Is Your MBA Worth Millions In Lifetime Income?
Maria |
April 20, 2022

A recent study conducted by Preston Cooper, a research fellow at the Foundation for Research on Equal Opportunity, dives into the data on the net economic value of nearly 14,000 graduate programs at over 1400 universities in order to estimate the return on investment (ROI)—the increase in lifetime earnings minus the cost of attending school—for each degree.

The results might make you question whether or not an MBA degree is really worth it.

In this episode of Business Casual, John, Maria, and Caroline give their opinions on this approach to valuing MBAs and debunk some of the data in Cooper’s report. 

Episode Transcript

[00:00:07.270] – John

Hello, everyone. This is John Byrne with Poets and Quants welcome to Business Casual, our weekly podcast with my cohost Maria Wich-Vila and Caroline Diarte Edwards. We are going to talk about something that is always ever present on the minds of people who are thinking about getting an MBA degree. And that is is it worth it? And if it is worth it, how much is it worth? There is a new study out. It’s called Is Grad School Worth It? A Comprehensive Return on Investment Analysis. The primary author, Preston Cooper, is a research fellow at the Foundation for Research on Equal Opportunity. And he really dove into the data on the net economic value of nearly 14,000 graduate programs at over 1400 universities. We look at, obviously, the business school in this study. And what’s interesting about this is that he kind of defines the ROI of a graduate degree as the increase in lifetime earnings a student can expect from that degree, minus the direct and indirect cost of attending graduate school. And he even subtracts out what you would likely earn if you only had your undergraduate degree. So he’s discounting your total earnings on the basis of what you would have earned anyway if you didn’t have the MBA, as well as the cost of getting there.

[00:01:36.970] – John

And that would include tuition and fees as well as the opportunity costs. So what he found was kind of really surprising because he contends that the MBA overall has a negative return. Now, there are a whole bunch of graduate degrees with negative returns. And he also points out that it really is dependent on what school you go to. And it’s probably dependent on a bunch of other things like your location, what kind of career you have, a number of other factors that are going to impact these numbers. But ultimately, he basically concluded that the highest ROI from an MBA occurs at Wharton, where the return on investment median over a lifetime is over $3.2 million. And that’s after doing his subtraction of the cost of getting a degree and the subtraction of what you would have earned anyway if you went to just didn’t have your work in MBA. Maria, what do you think it is?

[00:02:40.730] – Maria

Okay. So I mean, first of all, God bless this guy for what he’s trying to do. He’s looking at tens of thousands of different graduate programs. I don’t even want to think about how many different data points he was looking at and trying to make sense of what is probably an incredibly messy data set. I do think that a lot of the conclusions, though, that he sort of asserts them with a certain amount of confidence that I don’t necessarily think they merit. But overall, I think there are some good points that he makes. So one of the things I liked about his methodology is that he looks at something called counterfactual earnings. And so the idea is that, yeah, like a master’s degree in engineering, you might make a lot of money. But if you got a bachelor’s degree in engineering, you probably would have still made a very similar amount of money, perhaps a little bit less, but not dramatically less. And so similarly, I think with MBA programs, as we have talked about before, if your career is strong enough that you get into a Stanford, a Harvard, a Wharton booth, any of these Kellogg, any of these, you were probably already on a career trajectory to have been making a lot of money anyway, for the most part.

[00:03:48.940] – Maria

And so there are people that I know who like, I think I’ve mentioned these people before. Like, some of the wealthiest people I know were people who went to elite colleges and then went into the finance industry and did really well and thought, oh my gosh, why am I even going to waste two years of my life on an MBA? And instead they spent those two years getting more experience in finance, and now they’re doing very well. So I agree with that aspect of the methodology. But there are certainly some odd results here. And it’s so funny when people try to estimate what is like the lifetime value for Wharton. I think he got something like 3 million. There was earlier, like a year ago, there was a pay scale study that I think, John, you might have reported on that was 8 million. So we’re not talking like a 10% Delta here. This is a pretty dramatic fluctuation. So I don’t know that his numbers are necessarily correct for the MBA. I think there are also some his thing about the dentistry being the highest paid one, I don’t know. I was like, let me see, what is this University of Colorado advanced dentistry program?

[00:04:57.600] – Maria

And I think that it’s like a two year program, a three year program, but you already have to have a dentistry degree, which is a four year degree on top of your bachelor’s degree, if I’m not mistaken. So, yes, technically, it is a quote unquote two year Masters, but you need a lot of education before that. And so it’s not the same as comparing it with like a two year Masters of Fine arts or Masters in playwriting or acting or something. Anyway, I think some of the overall takeaways are interesting. I think it’s a little bit strange that given the messiness of the data set, that he then tried to come up with such specific numbers to quantify his results. But they are what they are. And at least, again, at least I would have looked at that data set and been like, Nope. I would have noped out of there pretty quickly and not even tried. So good for him.

[00:05:47.360] – John

Yeah. Caroline, what’s your take?

[00:05:49.740] – Caroline

Well, it’s not surprising, right, that professional degrees have a much stronger showing in an examination of return on investment than master’s degrees in the arts, for example. I think that is not something that we would have anticipated differently. Right. But as Maria said, and it’s a bit like the ranking sometimes.

[00:06:10.840] – Maria

Right.

[00:06:11.190] – Caroline

I mean, you look at the list and you roll your eyes because at the end of the day, who is going to look at that list and say, oh, well, I’m going to turn down my offer from Harvard Business School because it’s a much lower in this list than some of the other schools. So that suggests that HBS is so far down the list, to me, undermines the credibility of the list. But I think there is a useful message in that going to a strong program is going to have a better return on investment than going to a program that is not as highly regarded and doesn’t attract such a strong community of students and give you the benefits of a fantastic network post MBA. I think that’s something that we all agree with, and that does come through as one of the sort of larger messages here. Something else that’s important to keep in mind is that people aren’t just going from our sister’s degrees to make more money. Right. And I think that’s increasingly true, actually, of the people going off to graduate school these days and including people going to business school.

[00:07:23.960] – Caroline

There’s definitely a trend compared to ten or 20 years ago, people wanting to improve their education so that they can have a positive impact on the world even through going to business school rather than just going to business school to earn a bigger salary. And so people have greater choices, and that’s much more difficult to quantify. Right. I think that if you compare the career satisfaction of people who have graduated from some of these programs compared to people who haven’t gone to master’s degrees, I think the fact that coming out of a lot of these graduate school programs, you have doors that are open to you that otherwise would have stayed closed, and therefore you’re able to pursue something that you’re much more passionate about, whether or not that generates a higher financial return, that’s a very positive thing. Right. And anecdotally from my small sample of my network of people who I’ve seen who’ve gone to business school versus people who’ve gone into business because they’ve got a background in accounting or finance from the undergraduate degree. Often, as Maria said, they’ve done incredibly well financially also, but they haven’t been able to make the career switches that people who have gone to business school have been able to make.

[00:08:43.260] – Caroline

And that may have worked out very well for them.

[00:08:44.920] 

Right.

[00:08:45.100] – Caroline

They may have chosen the right path and stayed along those lines, and it’s worked out very well. But I think having the option to switch careers and choose a different path is incredibly valuable, and that’s not something that’s so easy to quantify.

[00:09:02.040] – John

Yeah, true. And in terms of weird results, both of you mentioned this briefly, but didn’t actually give the number. According to this analysis, the Harvard Business School MBA is actually worth less than a million dollars at $972,000. That compares to that Wharton degree where the authors estimate the value of well over 3 million. Kellogg is at 3 million, Chicago Booth is at 2.5, Columbia Business School at 2.6, MIT Sloan 2.6. And a little extra. There are MBAs from fairly prominent schools that are not necessarily in the top 25 that have negative returns. The author contends that the University of Texas in Dallas, if you get an MBA from there, you’re going to have a negative return of $62,863. How’s that for precision? Or if you get an MBA from Northeastern University, the more McKin Business School, the deficit that you’re going to experience will be $472,000, which is a pretty big negative number. While this is very interesting, to look at the numbers and the data like rankings, you need to take this with a really big grain of salt. Stanford, which is where Caroline’s husband went, is also surprisingly low, particularly because you just wouldn’t imagine, I mean, coming out of school.

[00:10:35.220] – John

Stanford MBAs tend to have some of the highest pay packages in the world. But this also contends that an MBA lifetime advantage from a Stanford MBA is only 2.1 million. Now, Maria referred to a pay scale study that we had actually paid for and sponsored at Bolton once, and the pay scale study showed that the lifetime return on Stanford MBA was 8.3, not 2.1%. But of course, that number did not discount the lifetime earnings by the cost of getting the degree, the opportunity cost of losing income for two years, nor the value that a person would have had on the basis of just her undergraduate degree. So there are adjustments to the numbers that would explain some of the differences, but not all of them. What other weird results do you see in here, Maria?

[00:11:29.430] – Maria

There were several that jumped out at me. One that I thought was kind of funny was that Duke University for Business appeared twice. So their Masters in Business Administration, the earnings at age 45 were predicted to be $228,000. But the Masters in International Business from Duke University was 347. And I don’t know if the Masters and Masters in International Business, if that means NBA with international focus, or I don’t know if that’s the Global Executive MBA at Fuqua, which in that case, that might be like older senior executives who are like, anyway, there’s just so many I was like, wait a minute, Duke has a Master’s in Business Administration and listed separately as a Masters in International Business with a pretty dramatic difference in that pay estimate. I’m not really sure. I tried to understand the methodology for predicting the future pay estimates, and I really don’t think that they are very sound. It looks to me like he just basically sort of slapped looked at what people were making immediately after business school and slapped a growth rate onto it. So for the Wharton number, for example, I think he estimated that at graduation it was something around 179,000.

[00:12:43.180] – Maria

And then by age 45, that number went up to 287,000, which because I’m an MBA, I calculated the compound annual growth rate, and that was about 3.2% of a growth rate per year, which doesn’t test it doesn’t pass the smell test. Right. Because that makes sense if you never get a promotion, if we assume that the average well, this year doesn’t count. But historically, inflation in the US has been roughly 2% a year. So he’s saying that these people are doing better than the average worker in terms of cost of living increases or pay increases. But most people don’t stay in the same job at the same level that they enter post MBA. So, yeah, they might be making if they were to stay, let’s say, as a manager level at Bain, that might be there after 15 years, that might be what they make. But they’re not going to stay at that level. Right. They’re either going to get promoted to higher and higher levels or they’ll be kicked out. So it’s this kind of odd. It doesn’t really take into account. I can see like perhaps if you’re a dentist, which is the dentistry being the highest one.

[00:13:59.740] – Maria

Okay. You start off as a dentist and you have your own practice, and maybe it grows a little from year to year to year. But in the business world, there are opportunities to really jump between manager level to director and then director to vice President or what have you. That is not a sort of 3% slope straight line for the most part.

[00:14:19.010] – John

Yeah. There’s no way that a Wharton MBA or an MBA from any school like that is going to have pay increases of only 3.1% a year into their mid 40s. It’s just not possible, given what the degree means and given the increased responsibilities at work and promotions, and these people are in organizations that are not bureaucratic and reward employees with 2% increases every year. The other thing that’s not adjusted for, of course, would be equity awards and probably bonuses as well. I mean, he’s really looking at base pay more than anything else because he has no database with which to extract the value of equity and award or even the value of a guaranteed bonus. Look, if you’re on Wall Street and you’re investment banking, your bonus often exceeds your salary. So there are a number of problems with the methodology and the calculations that get in the way. What is kind of interesting, though, overall, is that even though there’s quirks in the data, basically what he does show is that if you go to a brand name MBA program that has a great reputation and is ranked highly and is highly selective, you’re going to buy and large earn more than someone who goes to a second or third tier program.

[00:16:03.990] – John

And that’s pretty universal across the entire data set, no matter what industry a person enters. And it goes to why I think, Caroline, there is this obsession with getting into an NCR London business school in SSA Paris, an ISC in Spain, or Harvard, Stanford, Wharton, Columbia, Northwestern, Chicago. It’s understandable, right. I mean, there is this obsession that all of you deal with because every time you get a client, what do they tell you? I want to go to Harvard, Stanford Ward, right?

[00:16:40.740] – Caroline

Yeah. Vast majority of people that we work with are applying to the very top schools. I think whilst this exercise was interesting to me, it’s probably more useful to look at the data on the class that’s graduating and the salaries that they’re getting, the employers that they’re going to. I think that’s more useful to help candidates understand what their options are going to be post MBA, because it seems that there are so many assumptions that are made in this data. Just looking at two years post MBA and then extrapolating out how that evolves over time, it’s impossible. Right. Unfortunately, there is no good data that’s going to tell us actually how the graduate careers and salaries evolve over the long term. And I think the assumptions in this are flawed. So to me, it’s more useful to look at the actual data that is reliable, which is where people are going when they graduate from the school, which employers they’re going to, how much they’re making, if that’s something that is critical to you and see whether people are going into positions that really excite you and it’s going to enable you to land the type of job that you’re looking for post MBA.

[00:18:05.320] – Caroline

So I think those career statistics are much more useful for decision making purposes than this particular study.

[00:18:12.560] – John

True. The other thing here is can you really say that if you get a Wharton degree, your lifetime earnings are going to be an excess of 3 million more than they would otherwise be? I think an MBA, even for an elite institution, gives you an advantage right out of the gate and maybe a lifetime advantage in the sense that you have a networking, a group of networking colleagues that you can confer with who might see opportunities and bring them to your attention. But there comes a point in everyone’s career where where you went to school really doesn’t matter. What matters is what you deliver at work, what’s your performances. And that is almost not accounting for it all here because it can’t be right. It’s an intangible thing that can’t really be measured. Now, you might say that the selectivity process at really good Ivy League and prestige schools is such that they can identify people early who have the most potential and are probably more ambitious and more willing to work really hard to earn these large sums of money. And that I think there’s definitely some truth in that because, as I was mentioning before, he does seem to show that if you go to an elite institution, you’re going to do better than if you don’t.

[00:19:37.060] – John

So his study overall found that while 8% of master’s degrees overall offer a return above 1 million, that share rises to 41% for people who go to Ivy League or comparable universities. So clearly, Brand seems to matter. Or maybe it’s the selection process. Maybe it’s people like Caroline at NCAAW making sure that when she was ahead of admissions, she only entered people who she really believed had the great potential to have a successful life and a successful professional life and a career. So there is that as well. Okay. I’m going to just say it’s fun to look at this, and there may be some value here in saying, hey, in setting expectations. So if, in fact, you go to a second tier or third tier school and you look at the numbers and they’re well below what the numbers are for a top 25 or top 50 school, I think it’s probably helpful for you to know that, in fact, overall, not necessarily for you, the return may not be nearly as high. Last words on this, Maria.

[00:20:54.010] – Maria

A couple. So first of all, as you were saying a second ago, I think there’s a difference between correlation versus causality. Right. As we’ve said before, the reason that these elite schools, even with the law school results. Right. Oh, Columbia, Harvard, they’re the highest paid. Well, they probably accepted the strongest students in the beginning of the pipeline. And so those people then when they graduate, they work really hard and they grasp things more quickly or whatever it is you need to be to be a good lawyer. So I think just don’t confuse correlation with causality. And also my husband and I were sort of laughing at the because if you look at the chart, it has dentistry, but then it has several law schools. Like at age 45, you’re making a lot of money. If you went to Columbia Law School or Harvard Law School and we were laughing and it was like, yeah, but then you’d have to be a lawyer. I’m like, you know, I’m good because to be able to to admit be making that level of money in law and to be having to do it, it’s not just the hours of work.

[00:22:00.380] – Maria

I think the work is also itself pretty tedious.

[00:22:03.270] – John

It’s the numbing nature of the work.

[00:22:06.750] – Maria

Exactly. I’m fine with not looking at people drilling holes in people’s mouths and giving them fake teeth and not being a lawyer at Crevasse at age 45.

[00:22:20.590] – John

Doing people and trying to take advantage of situations and technicalities. Yes. Caroline, last words.

[00:22:27.450] – Caroline

Well, I think it is a very good point that you don’t have to go to Harvard or Stanford or Walton to do well in life.

[00:22:35.680] – Maria

Right.

[00:22:36.410] – Caroline

I don’t know if any studies have been done looking at business schools. But certainly there have been studies done looking at College graduates and, for example, people who are admitted to Ivy League schools but chose not to go and went to other schools. And what those studies have shown is that it’s not necessarily going to that school that drives your future career success and salary. It’s who you are as an individual. Right. I think they say that to the class coming in at Harvard that you would be successful in life regardless.

[00:23:15.020] 

Right.

[00:23:15.240] – Caroline

They’re well aware of the fact that they’re picking people who are going to achieve great things regardless of the school. So I do think people over index the impact of going to a top undergraduate school and sometimes also the case with the graduate school. But Nevertheless, I think there’s a lot of value in the options that it gives you and being able to choose your career path and define your future in a way that you might not be able to if you haven’t gone to business school and have all those opportunities that suddenly open up for you. So to me, it’s more about being able to define your own version of success and being able to access opportunities and open doors that might otherwise have been closed rather than necessarily making vast amounts of money.

[00:24:12.150] – John

Well said. Well, there you have it. So if you want to check out this article and see how much your MBA is supposedly valued at, go to Poets and Quants. See Calculating the value of your MBA. Is a Wharton MBA really worth $3.2 million? Whether you think it’s just total BS or not, it’s fun reading. Maria and Caroline, thank you once again for great discussion. This is John Byrne with Poets and Quants. You’ve been listening to Business Casual our weekly podcast.

The Economist Dis on MBAs: Is the Degree Still Worth It?
Business School News | General | P&Q Podcast "Business Casual"
Is Your MBA Worth Millions In Lifetime Income?
Maria |
April 20, 2022

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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