GMAT Score Inflation
Maria |
March 3, 2023

If you are an aspiring MBA applicant who has concerns about your chances of being accepted given the recent trend of “GMAT inflation”, this episode is tailor-made for you. In this episode of Business Casual, our host will delve into effective strategies that can help applicants improve their chances of securing a seat in top-tier MBA programs despite the ongoing trend of GMAT inflation. The episode will cover valuable insights and perspectives on the impact of GMAT inflation on the MBA admissions process, as well as practical advice for navigating this highly competitive landscape.

Our esteemed hosts, John, Maria, and Caroline, will share their expert opinions and perspectives, offering valuable insights on how to build a strong application package that highlights your unique skills and experiences, and stand out from the crowd.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host Maria Wich Vila and Caroline Diarte Edwards. I’ll remind you again, Maria is the founder of Applicant Lab, and Caroline is the cofounder of Fortuna Admissions and the former Head of Admissions at INSEAD. I want to talk today about GMAT scores. Obviously, there’s this great obsession about standardized tests when you apply to an elite MBA program that is highly selective, and standardized scores count for a lot. And that’s because it’s one way to compare candidates from all over the world with others, because sometimes GPAs aren’t as good a reflection as a current standardized test score, even though GPAs are earned over three to four years, as opposed to a test score which is earned over 3 hours or so of a test. But what’s really interesting here is how GMAT scores have been climbing. So in the US. Alone, people who apply to US. Programs now are applying with ever higher GMAT scores. The average score of GMAT exam for those who apply to a program in the US. Is now 658. That’s up 45 points from 613 only five years ago. And just as interestingly are those who score 700 and up. In the US. In testing year 2021, roughly 23% of the exams had scores of 700 and up. That’s compared to only 14% five years ago. That’s a big jump and in Australia and the Pacific Islands, 32% of the people taking the GMAT exam now have scores of 700 and up. Maria, what do you make of this?

[00:02:06.500] – Maria

Though I think there are probably a lot of factors at play here, and I’m sure Kennedy, you, and all three of us have a lot that we could talk about here. I think the first one that jumps to my mind is probably that more and more people are taking the GRE as an option, a viable option, to get into business school. When I first started looking at MBA admissions just over 20 years ago, the GRE was something that you pretty much only submitted if you were applying to a dual degree program, and so you didn’t want to have to take two standardized tests. But it has become increasingly a viable alternative to the GMAT, and in fact, not only viable, but I would go so far as to say an attractive alternative to the GMAT, especially for people for whom standardized testing may be a hurdle or something that they don’t excel at. One statistic that I pulled up is that roughly, sort of ten years ago or so, about 12% of the incoming class at a Harvard Business School applied with a GRE score. And this most recent year, 30% applied with a GRE score.

[00:03:05.840] – Maria

So it has gone from being a niche thing that a few candidates could explain away, oh, here’s why I didn’t take the GMAT, because I had already taken this other test, and so why I have to take two? But now it’s actually become a viable, if not more attractive, alternative because I do believe that, all things considered, the GRE as a quote unquote, easier test to take. And even if it’s not easier, I also believe that there is sort of a psychological forgiveness element that happens if somebody applies with a GRE score that is not stellar, because the GRE has not been consistently used within the MBA admissions committee community. If I look at a school and I say, wow, their average GMAT used to be 730, and this year it went down to 710, I can immediately and intuitively know that’s a huge difference. But if I look at a school’s average GRE scores and I say, oh, their average went from 164 to 162 in quantum verbal or what have you, that I have a less of a I’m like, well, it only sounds like a two point difference. That’s not a big deal, right.

[00:04:06.830] – Maria

So until I think the market overall, it’s interesting. I know I have some numbers, but I also have some non numbers and some more emotional psychological arguments. And I think that because the GMAT is scored, it goes up by increments of ten versus in GRE, which goes up and down in increments of one. And because I think that an increment of one difference in the GRE is a much larger swing and percentile difference versus a ten point swing in a GMAT score. You know, I mean, some of the top GMAT scores, you’re the 99th percentile if you have like a 767, 77 to 87, and they don’t report it within a different granularity of 99.2%, 99.8%. So, in other words, because of the way how the GMAT is scored, I just think that it’s a lot easier if you’re not a great test taker to say, well, I just, you know, I got a 161 and the average at the school is 163. But that’s pretty close, right? Even if you were to then translate that same exact score, that same exact percentile to a GMAT score, it might be like a 40 point, I don’t know exactly what, but it’ll be a huge swing where we would all step back and say, whoa, that’s a pretty big difference.

[00:05:13.760] – John

But for GRE, just yeah, Maria, that’s a really good point. I’m going to just say ten years ago, can you believe it? We ran a story. It’s called schools accepting lower GRE scores. And we proved that, in fact, if you use the conversion charts put out by Educational Testing Service, which is the administrator of the GRE, basically schools were widely accepting much lower GRE scores than GMAT scores. One example was Duke. Now, back then, the the equivalent GRE score well, rather rather, the equivalent GMAT score for the those who submitted Gres was 640 at Duke, when the average GMAT score back then was 690, a 50 point difference. The difference at Michigan ross was 33 points. At Washu Olin, the difference was nearly 100 GMAT points. So I think this trend remains true today. Schools are much more willing for whatever reason. Maybe part of it is the reason you just mentioned. You know, a one or two point difference doesn’t feel as big as a ten point difference on the GMAT. That’s part of it. Also, I think that many schools are under the mistaken impression that US news does not incorporate GRE scores in its waiting for its ranking.

[00:06:50.050] – John

They didn’t back ten years ago, but they do now. But how they wait it is sort of a bit of a mystery. It’s not really explained. So I think a lot of schools think they can take lower GRE scores and not suffer in the rankings. So that’s really interesting. We should run that analysis again and see what it’s going to look like.

[00:07:13.050] – Maria

Just really quickly. That stat that you just cited where if you take the ETS GRE to GMAT score converter, so the average GMAT score for HBS for the most recent class was 730. If you take their average GRE score and put it through the same score converter, I believe it’s a 690. And when you look at percentiles, a 730 GMAT score is 96 percentile and the 690 GMAT score is an 84th percentile. So about a 10% swing, which is a pretty big difference.

[00:07:49.380] – John

That’s fascinating. Now, it is true that more non traditional students take the GRE and more women take the GRE, and that could have some impact on these numbers as well, I would think. Caroline, what’s your take on these inflated GMAT numbers?

[00:08:08.410] – Caroline

Yeah, I do think there is an element of self collection going on here. So if you say people know that average GRE is are often lower than the average GMAs, and therefore if I’m not a good test taker, then I probably should go in the direction of the GRE. Although, having said that, you make a good point that a lot of the GRE test takers, there is a different profile in the pool, right? If the GRE pool versus the GMAT pool, and schools know that and they are often more flexible on their expectations of standardized tests from candidates who bring something to the classroom that the management consultants and the investment bankers may not bring to the classroom. Right. So additional perspective, additional more diverse experience, or more diverse profile. And I think therefore that if you are one of those more traditional candidates, you might not get as much leeway as you would otherwise expect if you take the GRE.

[00:09:13.390] – Maria

Right?

[00:09:13.720] – Caroline

Because the schools are maybe taking candidates with lower Gre’s, but it’s also because those candidates have those nontraditional profiles. And therefore, if you have that more traditional profile, then you may be disappointed. If you apply with a GRE that doesn’t match to it doesn’t map to such a strong GMAT, you might not it might actually diminish your chances versus a candidate with a similar profile who applies with the GMAT and with a strong GMAT. So I think need to keep in mind the difference in profile of the test takers. But I think there is increasingly self selection going on here with many schools not requiring the test or test optional. And this is also happening in the undergraduate market in the US. As well. There’s a lot of inflation of SAT scores because students are not going to take the SAT if they don’t have to, and they’re not going to be good test takers. So I’m not sure where we end up.

[00:10:15.800] – Maria

Right.

[00:10:17.670] – Caroline

It’s an incredible increase that you’ve highlighted in this article. It’s remarkable how much it’s gone up over the past five years. And is that going to carry on? Our candidates going to continue to self select, that they will only take the GMAT if they think they’re going to do well on it and therefore the average will creep up and up? I’m not sure that and at that point is it a very useful benchmark for admissions, right? Because if people are only taking it if they’re good at the test, then it’s not a common data point. The value of having something like the GMAT or the GRE, especially when you’ve got a very diverse pool, and this was very true when I was working at Inciet. You got a diverse pool of people who come from all different educational systems, a lot of different countries, a lot of different backgrounds, incredible diversity. The GMAT can be very useful as one common data point that people have or the GRE, because everything else is completely different in their profile. And it’s very difficult sometimes to compare candidates with very different backgrounds. And if you’re getting a lot of applications from candidates who haven’t got the test or have decided to take it only if they’re going to do well, then I’m not sure how useful that is as a data point to compare people.

[00:11:43.730] – John

True. All you have to do is look. At USC’s Marshall school, all right? Their latest enrolled MBA class had an average GMAT of 732. That’s up 25 points in two years alone. So looking at the overall inflation of GMAT scores gives some understanding of how is it possible that the USC Marshall could have a 25 point increase in the class average GMAT score to 732 against Harvard 730 median? How is that even remotely possible? Well, it’s because more and more people are scoring 700 and up on the test.

[00:12:28.670] – John

And it seems I mean, if you. Go to Australia and a third of the people are scoring 700 and up, and in the US alone, it’s 23%, it doesn’t feel as special as it once was. And of course, Maria, you’ll point out that MBA admissions is holistic. Standardized test is one of many elements that are considered. How important an element today, do you. Think standardized test is.

[00:12:56.420] – Maria

Well, to Caroline’s earlier point, I do continue to think that standardized tests play a valuable role, perhaps not as a benchmark across the entire applicant pool. I do think that standardized tests should be seen within the context of a specific candidate’s upbringing and their competitive bucket. So, for example, someone who grew up in a non English speaking country and was educated in a non English language, I think it’s perfectly acceptable for that person to have a lower verbal score. That is not, to me, an indicator of their intellectual capacity. So I do think, though, that there is absolutely a room for the standardized test because you have so many different candidates from so many different backgrounds, and so these different universities all have completely different grading systems, and it’s a huge nightmare to try to figure out some sort of a way to measure them. At a certain point, you do have to choose better versus worse candidates because otherwise you can’t accept 100% of them. And so in that context where people do have to be chosen and some people have to be not chosen, I think it’s a perfectly fine thing. And if the GMAT does end up going away, I would hope that there becomes, if not some other thing to replace it.

[00:14:15.720] – Maria

Perhaps it’s not a test. Then in that case, I would hope that there would be a way to determine with more transparency what does make for a strong competitive profile. So just to make something up. If it’s not about test scores, maybe it is about in order to be competitive for a school, you have to have had a management experience of at least two years. Or you have to have had some experience with dealing with your company’s senior management and impacting senior management or some some of those more qualitative yardsticks that I think as admissions professionals we use when we’re judging someone’s competitiveness. I think maybe then if that that would have to be the way, then that we start looking at it, which creates its own set of problems.

[00:14:58.260] – Caroline

Right?

[00:14:58.450] – Maria

What if somebody’s amazing, but they work at a very large company that’s very hierarchical and does not allow them to talk to the CEO and change the CEO’s mind? So, again, in a complicated world with a complicated admissions process, I hope that the standardized tests don’t go away completely, because I do think that they provide a lot of value.

[00:15:18.150] – John

Caroline, you obviously were making admission decisions at INSEAD on candidates. How important was the standardized test to you?

[00:15:28.060] – Caroline

Well, as you say, there’s a holistic admissions process at business school, and so it is one data point of many. But it is an important data point, and it is a valuable data point, and it’s not more important than someone’s undergraduate track record, and it’s certainly not more important than their professional track record. So all of those things are important, right? The schools are looking at a lot of different dimensions, but nevertheless, it makes it harder to get in if you have a very weak standardized test score. But I think one other issue with this inflation is our candidates going to be scared off by those numbers.

[00:16:16.510] – Maria

Right?

[00:16:16.810] – Caroline

And that’s been a concern top business schools for a long time. As the average GMAT have crept up, does it deter some candidates from even considering the school?

[00:16:28.750] – Maria

Right.

[00:16:29.330] – Caroline

And I think that there is a problem there. When you look at, as you show in your article, there’s a great diversity of average scores from different countries in different regions. And if you broke that down or into different profiles, then you would see greater disparities as well. And will some candidates who actually have a huge amount to bring to business school, a lot to add to the classroom, will they be deterred remotely because of those headline numbers without necessarily understanding the context? So I am concerned about that. And Maria made a very good point about the fact that you would expect native English speakers to do better on the GMAT.

[00:17:17.120] – Maria

Right?

[00:17:17.370] – Caroline

I mean, it’s very difficult for a non native English speaker to do, especially the verbal part of the test. I mean, I speak pretty good French, but I would be very challenged to try and do a version of the GMAT in French. And business schools do factor that in.

[00:17:35.920] – Maria

Right.

[00:17:36.260] – Caroline

They they understand that if you’re a native English speaker, then it’s easier to do well, especially on the verbal, than it is for non native English speaker. And so I’m concerned that with those very scary headline numbers and that increased inflation, that seems to be continuing. Right? I don’t see where this stopping anytime soon that this could be a deterrent for some really fantastic candidates.

[00:18:02.290] – John

Yes, and you’re right. I mean, when you look at the numbers, and they’re in this article that we just did in Germany and Italy, for example, only 11% of the test takers scored 700 and up. That’s half the level of 700 and up scores in the US. Alone. Right. So clearly you look at some of the language difficulties, and it really comes through by country. Interestingly enough, in Nigeria, we know that Africa is becoming a more important part of the MBA applicant pool. Five years ago, fewer than 5.5%, less than half a percent of the test acres in Nigeria scored as 700 enough. Now 7% of them score 700 and up. That’s a big change. I’m also thinking that it’s probably true that GMAT prep has become increasingly sophisticated, and those who have the opportunity to have a tutor or to be in a class, or to even avail themselves of online support platforms, that’s probably contributed to some degree to higher scores as well. What hasn’t contributed is the test has not gotten easier. No one would agree with that. But I think the test optional policies, the fact that you can take a GRE score lower and still get into a really good school and better prep materials that are out there and more accessible, more widely accessible, because many of the online platforms that allow you to study for the GMAT cost only a fraction of what GMAT prep had cost in the past.

[00:19:50.000] – John

I think that’s an element of this somehow. Now, I also wonder, if you’re an admissions official and you’re reading about this GMAT inflation, and it’s pretty significant, how does that change the way you look at the score? What do you think?

[00:20:04.710] – Maria

Maria I mean, my take if I were an admissions official, which I have not been and Caroline has been, so I’m really looking forward to her answer to this. How I would look at it is almost not so much that a high score gets you in, but a very low score would be a cause for concern. And I think a low score would keep someone out, potentially. And again, I would look at it in context. So someone who perhaps is from Egypt, who was raised speaking Arabic and attended an Arabic, maybe they went to the American University of Cairo, but otherwise their entire context has not been in English. I would personally be more forgiving of a lower verbal score. I think I would be on the lookout for some sort of a floor on the quant number, not in terms of percentile, because, as we can expect, the percentiles of 48 on the quant used to be a pretty strong score. And now it feels like a lot of people, from a percentile basis, more and more and more people are getting a 48 on the quantity. For me, something like, okay, I would want someone to do at least a 47 48 on the quant in terms of that being their score that they get, even if that means a lot of people are doing it.

[00:21:15.930] – Maria

And I think I would just look at it within context. But I would certainly be alarmed if somebody had if I were comparing two candidates side by side, who had very similar sort of work experiences, and one of them had a dramatically lower score than the other, especially if they had not been retaken the test. I also look at retakes, right? I think sometimes people submit and this is a problem, I think, for people from cultures, from countries where the culture is very test driven. Sometimes I meet people who will say, well, I took the GMAT seven times, and I finally broke. I would have applied to business school four years ago, but it took me years and years to get that 700. And I think, oh, no, you should have probably applied seven years or four years ago, or whenever it was. And also, I tell people, you realize that they can see. They ask how many times you’ve taken the test? And so if somebody has taken the test once and got a 700 and someone else took the test six times or whatever that limit is and got a 700, you realize that it’s a little bit less impressive if it took you that many tries to get to that level.

[00:22:25.550] – John

Although doesn’t it demonstrate how bad you want it? And it’s kind of like the fire in the belly metric, because people who have that fire in the belly are more likely to be successful than those who don’t.

[00:22:37.150] – Maria

I mean, there’s fire in the belly, and then there’s setting yourself on fire accidentally. How bad do you want it? Doesn’t necessarily mean anything if you’re not that bright, right? How badly I want it. I want to become the starting center for the Chicago Bulls, and I want that really badly. But the fact is, I’m a five middle aged woman. It’s not going to happen. So no matter how badly I want it, I can appreciate the tenacity involved, right. If somebody gets a low score and then they don’t retake, that to me, is a bit of a red flag, like, well, did you not look at what the requirements are? Did you think that we wouldn’t notice? So at least at a minimum, I think a retake does show some level of commitment. But I think there’s also a level where it just gets to be a little like, you know what, maybe you should just apply for a school that is not the school that you initially were hoping to get into.

[00:23:33.670] – John

It’s interesting for this story, we interviewed the person at Kaplan Test Prep, and that person mentioned that there’s no longer a stigma about taking the GMAT multiple times. And in the past, there had been a bit of a stigma. And as we do know, there are business schools who tell people, hey, take the GMAT again, get another 20 points, and we’ll admit you. That does happen, and I’m sure you might have seen that in some of your clients. Now let’s go back to that other question. The central question is, how does an admission official interpret these higher numbers? And let’s go to Caroline on that since she actually had to make these decisions at one point.

[00:24:20.050] – Caroline

Well, it very much depends on the context of the candidate, right? So the schools know that certain candidates typically do better than others on the GMAT, and they will have that in mind when they’re evaluating a candidate. So as we’ve said, if you’ve got an otherwise strong profile and you’re from a background where candidates typically do well on the GMAT, but you don’t do well on the GMAT, right, you’re going to be compared to other candidates who have done well on the GMAT. So it’s just it’s not going to look good. So it really depends on who you are. So they’ll definitely be looking at the profile, and they will have certain expectations of how a candidate should do. But at a certain point, you know that it doesn’t make a lot of difference. Right. If a candidate gets a 740 versus a 750 versus a 760 versus a 770. Right. Once you’ve met a certain benchmark, and I agree with Maria that quant score can be very important, especially for profiles where the candidates may not have a lot of quant experience in their work and may not have a strong quant academic background from the undergrad, that quant becomes very important. So the schools will be looking to see if someone has met a certain threshold. I’ve spent more time looking at the breakdown of the scores than the total scores.

[00:25:44.840] – John

Right.

[00:25:45.010] – Caroline

I think the breakdown is more interesting and tells you more about a candidate’s academic ability, and you’re looking to understand different things from different parts of the test, and you’re looking at that also in context of their undergraduate experience. Candidate who has in my case, when I was applying to business school, I had studied languages at undergrad, and I didn’t have a strong quantitative background. And so I knew that I needed to do pretty well on the GMAT to demonstrate that ability because that is an important part of the academic experience of business school. So the context remains very important. But at a certain point, if the candidates just keep the scores keep creeping higher and higher, I’m not sure that it’s really benefiting them that much.

[00:26:40.960] – Maria

Right.

[00:26:41.170] – Caroline

You need to show that you could reach a certain academic level. And beyond that, the schools are going to be looking at other things. They’re going to be looking at what else do you bring to the program, going to look at your professional experience. They’re going to be looking at what you would bring to the community. I’m not sure that having a super high GMAT score is going to impress them more than someone who’s got fantastic leadership experience or has done something very impressive in an extracurricular dimension. So I do think that candidates often overindex the value of having a super high GMAT and think that that can make them look like a really strong candidate, when in fact, okay, it makes them look like a really good test taker, but doesn’t necessarily make them look better than another candidate who is stronger in other dimensions.

[00:27:35.650] – John

Yeah, that’s really true. The other thing is there is to some degree in arms race and GMAT scores, and some of the reasoning behind that happens to be US. News and the fact that they wait this number, and it does discourage people. One of my pet peeves is, look, you don’t need a 700 to give an admissions official confidence that you can complete the core without difficulty. I don’t know what that number is. Maybe it’s 650, maybe it’s 600, maybe it’s even less, but it isn’t 730. And yet everyone wants to report a class average above 700 if you’re in a school that’s highly ranked. Now, the Stanford number, incidentally, for the latest class, 737, that’s going to turn off a lot of people. A lot of people are going to say, hey, I don’t have a shop at Stanford if I’m not way up there with a GMAT score and people are not going to apply. And that’s a sin because obviously we do know that admissions are holistic and an average means that there are a lot of people who score below the average and still get in. But you look at 737 and you say, wow, if I’m sitting at 680, I don’t have a chance. Why should I even bother and apply? What do you say to people who use that rationale and basically talk themselves out of applying?

[00:29:04.180] – Maria

Maria well, I think, first of all, if you’re going to use that rationale and talk yourself out of applying, you’re probably not the sort of person that Stanford wants anyway. I’m being really serious. Like, Stanford is looking for people who are going to change lives, change organizations, and change the world. If you see a single barrier, potential barrier to your acceptance and you give up, you’re probably not the sort of person who’s going to change the world in general. And so, yeah, I mean, of course it’s a 737 because they accept people who are, you know, truly exceptional. And people who are truly exceptional in one dimension of life are often truly exceptional in lots of dimensions. And so, of course, they’re going to be the sorts of people who do very well on the test. What I would tell that person on a Pragmatic level to their face, as opposed to what I would just say to myself in my head, which is the one I just said out loud, is this is a perfect candidate where if let’s assume that everything else is perfect. Like they had launched a new division of their A company and expanded their company into a new market and turned around a failing division and all that stuff that I know Stanford loves to see, amongst other things.

[00:30:07.330] – Maria

Let’s say that they had that, but they have a 680 GMAT. I would just say take the GRE. This is the perfect person, in my opinion, to take the GRE. It is for all the reasons we’ve been discussing, it is a less judgy test. I think it’s easier to get a higher percentile. And even if it weren’t, I think that the levels of judgment on a slightly lower GRE score are not as high as the levels of judgment on a slightly lower GMAT score.

[00:30:35.210] – John

Yes, true. Okay, for those of you out there who want to look at our story, it’s called GMAT Score Inflation. Now, nearly 20% of test takers are scoring 700 or higher. We have the numbers by country and region of the world for the latest year as well as five years earlier. So you can see how inflated scores have actually become. Well, Maria and Caroline, thanks once again for your insights. Really. Appreciate them. And for all of you out there, thanks for listening. This is John Byrne with Poets and Quants.

The Economist Dis on MBAs: Is the Degree Still Worth It?
Business School News | General | P&Q Podcast "Business Casual"
GMAT Score Inflation
Maria |
March 3, 2023

Episode Transcript

[00:00:00] John Byrne: Hello, everyone. This is John Byrne with Poets& Quants. We have a really cool story to relate to you today. Me and my co host, Maria Wich-Vila and Caroline Diarte Edwards, are going to talk about the most disruptive MBA startups of the year. Every year, Poets& Quants invites the top schools all over the world.

To submit nominations for ventures with what we call the greatest potential for lasting beyond business school. So what we want to do is acknowledge MBAs who have launched really cool companies that are paving the way for the future. And this year, we have 41 student startups that we have honored in what is the sixth annual list of the most disruptive MBA startups.

And they come from all over. We got nominations from Stanford, Wharton, Kellogg, MIT, INSEAD, London Business School and others. And, uh, I think what the basic list shows is that entrepreneurship is alive and well in business schools are a lot of great ideas. A lot of them are powered by AI. No surprise there.

They involve every imaginable industry. There’s a good number of these in the business of health as well as in beverages, consumer products and things like that. And I wonder, Caroline, if you have a favorite among this group, and I bet you it’s going to be an INSEAD startup.

[00:01:30] Caroline Diarte Edwards: Yeah, I have a few favorites, and definitely INSEAD is on my list, although I’m going to start with a London Business School one.

Um, and there were a few international ones that I thought were really interesting. I like the story from kiro, which is a fintech startup, coming out of London Business School, founded by LBS student Alicia Chowdhury. she secured 200, 000 in funding, and it’s the first AI powered financial coach, which is designed to help,

Gen Zed, as I would say, or Gen Z, as you would say. and young adults, get personalized financial guidance. So that’s something that jumped out to me, given that I now have a young adult among my children and trying to teach her financial literacy is somewhat challenging, so I can definitely see the need for that. And she tells a really interesting story about how financial literacy was something that she had struggled with and realized that there was a gap in the market, right? There’s a lot of great financial information out there, but it’s not necessarily tailored and communicated well to young people. And she ended up working in finance before business school.

she doesn’t have a tech background, but she did. Teach herself the fundamentals of AI and machine learning, and she assembled a technical team to work with her. And I thought it was really interesting as well, how she leveraged the LBS resources. And I think a lot of the stories that you have in this article really tell a great deal about the power of business school experience in helping people launch a company. And of course, there’s often a lot of criticism about the value of going to business school. And if you want to be an entrepreneur, there’s no point going to business school. And I think that this article really debunks that. so for example, this is how she benefited from LBS.

She was a finalist in the LBS Launchpad. She completed the LBS Entrepreneurship Summer School. She joined the LBS Incubator. She led the LBS Entrepreneurship Club. And then, of course, she benefited greatly from a lot of the courses that she took at LBS. I got a lot of great advice from LBS faculty, as well as the Institute of Entrepreneurship and Private Capital.

I think a wonderful story about how a student had a vision of something that she wanted to do and saw a gap in the market and really went after it, leveraging that wonderful ecosystem that you get at business school and she’s got a VC group backing her. So that’s one of her investors and Aviva Group is a huge financial company.

I think it sounds very promising. So congratulations to Alicia.

[00:04:11] John Byrne: Yeah, you’re right. One of the things that comes through here is the support that students get from the schools. And their classmates and their professors, it’s a real terrific thing.

As you said before, a lot of people say, hey, if you want to start a company, instead of paying a school tuition, just use that as your seed capital and you’re going to be better off, but the truth is that a business school you’re surrounded by really smart colleagues and people who’ve been through this before and mentorship from professors and seed money from the many venture challenges that occur at different schools can make a very big difference and shift the odds in your favor of success. Maria, do you have a favorite?

[00:04:53] Maria Wich-Vila: Yeah, my favorite.

startup was Cell Mind, which is out of the Johns Hopkins business school. This one really hit home for me personally. What they are trying to do is they are trying to maximize access to a type of cancer therapy called “Car T”. And I have indirectly lived this. We have a good friend from business school who has been battling cancer for several years, and last year there was a complete rollercoaster around  this car T therapy. And I apologize to any doctors if I’m butchering this. But basically, my understanding is that if it works for you, it essentially can cure your cancer or cause it to go into remission. But, if for whatever reason, if your body is too weak at the time that you receive it, it can actually kill you. Unfortunately, it can cause something called a cytokine storm, I think.

And so, the decision of whether to go or no go is obviously one that is very fraught with a lot of, emotion and risk. And so, we actually had a friend who last year was approved for CAR T. But then in the weeks right before they were going to give it to her, they then disapproved her because she had gotten weaker … it was this whole roller coaster.

And so any sort of startup that is doing something to figure out, which patients actually are likely to do well with this therapy? Can we expand our doctors being perhaps understandably a little too cautious because they’re concerned about the negative side effects, perhaps being worse than the.than the cancer itself.

Anything that can help expand access to this is why they were number one in my book. And as you guys were just talking about. Because Johns Hopkins is one of the best, if not the best medical school in the world, this is a great example of a business school student or group of business school students leveraging the resources and the expertise at that overarching institution, trying to find ways to commercialize it, and just make the most of those resources.

I really loved that story.

[00:06:40] John Byrne: Yeah, and that’s what you increasingly find. it’s not a bunch of MBA students doing their thing. It’s reaching out and having these really entrepreneurial collisions with students from other departments, other schools where they have deep expertise in computer science or engineering or medicine or law or public policy or environmental sciences teaming up with MBAs to launch things. which really give them extra power.

One of my favorites comes out of, uh, Chicago Booth. And, it’s sort

a really interesting idea where, first off, it’s called Encore, and it’s a marketplace for high end collectibles. Now, you think, how could that really be a cool thing? What they’ve done is they’ve combined TikTok style videos. With the traditional eBay auction format, to create a really engaging experience for people who want to shop for these collectibles. But what’scool is the MBA who’s behind this. His name is Will Enema, at first thought he shouldn’t apply to Chicago Booth, new venture challenge, because he had already raised a pre seed round and thought that Encore might not be good for that traditional, giving money out kind of program. But, he entered it after he was urged to by a number of professors at Booth. The idea placed second in the competition. He won $350, 000 to help launch his company, but here’s the real kicker:

Within two weeks of that competition, a venture capitalist who participated in the judging agreed to lead their seed round. So it just shows you how, incredible things can happen, in the environment of a business school.

Now, Caroline, I’m sure you have others that you really thought were really cool. Name another one.

[00:08:29] Caroline Diarte Edwards: Yeah. So my second one is of course, an INSEAD startup and it’s called faceflow. ai. And I really liked this one because it’s an AI powered skincare platform. So again, relating it to my personal experience of having four daughters who are constantly clamoring for the. latest ridiculous beauty product that they’ve seen on Instagram.

I think this is a fantastic idea.

What it does is it actually gives you scientifically based product recommendations, right? So they have for the two founders, Daniel Patel and Simon Zhang, Patel had previously founded a marketplace for international skincare brands. So he knew the skin, the beauty industry, skincare products.

And then his partner, Simon, is an experienced AI engineer, and so they’ve combined their expertise to bring AI to skincare recommendations. And it’s underway. I checked out their website. I have signed up already. The product is not yet available, but I’m looking forward to when it comes through.

And they won the INSEAD French competition and, talk about how they’ve benefited from the very entrepreneurial environment at INSEAD,

I really enjoyed reading about their experience and I’m excited to learn more about their products.

[00:09:49] John Byrne: Yeah, absolutely. And now

Maria, I know there are 2 Harvard startups on the list from your alma mater. did you pick 1 of them as your 2nd choice?

[00:10:00] Maria Wich-Vila: It was not necessarily my 2nd choice, but there was 1 called Vulcan Investments. This is a little bit out of my, Wheelhouse. So I think we all tend to gravitate towards something we know or something we have experience with, but it’s trying to figure out how to solve the rare earth magnet problem. Right now. A lot of these rare earth materials that are powering modern technologies are coming from China, which poses several challenges, especially should relations with that country not go well in the future. So this is trying to solve for that issue. I think that was a really interesting one.

But actually, my second choice was one that again, I have indirect personal experience with, albeit in a different way. It was called Yogger. What they’re trying to do is, I believe it’s taking your phone to watch you as you perform exercise then give you feedback on, your gait, your form, et cetera.

And this was really interesting to me, not so much because of exercise, although I wish it were (ha ha) (though: side note, my dad was a track and cross country coach for decades and I totally forgot about that in the moment, but I should have mentioned that!!! D’oh!!!), but who knows, maybe this will motivate me to jog more (har har har).

In the interview with the entrepreneur. he talked about how you can do things like a gait analysis right now, in other words, tracking how your legs move when you are running or jogging, and then providing an analysis, but these sorts of things are very difficult to get to. It’s expensive. You need to be set up with, they put a whole bunch of sensors on all of your joints. and I have a friend who has a child with cerebral palsy and they’ve had to do these, go to actually Hopkins (this is not a Hopkins based startup, it’s from Tuck, Dartmouth Tuck), but they’ve (my friends, I mean) had to go to Hopkins and actually have these, it’s a day long thing to set up your child with the different sensors. And so the thought of using something as simple as an iPhone app, perhaps, machine learning, et cetera. all that good stuff to analyze your gait and make this accessible. It’s not only I think useful for casual exercise enthusiasts, but I think it could also have ramifications and uses even in other areas. For example, kids with special needs. So I was really excited about this one.

John Byrne:

MIT Sloan has three startups on our list this year.

That’s more than any other school. And one of the really cool ones is called Vertical Horizons. This is an incredibly ambitious startup. It’s all about commercializing high density, high efficiency power supplies for AI computing. Essentially, it’s a semiconductor company. and you might not think that an MBA would be involved in actually creating a semiconductor company.

But it’s founded by Cynthia Allen, an MBA in the class of 2024 at Sloan and one of her professors. So it’s a good example of where university develop some sort of new technology or new insights. And then needs to commercialize it. And in this case, you have an MBA coming along, who has a great interest in this, and is helping to commercialize it. The actual idea of it has 4 million in research grant funding to develop the technology. So there’s a good amount of money behind this very ambitious idea.

I think, stepping away from the individual startups, what I think this says about, the ability of people who want to go to business school and use that experience as an incubator to launch a startup, it’s alive and well, it’s a great way to launch a company because it does take a lot of risk off the table and these startups, these 41 startups that these different business schools really give you a great insight into what different people are doing.

Caroline, I’m sure, and Maria as well, you probably meet a number of people in your practices, that want to use an MBA to do a startup. Do you think they’re ready to take full advantage of these experiences?

Caroline Diarte Edwards:

Yeah, I certainly hear from a lot of candidates who are hoping to launch a venture. Some of them want to do it as soon as they graduate and for some of them it’s more of a longer term ambition because of course financing can be a challenge.

Especially if you’ve invested a lot in taking on a lot of debt with your MBA and a lot of the themes that I hear, candidates are interested in come through in your article as well. So it’s noticeable that there are quite a few startups in your list that address, healthcare issues as Maria highlighted, also education, environmental challenges. And I think those are three areas that I hear a lot about from candidates in terms of where they would really like to have an impact.

And I think, something else that is noticeable is that a lot of them are really trying to have a positive impact on the world as well. They’re really trying to address,  fundamental societal challenges, many of them, which I think is wonderful from health care, mental health issues, pollution. et cetera. There’s a lot of really interesting, and important issues that are being addressed by some of these startups. and, I think it’s wonderful that we have this young generation, going through business school who are ready tackle these challenges that that they have inherited from our generation.

John Byrne:

Yeah. And these ideas are going way beyond, some of the earlier ideas of five, 10 years ago, hookup apps and match.com, uh, wannabes and things like that. some of these ideas are remarkably sophisticated and elegant as well.

Maria, last words.

Maria Wich-Vila:

I think that this article not only is very optimistic in terms of these amazing ideas that are out there, but I also like that it shows that there are so many different paths to entrepreneurship through the MBA that first of all, number one, the NBA is valuable for entrepreneurship, which, as you noted a second ago, is often a stereotype that that exists that, oh, I don’t need this. but also there are so many different MBA programs out there. Look at the range of schools that are creating these amazing startups. Look at the fact, one of the, Stanford ones, the student was not an MBA student. They were an MSx student.

Sometimes I’ll meet people who are a little bit on the older side who are applying and they’re like, I have to do the two year program and I’m like, no, you can… you just need to get your foot in the door and even if it’s that MSxs program, it’s one year versus two years. For example, you can, you just need to get to a university that’s going to teach you the things you need and give you the resources and then you can take it from there.

So I, the other thing I really appreciate about this article is showing the breadth of programs and the breadth of students and the breadth of backgrounds of these students who are creating incredible new companies.

[00:16:37] John Byrne: Yeah, check it out. It’s called most disruptive MBA startups of 2025, and it’s on the Poets& Quants website.

If you are interested in doing a startup, I think you’ll learn a lot about how business school can help you make it a reality. This is John Byrne with Poets& Quants. You’ve been listening to Business Casual, our weekly podcast.

Maria

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