"On average, certain careers are good bets, break-even bets, or one of many sucker bets. Like all heuristics, there are exceptions, but wagering $200,000 on being one of them is a bad idea."
On this episode, Micah reads Part 5 of his book "Rethink the MBA", and talks about the career bets you can take in business school. Some are smart bets that will lead to high paying jobs. Others are break-even bets, where you may not get everything you want. And some career bets are for suckers. You will likely lose all your money and time, and still end up without your Dream Job, which is exactly what happened to him.
This episode includes the following chapters from Micah's book, Rethink the MBA, Why Business School is Riskier Than You Think:
PART 5: GOOD BETS, BREAK-EVEN BETS, AND SUCKER BETS
Chapter 20: Bankers
Micah explains why getting an MBA is probably a good bet if you want to get into Banking. Becoming an investment banker, wealth manager, or hedge fund analyst obviously requires a firm grip of finance and accounting, and these firms are still willing to pay the big bucks for you to get your MBA. However, even for aspiring Bankers there’s a case to be made that your Dream Job could be obtained in faster and less expensive ways.
Chapter 21: Consultants
Micah explains how Consulting is the other industry where an MBA seems like a good bet. In Consulting, you work very long hours analyzing complicated strategic problems for the Fortune 100. You quickly become a master at making beautifully crafted PowerPoint decks to explain the results of your analysis. You work with extremely smart people on extremely challenging problems. And yes, you make a lot of money to pay off those damn student loans. However, if you don't have an interest in Consulting before b-school, there’s a danger you may develop an interest in Consulting during b-school for financial reasons.
Chapter 22: Career Switchers
Micah warns students wanting to get into Consulting or Banking that many students getting an MBA are Career Switchers who are just leaving Banking and Consulting to work for the Fortune 100. Switching careers to a different industry is a problem the MBA solves through the summer internship. Yes, Career Switchers are paying two years of time and tuition to effectively get a summer internship to help them switch careers. Career Switchers can be the most creative about avoiding the MBA, and this is why it’s a break-even bet.
Chapter 23: Free Money
Micah shows how it’s possible to get an MBA with “free money”, most commonly through an employer sponsorship. You would think your employer paying for you to go to b-school would be a “good bet”. However, it's actually a devil’s bargain. In exchange for the “free” MBA, you’ll have to work for your sponsor for a few years after you graduate. This means you’ll completely miss the option value of working somewhere else.
Chapter 24: College Grads
Micah explains the two major problems with getting an MBA right after college: The first problem is that you pay to collect data about what job you might like, instead of getting paid. Even worse, you’re paying to get bad data about the careers you might like. Taking classes in Marketing tells you nothing about whether you’ll enjoy segmenting the market for toothpaste at Colgate-Palmolive. It’s much better to get paid to test your career hypotheses in real jobs. Just graduated from college and want to get an MBA? Get a job instead.
Chapter 25: Learners
Micah highlights the fundamental misunderstanding about b-school. The purpose of an MBA is not to help you learn business skills. It’s to classify your abilities for the Fortune 100 companies that want to hire you because you’ve been “pre-approved” by the brand of business school you attend. If you’re getting an MBA just to learn business skills and don’t really have an interest in getting ranked for the Fortune 100 HR departments, then you’re making a mistake.
Chapter 26: Part-timers
Micah warns students who might be attracted to "brand name" business schools that for Part-time or Executive MBAs, no one will think there’s anything particularly exceptional about your abilities. For this reason, it's not worth the time and money, unless your employer is paying every penny of tuition.
Chapter 27: Explorers
Micah begs his listeners to "explore their career options" before business school. Explorers who do this during business school are more likely to make a bunch of career bets that never pay off. For example, if you decide at the last minute that you want to “do Consulting”, you’ll probably lose. The students that actually wanted to “do Consulting” have been studying the firms and practicing case interviews for months, while Explorers, will be scrambling and cramming for interviews. Explorers usually don't get their Dream Job because they're too busy "exploring" to focus on their career goals.
Chapter 28: Entrepreneurs
Going to b-school to become an entrepreneur is the worst career bet you can make. Micah knows this because he took this bet and lost. Micah explains why you should never get an MBA if you want to be an entrepreneur, and how getting an MBA is a complete failure of entrepreneurial thinking.
Chapter 29: Difference Makers
Students interested in "helping the world" and "making a difference" are surrounded by people more interested in working at a hedge fund than saving the world in business school. If you go to b-school interested in social impact work, you’re going to be lonely. There will either be very few students that share your ambitions, or a lot that initially do, but end up in Consulting or Banking after graduation. There are better, cheaper ways to learn business skills and accelerate your non-profit career than getting an MBA.
Chapter 30: Venture Capitalists
Finally, Micah explains that most students don't have the serious skills they need to become a VC Associate, in addition to the MBA. He also explains how the VC landscape is changing away from MBAs and towards technical entrepreneurs. If VC is your Dream Job, you probably won't get it with an MBA.