Does Your Silicon Valley Career Need a MBA?

THE QUESTION

Should I get a MBA (Masters in Business Administration) degree? Many times over the years in Silicon Valley I’ve been asked to give advice as to the value of a MBA. Often the person asking is in the first 5–10 or so working years of their career and has reached a decision crossroads, but occasionally they are older. I did this myself, starting when I was about 28, and feel that it has been net positive for my career.

Having recently again shared my insights with a colleague, I decided to summarize an overview from the perspective of a working professional in Silicon Valley who completed a MBA 16 years ago, and has since built a career in high tech companies. My observations are based on the American MBA system, in the context of Silicon Valley and technology companies and startups. If you are evaluating if a MBA degree is a good investment for your career, then this is for you, especially if you live in Silicon Valley or work in high tech.

WHAT YOU GET

The MBA is designed to be a terminal degree, created to provide a comprehensive and final education on the essentials of running of a corporation. It is a graduate level degree that essentially gets you two things. First, you get the degree itself which is comprised of coursework in core disciplines of Finance, Accounting, Management, Marketing, add more. You will have the ability to choose electives that match your interests and drive the focus of your degree. The second key outcome is the network you can build while in school and leverage for years to come. Your network can account for a significant, long-term portion of your MBA’s value. Provided you show up and do the work, you will get the degree. There is no guarantee you will get a network. A valuable network is the result of choosing the right school, and more importantly your effort to build that network yourself while you are there.

MOTIVATIONS

So why should you do it? It’s a big investment of your time (1.5–3 years) and money ($100–200k). In my opinion there are four reasons to get this degree. The best of these in my opinion are for career opportunities. These are as follows:

Acceleration: If you are interested in switching careers, or transitioning into a management or leadership role from a career started focused on a single discipline, the MBA can be a good enabler. E.g. If you’re an engineer looking to be a product manager, or a marketer who wants to manage a team or someday be an executive. Learning business foundations can make you more attractive to take on additional responsibilities by adding to your cross-functional skill set.

Price of Entry: Some organizations won’t hire or promote you for management roles or high-influence, high-leverage roles without a MBA. This creates an advancement ceiling. I have met many people who were told that the MBA was a requirement for management, or to ‘come back after you get your MBA’ for product manager roles. This may be a form of unnecessary gate-keeping in some cases. In other cases, organizations are looking for candidates to have a minimum level of education to be good fits for these roles.

Prestige: Some see the degree as a marker of prestige or club membership. I’m not a fan of this. Furthermore, it’s a lot of work to simply say you have it. I do have some reason to believe that there is an element to membership when it comes to a prestige school however. Wharton, Stanford, Harvard, etc. have strong brands, strong educations, and strong networks. As such, membership has its benefits including access.

Earning Potential: Some pursue the degree in order to earn more. Depending on your career choices this may or may not actually occur. If you are more qualified you can earn a better income, but it depends on the company and role you choose. Career progress itself may be more strongly correlated to higher income than the MBA degree. There are many careers that can provide good incomes without this degree. If the MBA accelerates or unblocks your career advancement, then this argument makes more sense.

TIMING ROI

If you’ve decided that your motivation and goals are worth your time and money, there is one more critical consideration. That is timing. A MBA degree at 25 years old and one at 40 years old have very different ROI (return on investment) horizons. In either case you learn the same thing, but the difference is what you can expect to get out of it.

A 25 to 30-year old graduate has a full career ahead of them to see the resulting benefits. A 40-year old who pursues an executive MBA has less time, however that target student has already started and achieved career success which they are building upon. At the executive MBA level, this cohort is transitioning at a career midpoint with the leverage the MBA can give them.

For a traditional 2-year MBA, the common student age range is ~24–34. For an executive 1.5-year MBA, the range is mid-30s to mid-40s. Age and career trajectory are key factors. Choosing among them depends on where you are in your career, your age, and your willingness and ability to invest in it. A 50-year old will likely never do a traditional 2-year MBA since it won’t impact the remainder of their career meaningfully.

SELECTION

Deciding where to go to school has a few inputs, only a couple of which you can control. Regardless of where you’d like to go, you have to first ask yourself, ‘Where can I get accepted?’ MBA schools have competitive entry. The more renowned the school you apply to, the more competitive they can be to get into. Good schools are looking at candidates who are a match for them starting with a student’s academic history and GMAT scores. In addition, work history and supplemental school goals are considered.

Next, assuming you’re a good fit, you’re demonstrably intelligent, and they want you, the next question is, ‘Can you afford it?’. The MBA degree is not cheap. Depending on where you go, you’ll trade a significant amount of time and the equivalent of a 1–2 luxury cars in cash. Many students take loans out to afford tuition. The lucky few are partially subsidized from their employers or win scholarships.

Next is the quality of the school. My personal opinion is that you should go to the best school you can get into and afford. This may sound elitist but given the cost and time investment, I argue you will want the highest ROI you can get. School brand value matters. Unfortunately, the quality of the school you can get into may already be limited if you don’t have a strong academic history. Harvard and Stanford aren’t taking C students.

Lastly, choosing a traditional program or an executive program is a matter of where you are in your career. 22-years olds with little work experience won’t be considered for an executive program and 50-year olds won’t likely be considered for a full-time, 2-year degree.

MBA DEGREE OPTIONS

There are a few different types of MBAs, broadly categorized by duration and value. Selecting the program for you is a combination of your lifestyle and career needs, and the amount of dedicated time per week you can spend on your education to the exclusion of other activities including work, and cost.

The Full-time Traditional MBA

Duration: 2 years full-time
Cost: Tuition, housing, food, materials
Opportunity Cost: Lost wages and career progress
Getting In: Competitive entry
Perspective: As a younger professional, a work interruption now may have the least impact on your career long term while you invest in yourself. A full-time program may allow you to retain some sanity while providing some time for personal relationships.

The Part/Night Time Traditional MBA

Duration: 3+ years part-time depending on your course load
Cost: Tuition, materials. Food and housing are assumed to be covered by your career role as before.
Opportunity Cost: Significant lost leisure and family time
Getting In: Competitive entry
Perspective: As a working professional this allows you to maintain career and pursue school at the same time. Caveat emptor: Together this will consume all of your time for three years.

The Executive MBA

Duration: 1.5 years part-time
Cost: Tuition, materials
Opportunity Cost: Significant lost leisure and family time
Getting In: Competitive entry, with career milestone prerequisites
Perspective: As an older established professional, you likely already have significant career responsibilities which will remain and possibly grow during this program. You may also have a family who you will be taking time from. The increased burden on your spouse will not be insignificant.

MBA VALUE SPECTRUM

In addition to the general structure of the program you choose above, you must also choose where on the value spectrum you want to go. The higher value, the more expensive and exclusive they can be. Access to your target schools will be primarily gated by your undergraduate GPA, and your GMAT scores. Low scores will automatically exclude you from the best schools. Some high-status institutions also consider intangibles like family legacy, which generally means someone in your nuclear family also graduated from that university.

Prestige MBA

This is a program at an institution with an established, high-value, high-ROI brand. This brand is evidenced in the alumni and where they work, and the high-leverage network opportunity they represent. These schools are active in their alumni programs and invest heavily in them. These schools also invest in highly-qualified faculty and professors. Entry to these institutions is very selective and typically require a strong, proven academic history and GMAT test scores. These schools are often full-time only.

Value MBA

This MBA can be a traditional full-time or a part-time school. Entry is still selective and their reputation is still considered good to very good. They cost a little bit less and the market will still recognize MBAs from these schools well. The investment can still be significant, but lower than a prestige school while still offering a good return.

Bargain MBA

This is a MBA degree from an unbranded or unvalued institution. Does this mean you learned less than a prestige MBA? Yes, likely it does. Your professors are not of the same caliber. Your resulting network may be weak or nonexistent. You may have saved money on this degree, but the return expected is also low. In the worst case, you will get no return on investment and your industry will not perceive you as a more valuable working professional. These degrees may actually give you negative value signaling instead of the career boost you may have wanted.

POST-MBA TRANSITION ZONE: ACHIEVING ROI

You’ve spent the money, lost hair pulling someone else’s weight in your 15 different group projects, spent either all your time for two years, or spent 2 nights plus Saturdays every week for three years in classrooms, lost touch with your friends because you had no time for them, went into debt for tuition, and more. Now what? When do you start getting the return you hoped for? This is the post-MBA transition zone and it warrants discussion. In discussions over the years with one of my oldest friends who also got his MBA when I did, I believe there is a leverage zone of 1–1.5 years after you finish the degree to level up. This includes the new role, better salary, more responsibility, or promotion. I.e. The return for the investment. If in a year or so you don’t make your move, you might be seen as the person who already had the MBA and not as the go-getter ready for more. Assuming you pursued the MBA to improve your career, plan to level up long before you graduate to use the leverage and opportunity available to you.

LEVEL UP IN PLACE

Keeping the same job without a plan and just carrying on working will result in low likelihood of change in title, responsibility, or salary. Remaining at the same company isn’t bad in itself, but you can’t just hope your company notices you finished the degree and appreciate you more. After all they might think, aren’t you doing the same thing you did before? Without a plan put in place a year or so in advance this might happen. Create a plan with your boss and management chain, letting them know what you’re working on, and how much more qualified you will be to add value to the company as you learn. Get them to plan on using you as a high-value employee early, and let them visibly benefit from your value increase. You might even agree on milestones along the way to improve your work contribution and compensation. If they don’t agree that you will be a better company asset, this is a strong signal to leave. Don’t rush though. Stay in place during the MBA to reduce life stress while you also study, and plan to transition to a new company when you finish.

LEVEL UP AND OUT

In my career, my biggest role and compensation changes were always the result of changing companies. Sadly, many companies don’t see in-place talent for their market value, or worse, are silently aware that their market value is much higher than their comp scale and hope they remain blissfully unaware. Whether you pursue a full or part-time MBA, get prepared very early for what you will do when you graduate. Finding the right role and the right company take time. Use your network to make connections into target companies, and grow your network at these targets. Networking is not transactional. Relationships take time to grow and mature.

In either case, sometimes you will find that the perception of a MBA is more warmly received when your leadership has a MBA. This is a strange but sometimes true confirmation bias that can work for your benefit.

THE SILICON VALLEY MBA DEBATE

The MBA is designed to give management education fundamentals to early professionals headed into management. As such, it’s a good fit for corporations. Curriculum designers have only begun to think about entrepreneurship in the last decade or so. I’d argue upon long reflection that the MBA isn’t strongly indicated for entrepreneurs. With the influx of startup incubators, and the long presence of entrepreneurs across time who pursue their dream regardless of education, the MBA might be a distraction of time and resources. At a minimum, if you have strong building skills, desire, and endurance, you don’t need to wait for a degree to open the gate for you.

In the tech startup industry, some consider a MBA to be a negative or even a disqualifier. I have mixed feelings on this based on two beliefs. The first belief is, the MBA provides valuable and fundamental business basics that many startups lack. Companies, even startups, require many skills including those that come from business training. Many startups have failed hard due to missing business fundamentals like a viable business model. The second, contrasting belief, is that the MBA itself might not be exactly what a startup needs in its initial pre-seed and series A run. A technology startup has to run with all their effort to create, validate, and build a sustainable idea and hope the market likes it enough to reward it with traction. In the intense, early building phase you need a lot of engineers. Business people can also directly provide value early, but some in the startup ecosystem view them with skepticism. How you feel about this dichotomy may depend on what side of the engineer vs. business person fence you’re on, and both have their biases.

MAKING THE DECISION

Any MBA degree is a significant investment of your time and money. During this process, you may suffer stressed and unattended relationships, or career delay by not working. As a post-undergrad who has worked 3–5 years, you might not live with your parents any longer; making coverage for rent, groceries, and student loans difficult. This means more student loans, or working and studying at the same time.

On the plus side, you will learn a lot, forge new relationships, and prepare yourself for your next career stage. The upside in terms of job opportunities, responsibilities, and income can drive career long benefits.

Therefore, if you believe the following, I recommend choosing the highest-value school you can get admitted to and afford.

1. You’re in the right age range for your target degree (traditional MBA, or executive MBA)
2. You believe this is a value-add for your career long-term worthy of investment in yourself
3. You believe you can get admitted with your grade history and GMAT score
4. You can afford it directly or with financing

If you are unable to get into a value or prestige school based on academics or career, I’d advise you to think carefully if a bargain school will actually give you the benefits you want before taking this option. If you can’t afford it, but still believe it’s valuable to you, consider a loan. Within a few years of graduating, considering you enter a profession the market values monetarily, and you aren’t already swamped with debt, there is a strong likelihood that you will earn enough to pay off the loans within a comfortable number of years.

MY PATH TO MBA

I completed a part-time, value MBA at Santa Clara University in the heart of Silicon Valley in 2003. It is an accredited school and boasts attendance by working professionals deeply embedded in Silicon Valley. A part-time MBA, SCU ranks well nationally and regionally, and is respected by Silicon Valley companies. There are other schools in the region, and several prestige MBAs including the well-known Stanford Graduate School of Business, Wharton San Francisco, and University of California at Berkeley, Haas School of Business. Outside of Silicon Valley there are many more to choose from.

I began to consider a path towards the MBA when I lived in New York City after my undergraduate degree for a couple years. Having moved to NYC from from a small town before having a job, I quickly found temp work to cover my bills. I didn’t have a network for introductions so I worked and searched outside-in for career roles at the same time. During this time I interviewed 30 or so companies. It was 1997 and at this time the Internet barely existed, and it didn’t help much with job search. I remember using Careerpath.com which was nothing more than online reprints of newspaper job listings. I also used the actual newspaper. This sounds amusingly barbaric compared to finding roles in 2019. At the time, many print listings weren’t even from companies it turned out. Placement companies would post roles to collect resumes and test people for basic competency on Microsoft Word and Excel. It was toward the end of this period that I started researching how to make myself more competitive and get into closed doors. My career was not taking off and I was working a dead-end job. Career acceleration and price of entry were my motivations. I began a study course for my GMAT.

Around the same time, I took a position at a French international bank in the corporate banking department. This appeared more promising, although the work was fairly repetitive. I started my first year of MBA part-time on the east coast after work during this job. At the same time during the summer recess, I took some basic HTML courses out of interest. To be honest, I still didn’t know I’d work in technology or what I’d actually get out of the MBA. After one year I took an opportunity to move to Sunnyvale, California. The bank job was rote and didn’t pay much. The real reason to leave, however, was the recognition that this role offered no opportunity to progress in the organization.

In California in 2000, the technology market was booming and my basic HTML, CSS, and FTP skills were just enough to get me a tech support job at Yahoo!. I was lucky to support a product that was complex and allowed for on the job learning. Fun side note, the product was Yahoo! Store, which was the new name for Paul Graham’s Viaweb acquisition. Paul later became even more well-known for launching Y Combinator. No, I never met him. I transferred to Santa Clara University and again worked and studied part-time to finish the MBA with a focus on the software industry and innovation. Being a transfer student, I chose SCU because it was local, had a great reputation, offered a part-time program, and because they let me in. Here I started to see the power in a network when a fellow student made an introduction for me at Sun Microsystems, which landed me an internship role in software project management. To accelerate this story, I progressively leveraged up my technology experience and MBA into progressively more complex roles, moving into product management along the way.

The MBA created an opportunity to work hard, meet a network, and forge my various, vague self-improvement and career interests into a focused set of goals. The experience did open some doors as I had wanted it to. It also accelerated my career by bringing together education, the ability to meet like-minded peers, examples of success models, and more. Over the years, progressively moving to better roles was still not easy. An open door does not mean you will get welcomed to walk through it. That still takes work and industry is competitive.

Ultimately it is challenging to get hard data, even from your own career, to be certain a MBA was worth it. For me, however, I strongly believe it was a valuable investment. Over three years I transitioned from an anonymous, undifferentiated young career seeker with a temp job and no benefits in NYC, to a career in software product management in the cradle of technology in Silicon Valley. The MBA helped enable that transition both materially with the degree, and mentally by creating opportunities for me to see and develop ideas and goals. I started the MBA with a vague idea that it would improve my career, and completed the degree with additional qualifications, a strong local Silicon Valley network, good friends, and a much clearer idea of what I wanted to do next, and in the foreseeable future.

If you are considering this degree investment, I recommend understanding your motivations, then determining where and how it will fit into your life needs with the heavy time investment, and finally assess the value for the price and reputation of the school you are targeting.

ABOUT LUKE

Luke Congdon is a career product manager living and working in Silicon Valley since 2000. His areas of focus include enterprise software, virtualization, and cloud computing. He has built and brought numerous products to market including start-up MVPs and billion-dollar product lines. Luke currently lives in San Francisco. To contact, email luke@lukecongdon.com.

Originally published at lukecongdon.com on April 12, 2019.