obtain for financial and professional progress purposes. Thus the cohort it attracts are hyperrational people (which is partly why I think "most" -- not all -- MBA graduates are ill-suited for starting companies, since a startup is a highly irrational affair from a financial perspective), and thus their decision making will be rational. It just makes sense to pursue a career in finance. After all, it is by far the most lucrative path on average.
Also, I can't shake the suspicion that the output results from the program are affected significantly by the inputs (the students accepted by admissions), and the effect of the relative cyclical attractiveness of the industries must thus be attenuated significantly.
Also, I can't shake the suspicion that the output results from the program are affected significantly by the inputs (the students accepted by admissions), and the effect of the relative cyclical attractiveness of the industries must thus be attenuated significantly.
So the entire premise of the article is based on the recent Stanford GSB recruitment report:
>That’s according to newly released employment data from Stanford’s Graduate School of Business, which is a particular bellwether of the state of startups given the school’s proximity to Silicon Valley. About 24% of MBA graduates in the class of 2014 headed to tech jobs, down from 32% in 2013 and equal with the proportion back in 2012. Of course, those profiteering graduates are returning right back to where they belong in finance and consumer products, which each saw notable upticks in employment.
Apparently we can now make statements about entire industry sub cycles from the whims of 350 students.
>That’s according to newly released employment data from Stanford’s Graduate School of Business, which is a particular bellwether of the state of startups given the school’s proximity to Silicon Valley. About 24% of MBA graduates in the class of 2014 headed to tech jobs, down from 32% in 2013 and equal with the proportion back in 2012. Of course, those profiteering graduates are returning right back to where they belong in finance and consumer products, which each saw notable upticks in employment.
Apparently we can now make statements about entire industry sub cycles from the whims of 350 students.
A dose of reality + MBA Friends making way more outside of tech = "I've made a mistake"
Startups are hard. Very hard. Startup life is not glamorous. And failure hurts twice as much when you've lived a cultivated, high-achievement life. Building a company may have gotten cheaper, but it hasn't gotten any easier. If you imagine your life being an uninterrupted string of success by following a relatively conservative game plan you may find it difficult to adjust. Leaving is perfectly reasonable.
Startups are hard. Very hard. Startup life is not glamorous. And failure hurts twice as much when you've lived a cultivated, high-achievement life. Building a company may have gotten cheaper, but it hasn't gotten any easier. If you imagine your life being an uninterrupted string of success by following a relatively conservative game plan you may find it difficult to adjust. Leaving is perfectly reasonable.
As someone who has been coding for a while, I must say I'm jealous of my MBA friends. Some of them were programmers but their careers just shot up after those 2 years. The older I get, the more it feels like programming is really an entry level job. Sure, you'll have rock star architects/distinguished engineers who get to have great careers (mostly due to right timing) but that's a very small percentage.
This is a reality that most do not want to accept. Is it just? Probably not.
I've often viewed this as Thinkers vs. Workers. Society places a high value on Thinkers, those who make decisions, strategize, make connections, build relationships, etc. Those who fall in this camp are doctors, lawyers, consultants, CEOs, etc. The Workers -- programmers, engineers, designers -- are often fungible. They are in a competitive market of manual laborers that has driven down the price of labor to levels that, for many, increase the opportunity cost of learning the tech yourself. Over time, Thinkers accumulate social capital that can be leveraged to gain benefits, both related and unrelated to their profession -- e.g. a doctor being given preferential treatment by a restaurant host. Workers accumulate labor capital; they're more efficient at their work, can develop more creative solutions. But put a 50yr old coder up against a 50yr old lawyer/doctor/banker and the latter will be given more praise, more money, more influence 9 times out of 10.
Even Workers eventually outsource their labor once they're in a position to become a Thinker. Few successful startup CEOs and execs are actually coding themselves. Their roles shift to strategy, operations, so on and and so forth, for that's where they're valued and will be rewarded the most.
And getting a graduate degree is often the ticket to be considered a Thinker, whether MD, MBA, JD, PhD.
That's the game, whether you like it or not, and it certainly won't be changing anytime soon. If money is a priority, becoming a Thinker might be in your best interest.
I've often viewed this as Thinkers vs. Workers. Society places a high value on Thinkers, those who make decisions, strategize, make connections, build relationships, etc. Those who fall in this camp are doctors, lawyers, consultants, CEOs, etc. The Workers -- programmers, engineers, designers -- are often fungible. They are in a competitive market of manual laborers that has driven down the price of labor to levels that, for many, increase the opportunity cost of learning the tech yourself. Over time, Thinkers accumulate social capital that can be leveraged to gain benefits, both related and unrelated to their profession -- e.g. a doctor being given preferential treatment by a restaurant host. Workers accumulate labor capital; they're more efficient at their work, can develop more creative solutions. But put a 50yr old coder up against a 50yr old lawyer/doctor/banker and the latter will be given more praise, more money, more influence 9 times out of 10.
Even Workers eventually outsource their labor once they're in a position to become a Thinker. Few successful startup CEOs and execs are actually coding themselves. Their roles shift to strategy, operations, so on and and so forth, for that's where they're valued and will be rewarded the most.
And getting a graduate degree is often the ticket to be considered a Thinker, whether MD, MBA, JD, PhD.
That's the game, whether you like it or not, and it certainly won't be changing anytime soon. If money is a priority, becoming a Thinker might be in your best interest.
>>>> Their roles shift to strategy, operations, so on and and so forth, for that's where they're valued and will be rewarded the most.
Those are the roles where you can't trust anybody to do them for you without fleecing you. Even MBA's are loath to fully entrust those roles to other MBA's. The top management of our company has an elaborate review process for strategy and operations, and no high level review process for coding.
Those are the roles where you can't trust anybody to do them for you without fleecing you. Even MBA's are loath to fully entrust those roles to other MBA's. The top management of our company has an elaborate review process for strategy and operations, and no high level review process for coding.
My upvote wasn't enough: Your comment summarizes simple but important career and life insight that most people have to learn the hard way; I wish more people would read it.
There's certainly economic truth in this position. But putting doctors and CEOs in the same category seems a bit off to me. Certainly, CEOs and consultants aren't stupid, but it seems that there are other skills in play as well, some of which can be expressed in words with both positive and negative connotations. Being a "thinker" isn't sufficient to be a CEO.
If you head over to wallstreetoasis, you'll hear a few of them comment on how software engineers have it made. Grass is always greener on the other side and what not. There's a lot of not so nice things about being in finance, like the work conditions and hours. You have to pay your dues and work like a dog for quite a bit. Outside of high finance, you can go work for F500s, but then you take a significant pay cut. The last option is strategy consulting, which has often been described as more miserable than investment banking due to the travel and the fact that hours never really go down even as you rise up.
Also, the median total compensation is $181,500 USD for an MBA graduate of arguably the best business school in the country. They have a median of four years of work; Assuming they started at 22, and the MBA took two years, they're 28 when receiving this compensation. Unless they have corporate sponsorship, they've also paid around $185,000 for that degree, most likely in loans which will increase the cost. I wonder if a software engineer of similar caliber (smart, dedicated and possessing competent social skills to get into GSB) could pull off a similar compensation at 28 and how his life time earnings would compare. I'd be willing to wager the difference isn't that drastic; if it isn't, it's probably better to just pick the path where the work suits you better.
I think a good grasp of programming combined with being business-savvy and being able to communicate confidently with people can get you pretty far monetarily if you seize the right opportunities; its a useful skill that has the potential to create significant revenue/cut losses for businesses. It seems like some people manage to become well off by becoming consultants and doing just that, but I'm just speaking from second-hand information.
Also, the median total compensation is $181,500 USD for an MBA graduate of arguably the best business school in the country. They have a median of four years of work; Assuming they started at 22, and the MBA took two years, they're 28 when receiving this compensation. Unless they have corporate sponsorship, they've also paid around $185,000 for that degree, most likely in loans which will increase the cost. I wonder if a software engineer of similar caliber (smart, dedicated and possessing competent social skills to get into GSB) could pull off a similar compensation at 28 and how his life time earnings would compare. I'd be willing to wager the difference isn't that drastic; if it isn't, it's probably better to just pick the path where the work suits you better.
I think a good grasp of programming combined with being business-savvy and being able to communicate confidently with people can get you pretty far monetarily if you seize the right opportunities; its a useful skill that has the potential to create significant revenue/cut losses for businesses. It seems like some people manage to become well off by becoming consultants and doing just that, but I'm just speaking from second-hand information.
If you're the kind of person who actually enjoys screwing around with spreadsheets all day long, maybe.
If you'd rather work as a Roman galley slave, maybe not.
No money is worth doing a job that you hate.
If you'd rather work as a Roman galley slave, maybe not.
No money is worth doing a job that you hate.
Note that my advice would be the same to those who are contemplating becoming programmers.
If you don't actually enjoy writing code, no amount of money is worth it.
If you don't actually enjoy writing code, no amount of money is worth it.
The interesting thing about doing spreadsheets or writing code is that, at their fundamental level, they are very similar.
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> Sure, you'll have rock star architects/distinguished engineers who get to have great careers (mostly due to right timing) but that's a very small percentage.
Well, if it helps, that really applies to just about any profession.
Well, if it helps, that really applies to just about any profession.
But if it were true that there is such a vast programmer productivity/competence variance (you know, "10X"), there should be a lot more room for distinguished engineers or whatever you want to call them. Sure, if you assume a leadership hierarchy then the top is always going to be narrow. But do distinguished engineers (or whatever the best term is) have to necessarily have large hierarchy of less experienced programmers beneath them?
Or maybe "10X" is true, but it isn't realized due to whatever non-technical reasons (political, etc.)?
Or maybe "10X" is true, but it isn't realized due to whatever non-technical reasons (political, etc.)?
It depends on the work mix. I know at my current job, I am MUCH more effective at writing actual new code than the offshore team (for one thing, I actually like doing it, whereas they seem to put it off for days in favor of other make-work activity the company generates).
OTOH, I'm no better at filling out random paperwork than they are, maybe even less effective, since they will readily gamble that a sketchy answer in a form won't bounce back for clarification.
So, if there is a lot of low level busy work, you might as well hire entry level workers. Just don't let them build stuff that perpetuates more busy-work, or it can become a tough pit to climb out of ... and now I'm off on a tangent.
OTOH, I'm no better at filling out random paperwork than they are, maybe even less effective, since they will readily gamble that a sketchy answer in a form won't bounce back for clarification.
So, if there is a lot of low level busy work, you might as well hire entry level workers. Just don't let them build stuff that perpetuates more busy-work, or it can become a tough pit to climb out of ... and now I'm off on a tangent.
10x is IMO a bit of a myth. But even if we assume it is not, it can't be measured which is why it is difficult to reward
10x is arguable. But the 1000x programmer (who is as good as a team of 1000) definitely doesn't exist. IMO.
10x is arguable. But the 1000x programmer (who is as good as a team of 1000) definitely doesn't exist. IMO.
10x or 100x or whatever is probably only true along a certain dimension. I don't doubt that there are programmers who are both 10x and 100x above the median at writing a high performance journaling filesystems, or fast, stable, multidimensional PDE solvers for example. But If you average it out over every conceivable programming task you probably won't find many 10x programmers.
The other aspect is that just being good and fast doesn't make you money. You have to be good and fast at solving the right problem in the right way and then convince people to give you lots of money for that solution. If you can't do those last bits, you'll always end up working for someone earning more than you, no matter how good you are.
The other aspect is that just being good and fast doesn't make you money. You have to be good and fast at solving the right problem in the right way and then convince people to give you lots of money for that solution. If you can't do those last bits, you'll always end up working for someone earning more than you, no matter how good you are.
Hmm. But there does exist programmers who you could found a company built around that person. But it would be fair to argue that they are a thinker,
> But even if we assume it is not, it can't be measured which is why it is difficult to reward
But isn't it more measurable than what an MBA in a senior/executive position does? If being part of writing a large software system is complex and hard to get right, and hard to measure progress on (technical debt v.s. features, for example), I can't imagine that running or managing a system of people - which are much less predictable than system components - is less complex, and in turn easier to measure when you factor in all external factors and things that an executive can't really do anything about (even though he might be responsible for it on paper).
But I don't really know anything about the management world.
But isn't it more measurable than what an MBA in a senior/executive position does? If being part of writing a large software system is complex and hard to get right, and hard to measure progress on (technical debt v.s. features, for example), I can't imagine that running or managing a system of people - which are much less predictable than system components - is less complex, and in turn easier to measure when you factor in all external factors and things that an executive can't really do anything about (even though he might be responsible for it on paper).
But I don't really know anything about the management world.
"If you do what you love, you'll never work a day in your life." -- Marc Anthony
:)
:)
"if you do what you love, AND What you do is valued by others who give you a decent pay you can live with, then..."
Can I ask which fields are your MBA friends making way more outside of tech?
Maybe they're fleeing as a consequence of culture? Virtually every story I've heard about MBAs in SF can be summed up as "we didn't hire them because of their MBA, but rather, in spite of it." I don't know how well-regarded MBAs in SF actually are, but the cultural grapevine suggests there isn't a very high demand for them.
There is a culture of groupthink in hiring that mainly benefits people that are doing the hiring. MBA's are bad. Devs that are not social are bad. People with degrees of any kind are bad. Anyone who wouldn't make a good drinking buddy is bad. If you stop and think about who they're optimizing for, it's very dumb yes-man bro friends that don't challenge their decisions or thinking.
While I upvoted you, on the flip side, I've noticed that MBAs tend to be hired by other MBAs. This is certainly the pattern at the company where I work. If you highlight the MBAs on the org chart, they will tend to be clustered. Folks also decide to pursue an MBA when they see that the entire ladder above them is populated by MBAs.
It could be that MBAs have something that the rest of us don't know we need, or that we don't know how to hire and manage an MBA.
It could be that MBAs have something that the rest of us don't know we need, or that we don't know how to hire and manage an MBA.
I've always seen MBAs as filling positions that make it possible to grow your organization. A sort of organizational glue. My perspective is by the nature of their roles they aren't meant to play a pivotal role.
So perhaps for the time being fewer MBAs means less growth in the sector. However, I envision a future where the positions MBAs fill will be some of the first ones automated. My perspective is that MBAs are a dying breed, and over time it will only become more evident.
So perhaps for the time being fewer MBAs means less growth in the sector. However, I envision a future where the positions MBAs fill will be some of the first ones automated. My perspective is that MBAs are a dying breed, and over time it will only become more evident.
I don't want to sound too cynical here, but just the right amount of cynical: I work in a large organization that has layer upon layer of hierarchy. To me, middle management seems like an information processing task: Gathering, organizing, analyzing, and reporting up and down the ladder.
The language of management is a COmmon, Business-Oriented Language. ;-)
The language of management is a COmmon, Business-Oriented Language. ;-)
I agree that alot of startups have horrible culture. Technical teams can be particularly responsible for it if not kept in check. But I would argue that teams configured of that kind of personality generally won't get past the first round of funding.
But having worked with / for many startups in my career, my intuition tells me that competent / grounded MBAs bring little to the table when compared to competent / grounded technical folks.
But having worked with / for many startups in my career, my intuition tells me that competent / grounded MBAs bring little to the table when compared to competent / grounded technical folks.
Downvote? Sorry for not sugar-coating it. I thought this discussion was about why MBAs seem to be trending away from SF, and back toward finance.
> cultural grapevine suggests there isn't a very high demand for them.
Publicly observable facts say otherwise. Go look at BizOps at the major tech companies, including YC alumni like Dropbox and Stripe: They are filled with MBAs and former consultants and bankers ("MBA-types"). They are usually paid better than the working slobs, have better working conditions and have better career trajectories.
Publicly observable facts say otherwise. Go look at BizOps at the major tech companies, including YC alumni like Dropbox and Stripe: They are filled with MBAs and former consultants and bankers ("MBA-types"). They are usually paid better than the working slobs, have better working conditions and have better career trajectories.
So the "Great MBA Bubble of 2013" was followed with banks offering greater compensation and possibly the opportunity to work with tech companies without the risk of belonging to one. I would imagine VC is a very attractive career for the graduates, and banks can offer a clear path to it.
This is, of course, pure speculation; I'm just trying to illustrate that correlation != causation. I understand everyone is concerned with the tech bubble, but this article is really stretch.
This is, of course, pure speculation; I'm just trying to illustrate that correlation != causation. I understand everyone is concerned with the tech bubble, but this article is really stretch.
I don't understand why MBAs seem to think of developer as lowly worker bees, and developers seem to think of MBAs as overpaid snobs.
But two things I have noticed: 1) many of these opinions come from people who are one or the other, but not both
2) people who have both skills are lethal and awesome people to work with.
But two things I have noticed: 1) many of these opinions come from people who are one or the other, but not both
2) people who have both skills are lethal and awesome people to work with.
I wonder what the stats are regarding success stories with MBA founders vs technical founders. Perhaps SF is catching on to some as yet established reality that an MBA doesn't bring to the table what a technical founder can for an early stage startup.
So, there were lots of MBAs in 2013, but not so much in 2014? Even if you grant that MBAs are a good indicator of startup success, two data points doesn't make a trend line. And I don't think many people on here would be inclined to grant that.
Isn't there a gigantic influx of bankers who want to be close to Asia? Seems to compensate just fine...
Maybe the valley understand that the MBAs don't add any really value compared to programmers who can really build. As a result, recent MBA graduate can no longer command high salaries and are now looking for greener pastures
What about an MBA who can also program? Do you think they can add value, or is the degree itself some kind of mystical tattoo that forever bestows unworthiness upon the graduate?
HN-ers like to laugh and think the MBA and techie sets are disjoint. A quick google search shows numbers from 25-40% of MBA students have engineering backgrounds (for example [1], [2]).
1. http://spectrum.ieee.org/at-work/education/engineers-and-bus... 2. http://www.science-engineering.net/engineering/united-kingdo...
HN-ers like to laugh and think the MBA and techie sets are disjoint. A quick google search shows numbers from 25-40% of MBA students have engineering backgrounds (for example [1], [2]).
1. http://spectrum.ieee.org/at-work/education/engineers-and-bus... 2. http://www.science-engineering.net/engineering/united-kingdo...
> What about an MBA who can also program?
Then they're mediocre at both, at best.
Then they're mediocre at both, at best.
The logic underpinning this article is flimsy at best. He is using the following to infer that fewer MBA's are going to SF:
About 24% of MBA graduates in the class of 2014 headed to tech jobs, down from 32% in 2013 and equal with the proportion back in 2012. Of course, those profiteering graduates are returning right back to where they belong in finance and consumer products, which each saw notable upticks in employment.
There are several things that are wrong with this. First, he is only looking at Stanford GSB and assuming because it is in the Bay area that it is a reliable representation of MBA's everywhere, because surely it's proximity to SV means it must graduate more students who are likely to be employed there than elsewhere. But Haas is in the Bay area too. He's also assuming that students who graduated in years past aren't now moving to SV in increased numbers which, if true, could more than offset a decline in graduating students. However the most glaring hole in the logic is that "tech jobs" = San Francisco. As a fairly recent MBA grad myself, I can tell you that most of the people in my class who went into tech did not go to SV. Most went to places like Intel, Amazon, and Microsoft, none of which are based in California, let alone SV.
If you don't have a firm understanding of a topic, why write about the topic? It just makes the author sound stupid.