Stanford MBAs Shift Away from Tech | Hacker News Reader

Stanford MBAs Shift Away from Tech

poetsandquants.com

88 pointsekm277 comments

Stanford MBAs in tech are fucking weird. I worked with a few, and had one for a CEO for 2 years. The gist of it is that they all sucked at tech but thought they didn't (trying to manage engineering teams in ridiculous micromanagy self important ways), were all very self centered, and all came from very wealthy families, being able to raise a few hundred thousands from "friends and family" (!?) and spending 4 day weekends in Tahoe and LA even though "we're bootstrapping so I'm only taking $30k a year right now".

I know, I know, anecdote != data. Having talked about it with friends, I know I'm not alone. I even see it mentioned in HN comments every once in a while (eg https://news.ycombinator.com/item?id=7083219).

as an angel investor, mba founders is a big warning sign. so there's that.

So this is a real thing? It's not just me turned off by the strangely premeditated handshakes?

MBA courses are now being promoted in Europe and many people see it as a cancer

MBA stands for "more bad advice". The current MBA curriculum is mainly based on knowledge that we know in the 1980s. Most of the advance science and management processes that we have developed since then are not in the curriculum. So basically the MBA students are unfortunately learning outdated knowledge - half of which is wrong.

Do you have a citation for that? I'm genuinely curious.

I heard that term at a conference given by Sidney Dekker. Professor Dekker is a world famous expert in risk and accident management.

The links from his talk and books are below. He said "MBA stands for more bad advice" at 14:00. It is worth a watch even if you are not interested in engineering risk management.

http://vimeo.com/102167635 http://sidneydekker.com/books/

From my own personal experience as a researcher in project management. Many of the advances in project management are not currently being taught in school. This is due to the fact that it takes so long for the idea to migrate to the core curriculum. Most undergraduate education (even some aspects of CS) has not really changed for decades. Generally undergraduate education is behind current research by about 20 years and this will vary from field to field. The masters might get you closer to the 10 year range. The PhD is the only time where you are at the current state of knowledge. Although this is not quite true since recent journal articles are usually 2 years old (the review process is so long).

I'm more interested in the 'good practices' than the snarky one-liner. I don't have an MBA nor intend to get one, but it seems like a legitimate thing to pursue for some people in some circumstances.

Is there a book you can recommend so we can get a reasonably current overview?

I study project management so I only know about things from the production perspective. The following reading should get you a modern view of managing projects.

http://lib.tkk.fi/Diss/2000/isbn951385566X/ http://www.leanconstruction.org/media/docs/ballard2000-disse...

This problem is precisely what leads me to doubt the value of what we currently call higher education. To put it bluntly (and in a slightly exaggerated manner), in exchange for your tens/hundreds of thousands of dollars, you get obsolete (at best) and just plain bad (at worst) vocational training.

What is your thoughts on critical chain as defined by Eli Goldratt?

Many people share that sentiment. Elon Musk sees an MBA as a detriment when hiring: http://www.aps.org/publications/apsnews/201311/profiles.cfm

Yah bookmark it. Always beware of those who have acquired some knowledge and the credentials for such. So that's this.

there are occasional exceptions, but it's a been a good first approximation for me.

On that note, why does YC let so many MBA founders in?

I haven't seen any stats to say that it's lopsided or not, but i'd wager because education alone doesn't define an individual or the company?

Because people who matter still see an elite MBA as a useful imprimatur.

YC lets them in because the people making that decision believe said founders have some (unspecificied, but non-trivially non-zero) chance at building a company they can sell (to other investors or "the public" in an IPO) for far more than they invest in it.

It seems people are making a category error with respect to YC. YC's purpose is not to foster a cradle of technical innovation with an engineer focus; it's to maximize returns on high-risk investments in what happen to be technology companies. Engineers in the startup world are like engineers everywhere else in technology work: second-class workers who exist to expend their life in the form of labor for (relatively) token compensation in return, with lots of ego stroking to help deflect attention from that.

> Engineers in the startup world are like engineers everywhere else in technology work: second-class workers who exist to expend their life in the form of labor for (relatively) token compensation in return

Be careful, that breaks the marketing veil too much ;-)

The problem is that to attract and keep engineers busy and happy it is important to tell them stories about changing the world, "breakthrough technologies", paradigm shifts. Also it is important to explain inability of many engineers to discern how equity gets allocated, how options and stock work and so on. "oh look you get 10000 shares!" type tricks.

Now, granted, those are not mutually exclusive, some do work on breakthrough technologies.

curious, but do you differentiate between if they're also the technical founder or not?

Asked another way: Are you identifying this as a lack of tech expertise, or as a 'poisoning' of the mind irregardless of the experiences?

Thanks!

Yes, though I am still not thrilled with it.

I've just seen too many "two mbas and a PowerPoint" startups, "we just need some money to build a prototype"

I would rather see a prototype (or a soft launch with a little traction) than a PowerPoint that poorly explains the implications ("lipstick is a 40 billion:ur business, if we get just ONE PERCENT")

anyway.

The trading desk I worked on, many years ago, did not hire folks wih MBAs either. Inheritance?

Small world, I was an editor at memepool. Good to see you're still around in the trenches here after the big delicious sale.

Yay! I should reboot it. Something that isn't eithet delicious or reddit.

I'd love to understand the reasoning behind this generalization. Do you object to the content of the MBA curriculum? Is there data that suggests a causal relationship between founders with this credential and business failure?

I just don't like investing in tech startups where the founders have neither engineering nor product skill.

What do you mean by product skill?

product is engineering (as in negotiation of constraints) as much as building. i look for that.

I had the same reaction initially, basically thinking 'good riddance', but then stopped for a second and realized they are talking about tech, not start-ups.

I have a lot (too many, more than I ever thought I'd have) friends who are MBAs, and their is a place for them in larger technology companies, they just shouldn't be involved in developing breakthrough products. They are taught to manage big business and eke efficiency out of large systems, start-ups don't fit that mould.

Don't forget that only ~1% of startups develop breakthrough products, because only ~1% of startups break through.

Not sure if you are just trolling, but I'm pretty convinced that ~100% of startups are developing 'breakthrough' products. For various reasons only ~1% turn out to be very successful at it.

From an after-the-fact standpoint it's easy to point at the losers and say all kinds of nasty things about them. But since you can't reliably pick the winners of tomorrow, nor can the losers reliably pick themselves (they are usually both at different times) any sentiment towards failed startups being a waste is really just a misconception.

5 minutes of browsing on producthunt should change your opinion that 100% of startups are developing breakthrough products.

Maybe it'd be more precise to say 100% of startups believe they're developing breakthrough products?

I'm wondering if we worked at the same company.

We got press in TC in order to reach out to the "nerds".

"they all sucked at tech but thought they didn't"

Gah...these are the worst people!

The worst is one they spew out all their personal assumptions as though its the divine word that all must obey and follow.

People who really know tech share the same trait; they listen and learn. Every engineer knows that learning new things is part of overcoming challenges.

When someone acts like they know it all, that's usually a good indicator that they don't know shit.

I've known engineers who fit your MBA description and MBAs who fit your engineer description. It's about people in the end.

Obligatory link to Hunter Walk's great post on exactly this point: http://hunterwalk.com/2011/12/24/its-fine-to-get-an-mba-but-...

Damaso Effect.

http://michaelochurch.wordpress.com/2014/01/05/vc-istan-8-th...

https://michaelochurch.wordpress.com/2014/10/23/an-insight-o...

My attitude toward these numbers is... how the fuck are we not organizing? If a straight-out-of-school Stanford MBA is worth $300k, then I'm worth $750k at least on that piece of data alone, and I'm not the best programmer out there. What in fuck's name are we doing posting here, with evidence like that of the need to organize?

More (highly relevant, IMO) blog posts on the topic of what engineers are actually worth:

http://michaelochurch.wordpress.com/2014/05/24/whats-a-mid-c...

http://michaelochurch.wordpress.com/2013/11/03/software-engi...

Your sample size is too small to judge all Stanford MBAs. This is Hacker News. Please bring more substance to the table.

Part of the point of boards like this is to be able to share anecdotes from the field. That's why I come here. While your point about sample size is true please don't discourage this.

I interview some college kids and that is sometimes the case.

"I don't know technology but I want to manage people".

Or some stay in the CS degree but switch focus to "UI design" or "HCI" and so on. It is ok to switch, but after a talking to a many it seem the reason is that a few core CS classes were getting too hard to they switched.

Away from tech, back into finance. It's not like they're going into manufacturing or something useful.

"Finance was able to reclaim its No. 1 position at Stanford because of some extraordinary pay packages it dangled in front of the newly minted MBAs. Graduates who accepted jobs in private equity—12% of the entire class—pulled down median base starting salaries of $170,000, 36% higher than the $125,000 median base for the entire class and $20,000 higher than last year’s $150,000 median in private equity.

The PE crowd also grabbed some of the highest signing bonuses and guaranteed other compensation. The average sign-on bonus in private equity was $46,250, highest of any sector..."

Yeah, it's not like those useless folks on Wall Street have ever helped manufacturers or tech companies. Oh wait[1][2].

[1] http://www.goldmansachs.com/our-firm/progress/titan/

[2] http://fortune.com/2014/10/08/wellington-management-gets-int...

Help me out here, because I have a very tough time imagining a world where society is worse off because financial companies didn't exist. Is it really the case that if Goldman Sachs didn't exist, Titan International somehow can't exist either?

Companies don't exist to improve society, but to provide something of value to their customers in exchange for money. If society benefits along the way, that's a happy coincidence.

A plumber will fix your leaky sink, and that benefits you personally -- whether it benefits society or not is really beside the point. Similarly, investment firms and hedge funds will benefit their clients by investing their money and (hopefully) getting them a good return.

Well some companies exist not to provide something of value to customers but rather provide increased earnings per share, better P/E ratios, etc to stockholders.

Stockholders ARE their customers.

Relevant: http://hbr.org/2014/03/choosing-the-right-customer/ar/1

"investment firms and hedge funds will benefit their clients by investing their money and (hopefully) getting them a good return"

Ideally, but in the really-real world they often fuck their clients because conflict of interest rules rarely exist or when they do aren't enforced.

Goldman Sachs (already mentioned in the thread) being a prime example of this, eg the Abacus deal, the whole "muppet" culture, etc.

So how do they still have clients?

State-of-the-art salesmanship.

Sure, but as a society we (should?) also try to discourage business models that significantly harm society without benefiting it in any comparable way. Hitmen provide a value to their customers in exchange for money, doesn't mean we need to allow it as a valid business model. Granted, that's a extreme example and with financial firms is often very hard to know which of their many business models provide a net benefit, a net neutral or a net harm to society. But the base premise of "well, companies should be allowed to act as unethically as the hell they wish" is not really a good or reasonable premise to accept.

By definition, profit benefits society. Customers voluntarily buy products which companies sell voluntarily (at least in the typical case there are corner cases of course). Both parties profit which is evident by the exchange taking place.

Society is made up of individuals, if individuals profit so does society.

Companies exist because there's opportunities for profit. So I'd argue they do indeed exist to improve society. On a larger scale one might say they improve society by allocating factors of production to the places where they are most useful.

> By definition, profit benefits society.

No.

http://3.bp.blogspot.com/-v4zI8gKuFug/T-vpFAjdXeI/AAAAAAAAB-...

More formally, Nash equilibria != global optima. It is not uncommon for companies to spend money destroying value for their customer -- and to profit from doing so! See: keurig DRM, speed grading in the semiconductor industry, Goldman Sachs cornering the Aluminum market, Enron shutting off power to create the infamous rolling blackouts. There are recordings of Enron traders literally giggling as they call plant managers to order them offline at times of peak load.

Profit is about leverage, but value creation is only one of many ways to obtain leverage, and it's often not a very reliable or effective way (just ask Bengali sweatshop workers). Other methods for obtaining leverage are generally "evil" and most certainly do NOT benefit society, but they are very effective, especially in industries where best-practices have long since solidified and the only way to gain a competitive advantage is a sprinkling of "black magic". The most obvious dark patterns are illegal, but the lethargic whack-a-mole from our legislative and judicial branches is nowhere near sufficient to stem the tide.

You've shown profit is not necessarily optimally beneficial for customers. You haven't show that it isn't still beneficial.

It's not impossible that redistributing piles of cash from California citizens to Enron shareholders, employees, and execs in return for intentionally cutting off electricity was a net benefit for society.

But I doubt it. And so should you. Focusing on the fact that we can't finish the proof without an assumption along the lines of "financially incentivizing companies to treat customers poorly is bad for society" is very much in the same vein as arguing that we can't prove one way or another if there will be an alien invasion in the next year => let's assume there's a 50/50 chance.

I dont have sympathy to how the finance sector has behaved historically, but this opinion can only come from ignorance. Its like a 50 year old saying working for technology companies is useless because he can live without snapchat and whats app. Finance is the study and work of value, which is enough to believe it has important applications.

I have no problem with that statement unless you are working for a venture backed company yourself. The origin of a lot of growth in the valley is due to finance companies funneling money from pension funds and other institutional investors into VC firms. If it wasn't for the FED printing money like crazy and institutional investors scrambling to get any return on their assets Silicon Valley wouldn't have grown nearly as much in the past (and would also have had fewer bubbles).

Not Goldman Sachs specifically, but without financial companies in general, specialized companies could not grow or persist for very long.

That's a false dichotomy. Obviously finance can help. Vitamin A in small amounts is healthy too. I think most people realise this.

A more interesting question is whether finance the past 15 years has become a net loss for society, not whether it sometimes does useful things.

Highly unlikely. There is fat that can be trimmed, but the modern economy would collapse without the finance industry.

Given that it does bring the economy to the brink of collapse every 10 years or so (and requires massive bailouts), I'd say there's more wrong with the finance industry than a little extra fat.

A 3-4% dip in GDP and a doubling of unemployment is nothing compared to what would happen without a finance industry. It's one of the bedrocks of civilization. If you want a historical perspective, research how England's finance industry was closely linked to its rise as a world power.

No one is saying get rid of finance, just put it back in its cage and hit it with sticks when it gets too uppity.

This is like saying that there is something "wrong" with computers because they sometimes crash.

A liver is a vital human organ. A liver that's three times normal size is a sign of a very sick human.

Take a look at what happened to Titan's stock, and shareholders, after that deal.

For background on what Goldman Sachs has become, read "Why I Left Goldman Sachs: A Wall Street Story", by Greg Smith. This was recommended to me by an angry former Goldman Sachs customer after they tried to put him into a sketchy deal.

Goldman Sachs helped Titan raise capital. If you believe that Titan hasn't performed well as a company, how is that the fault of Goldman Sachs as opposed to say, Titan's senior management team? Do you have any knowledge of trends in the global tire market? Do you know about tire subsidies from the Chinese government and how companies like Titan may have been impacted by them? What do you think would happen to Titan if it didn't have access to capital?

Wall Street firms structure countless financing deals for thousands of companies every year. Some of those companies are in better shape and better managed than others, and thus some of them are able to tap the capital markets on better terms than others.

As for the book you reference, I'm sure Goldman Sachs, like any company, is not perfect. But judging a company based on one book written by a single person with a single perspective and that wasn't exactly the recipient of universal praise is silly. If Goldman Sachs, which has been around since 1869, offered nothing of value, took advantage of its clients, and was in fact responsible for leading them to their demise, you'll have to come up with a good theory as to why it's still in business.

Who exactly do you think is bankrolling the party in SV?

That is a very naive view. Guess where the money for the IPO parties is coming from?

There's a weird attack on MBAs for not being good at creating value in tech. But the biggest, most successful new tech companies over the last few years are hardly valuable in the grand scheme of things. Social networks are just new advertising platforms. Sure, there are companies like SpaceX, but I'd imagine the vast majority of people here on HN are not building anything so significant.

So why the outrage? Live and let live.

Well, shit. How are any of us toiling away in tech going to create value now?

I guess the primary function of private equity is to run companies into the ground for a quick tax writeoff. And destroying viable companies efficiently is something to which MBAs are uniquely suited.

at best, an MBA signals that a person does not know what job they like and are in for a career change.

it can augment existing, core skills. haven't gotten/seen a candidate where an MBA was the core of his/her skillset.

if you get an MBA at very expensive institutions, you also get access to a network of likely-minded, rather rich people.

personnally, if you're already in tech and love it, getting an MBA seems like a giant waste of time.

With any group of people, you always have a spectrum of talent and usefulness. I've worked with Stanford CS grads who would shock you with the inability to produce anything useful without handholding and worked with Stanford MBAs that I was surprised could even get their pants on in the morning. The problem is that the admissions process for most of these programs is less about the numbers and more about your ability to network or tell a compelling life story. If you can tell a story that impresses the admission folks, you're likely to get in. Sometimes this is reflective of actual talent, sometimes its a reflection of great story telling.

That being said, there a few incredibly talented and intelligent people in each class that will continue to allow these types of institutions hold the prestige that they do.

What on earth is a guaranteed bonus? If it's guaranteed, then it's not a bonus.

I've seen numbers like this before for PE. They make some assumptions about the fund's returns to come up with the $300K in "guaranteed bonus".

An 8% decrease from one year to the next isn't very newsworthy IMO. This trend may not continue next year for all we know.

Good riddance

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