Why MBA Degrees Cost So Much
Maria |
August 5, 2023

In this episode of Business Casual, our hosts provide insights into the multifaceted landscape of MBA expenses. They delve into the topic of the soaring costs associated with pursuing an MBA degree. The discussion centers on the expenses of prestigious business schools in the US and Europe, particularly emphasizing the steep financial commitments demanded by top US institutions, where tuition, fees, and living costs often surpass $200,000. Notably, Stanford stands out due to its location in the expensive Bay Area.

Our hosts explore several factors contributing to the elevated costs, such as the diverse curriculum offered by business schools, substantial faculty salaries, and investments in modern infrastructure. The podcast underscores the availability of scholarships, with a focus on Harvard and Stanford, where almost half of the students receive financial assistance. The hosts also share their advice on how to negotiate scholarship offers and highlight the importance of considering return on investment (ROI) and other vital factors beyond costs when selecting an MBA program.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. It’s John Byrne with Poets and Quants. You are listening to our weekly podcast. We call it business casual. And I have my two co hosts with me, as always. Maria Wich Vila and Caroline Diarte Edwards. We’re going to talk about how much it costs to get an MBA. You know, it’s, it’s a lot of money, right? Well, every year we take a look at how much it in fact costs at all the top business schools in the US. We also take a look at the European schools, but let’s just focus on the US. Schools for now because some of the numbers are rather shocking. If you want to talk about sticker shock, people will get sticker shock by looking at this article. If you want to know how many top 25 US. Business schools are now in the $200,000 club, it’s 19, actually, of 27. Schools have tuition, fees and estimated living expenses that exceed or equal $200,000. The biggest one, not surprisingly, given the high cost of living in the Bay Area, is Stanford. For the first time ever, a full cost of a two year MBA at Stanford now exceeds a quarter of a million dollars.

[00:01:24.970] – John

I am even shocked. But it’s not cheap to live in the Bay Area. Caroline can attest to that since she lives not far from Stanford. And I just moved from the Bay Area a couple of years ago, and it is super expensive. What’s also interesting here know we track tuition over a number of years in addition to the estimated total two year cost of these degrees. And it’s interesting to see which schools have most aggressively increased their tuition and which haven’t. And when you look at the tables, you find Wharton, for example, was charging $74,500 a year into MBA tuition in 2020. That’s three years ago. Now it’s 87 370, $13,000 more per year. That’s a pretty big hefty increase. Harvard, on the other hand, and this is kind of interesting, is Harvard held the line on their tuition cost for three years in a row with no increases whatsoever, and now they finally put up a raise. But it went from 73 440 to 74 910, just a meager 2%. So Harvard is definitely playing the mid range game. They don’t want to be perceived to be the most expensive business school in the country or the world.

[00:02:51.400] – John

And they like that midpoint because if you look at the schools that have tuition that exceeds $80,000 a year, it’s Wharton at Chicago Booth. Stanford is just under 80. Northwestern, Kellogg is at 81. MIT Sloan, 84. Columbia, 84, five. Yale, 82, seven. Then NYU Stern, because, of course, if it’s New York location, which is a very expensive place as well, 82 326. All these numbers, I’m just going to tell you, are, in my mind, conservative because they don’t factor in the likelihood of another increase in your second year in an MBA program. And typically tuition goes up anywhere between three and 5% on an annual basis. So, Maria, why do you think it costs so much money to get an MBA these days?

[00:03:45.830] – Maria

Well, I think, for starters, MBA programs have a lot of costs. One of the biggest ones that would jump, to my mind, would be other types of programs tend to focus on perhaps offering a couple of different flavors within one given subject area. So let’s say a school of architecture might have an architecture degree and then an urban planning degree and I don’t know, a couple of different flavors within one central academic discipline. I think with business schools, most business schools will have, let’s say, between five to ten majors. Some of them are quite different right. To offer a very robust faculty and course offering in marketing and finance and operations and business analytics. I think it really starts to add up very quickly because the MBA is both a general management degree, so you need to be strong in all of the core business academic areas. But then you also offer majors and minors or concentrations or certificates or whatever you call it, to meet the demands of what the students want for the workplace and what the employers are looking for too, I assume. So I would guess that that’s part of it is that there is such a broad range of subjects being taught at a business school that that’s probably a big reason why, in order to have that many faculty members on board.

[00:05:04.020] – Maria

And also given that a lot of these faculty members could probably be making money consulting to businesses, I know many faculty members, for example, make a nice living, a nice sort of side gig living by consulting to corporations or by being speakers at conferences and what have you. So I think that you also have to look at what is the alternative that someone has. So if somebody has an alternative to make a lot more money, if you want them to be a teacher full time, you don’t have to match the private sector. But I would suspect that you probably need to offer a bit more than you would have to offer someone who teaches in a discipline where there aren’t as many alternatives to make a significant income. So those would be my guesses, yeah.

[00:05:51.220] – John

And then there has been a race to build the fanciest, most modern, most complete, most technologically savvy buildings. And that has cost a good amount of money. But faculty, faculty and business schools are very well paid, probably better paid than any other faculty other than the med school. Five years ago, we took a look at, in fact, how much faculty make, and in the few cases at a public university, these numbers are public. So we looked at UCLA, for example. This is five years ago, and we found that four finance professors alone were paid over two and a half million dollars. You had one that was making about 690,000 a year, another making 630,000, another making 620. And this is for people who teach generally three classes a year. So the cost of faculty is tenure faculty, I should say, because the adjuncts are paid peanuts and so are the clinical professors. But if you are a research heavy professor at a business school, you’re making big bucks and you’re not teaching a whole. You know, you’ve often said that the European schools, largely because their one year programs are bargains compared to the US schools.

[00:07:14.020] – John

And after looking at these numbers, I would think that you’re going to feel that that’s certainly true more than yes, absolutely.

[00:07:23.390] – Caroline

It’s difficult to compare the return on investment for two years versus one year, right? But there is evidently a great deal more cost if you’re undertaking a two year program versus one year. Schools like Ses tend to do extremely well on those surveys that do look at return on investment because you’re paying tuition fees for one year rather than two. You’re incurring all of those living costs that you have looked at in your article for one year rather than two. And then, of course, you’re foregoing a salary for one year rather than two. So in the grand scheme of things, it makes a tremendous difference. And that’s often a reason that’s a big motivator for a lot of people to choose those one year programs. I mean, it’s not obviously the only reason why they would choose to go to one of the top international schools because it is also a different experience, right? It’s very different to go to an international MBA program versus going to a top US program. It’s a different educational experience, it’s a different community, it’s a different alumni network. So that should not be the only reason why you should I would never encourage somebody to choose the MBA program based on price alone.

[00:08:44.510] – Caroline

But nevertheless, for people applying to the international programs, many of them are coming from emerging markets where they have not necessarily had the savings power of someone coming from the US or Western Europe. And therefore the sticker shock that you mentioned is even greater for them if they’re looking at those top US programs. So they may well feel that those programs are completely out of reach and they are very attracted by the more efficient model of the one year programs where they can get that top notch education, but not have to spend quite as much money and be able to get back to the workforce much more quickly.

[00:09:26.230] – John

Right now, the offset to all this, and we should explain this, is that there is a lot of scholarship money losing around. Know, at Harvard half the students get scholarship aid and it’s quite generous. Stanford, same thing. And many schools offer even full scholarships. Most are partial. So that offsets the cost. And you have to remember that in your summer internship, you probably will be well paid and that helps to bring down your debt levels if in fact, you have to borrow money. And then finally, when you graduate, the salaries, the compensation packages overall, including sign on bonuses, performance bonuses, relocation expenses paid, and in some cases, employers will even give as a perk a partial reimbursement of tuition that you paid. Really helps to offset this number. But nonetheless, you look at these figures and you almost want to faint. Maria, do you recall what you paid for your Harvard MBA?

[00:10:31.090] – Maria

I don’t remember the money, but I did not get any know it was based on income. And at the time, like a fool, I was working in Hong Kong at the time, and a big chunk of my salary was housing allowance because the cost of living in Hong Kong is enormously high. But that was counted as regular salary. And so by their measure, I didn’t qualify for any financial aid. But like you said, only half of people get it. And when they do get it, the average is not it is not normally a full, full scholarship. It is normally for maybe half, I would think, of the tuition.

[00:11:03.250] – John

Even people who 30,000, I think is the average, right?

[00:11:07.750] – Maria

So, like, half of the people are getting roughly half of the tuition scholarship money is available for sure, but it’s not the same as with other fields of study. And I think the reason for that is because I think providing an MBA education is more expensive. But I also think, as you pointed out a second ago, what the salaries that people are going to be making after school are also going to be much higher than, say, someone who goes to the School of Social Work or who goes to get a master’s in English literature. And so what I sometimes tell people, because I think you tell people right up front, like, hey, only about half of people get scholarships. And that’s at Harvard and say, at Stanford. I think at other schools like NYU, I think it’s maybe a quarter of people get scholarships. So what I tell people when they sort of come at the end of the process and they’re like, oh, I was kind of expecting a full ride. My take on it to them is, look, the schools are basically placing a bet on you by accepting you into their class, right?

[00:12:04.070] – Maria

Most schools have way more applicants than they have seats. And so by choosing you over other people in the applicant pool, they’re essentially placing a bet on you that you are going to achieve certain levels of positive notoriety and success in your career. And if they’re placing a bet on you and you’re not willing to place a bet on yourself by taking out that loan, how is it that you can write an essay saying that I’m going to be this leader that’s going to change the world? And then when I ask you like, okay, great world changing leader here. Take out 200 grand in loans now, you get cold feet. If you really believed in your job opportunities the way you said you did, you should be willing to take that kind of a gamble on yourself. It is a gamble, but it’s an educated gamble. It’s not a completely random roulette table gamble. And so I tell people this is why you said in your application that you were going to go out and become the CEO of whatever by the age of 45. Well, great, this is nothing then. No, but seriously, that’s kind of the more flippant answer.

[00:13:08.000] – Maria

But seriously, the schools are placing a bet on you and now you’re not willing to bet on yourself? I don’t know. Little suspicious.

[00:13:15.390] – John

Yeah. Caroline, what’s your take on all that? I’m sure you have clients who moan and groan about the cost of an.

[00:13:26.770] – Caroline

I do. And what Maria say made me laugh because we used to chuckle sometimes when you’d read someone’s admission application, and of that their life was just one long story of amazing success. And then you read their scholarship application a little bit later and their life is a disaster. Rather, they can’t afford to pay for the MBA. There are all these reasons why they can’t play for the MBA and they need the school support. So it was often a very different.

[00:13:52.940] – Maria

Story that they would tell in the scholarship application.

[00:13:57.130] – Caroline

So it was sometimes quite amusing to compare the two versions of events. Often when people get to the point of working with us, they have kind of absorbed the fact that they’ve often figured out that they are going to have to take a loan, that they’re going to want to apply as a scholarships. And we’ll often help people with a scholarship process as well and advise them on that. But I don’t often talk to people who I would say are hesitating about whether to apply or not. I guess that’s probably because by the time people get to me, normally they’ve already signed up to work with us and therefore they’re committed to applying to the MBA. Probably some of my colleagues have more of those conversations with people who are still hesitating about whether to apply or not. And I think it’s a shame, I’m sure that there are some great candidates who do not apply because of those numbers and because they fear the risk that they’re taking in making it is quite no. And I remember taking out a massive great loan. I can remember going to the bank and signing my life away.

[00:15:15.800] – Caroline

And it is very nerve wracking to take on that amount of debt at such a young age. It’s not like getting a house mortgage or something where you’ve got some security, you’ve got something to show for it, right? You’re investing your education, it’s intangible. So it is quite nerve wracking to take on that amount of debt. And I could imagine that some people would find that quite off putting and may not necessarily have figured everything out that Maria talked about. Know ultimately the opportunity is there. And you described this in your article as well, the return that is much greater over the lifetime of the salary that you can earn as an MBA graduate compared to someone who has not necessarily been to graduate school. So it does definitely pay off. But having said that, of course it’s going to pay off. If you have a plan for how you’re going to use it and you go out and you use your MBA and you’re going to leverage that education and that whole experience and that alumni network, if you’re not actually going to make the most of it, then it’s probably not a good investment.

[00:16:24.650] – John

Very true. And a moment ago I said that the average aid or average scholarship, harvard, it’s called the fellowship, it’s the same thing was 36. It’s actually $42,000, which is pretty darn generous. That’s for one year, incidentally. And the tuition is, what, over 70 something? But again, slightly less than half of the students get that money. And at Harvard and Stanford, it’s based on need. At most other schools, it’s based on merit because schools are using their scholarship awards to basically get the best and brightest students to come to them and not to go to Harvard and Stanford. So it is a bit of a and in fact, is there a negotiation? I wonder if the two of you have counseled some of your clients through negotiating different offers from schools based on the scholarships that they’ve been awarded to offset these high costs.

[00:17:29.670] – Caroline

Caroline yes, people do negotiate and you can certainly try. Obviously, you need to be careful how you go about doing that, and it can be helpful if you are comparing offers. So if you’ve got two offers from comparable schools and one school has given you a scholarship offer and the other one hasn’t, then you can share that offer with the other school and say, I would much rather come to your school, but it’s very difficult to turn down this fantastic offer from your peer school. So is there any chance that you would be able to match this offer or help me help close the gap in my financing? Schools do understand that it’s very difficult for candidates to turn down financial aid, and if they have some leeway, sometimes they won’t, right? But sometimes they may have some room for maneuver because they may have candidates who have withdrawn, who had scholarship funds allocated to them. And so there’s often movement in the pool of scholarship funds and you may be lucky and they may be able to reallocate some scholarship funds to you because of that sort of ongoing movement in the admin pool.

[00:18:57.430] – Caroline

But it tends to work better. As I said, if you’ve got offers from comparable schools, if you’re going to Harvard and saying, I’ve got an offer from this school that they’ve never heard of, and they’ve given me a scholarship, then I don’t think that that’s going to necessarily be very convincing.

[00:19:20.610] – John

Yeah. So in fiscal 2022, the actual number in terms of the average fellowship at Harvard is 43. Seven nine four. Pretty generous. It went to about 817 MBA students. So that’s pretty darn good. How about you, Maria? Have you helped someone through a negotiation with schools? Because I know some schools get very angry when you try to negotiate with them on scholarship money.

[00:19:53.790] – Maria

Absolutely. I think, just to echo everything Caroline said, I think, first of all, if you ask respectfully and you explain if you have a valid reason, especially, let’s say, all of a sudden you have a personal financial obligation, maybe a family member lost a job, and so you need to suddenly start financially supporting them. That is relevant information to share. But to Caroline’s point, like trying to play a school, one school against another school, I think it does help but realize that it has to be a school that is viewed as a peer school or as a competitor school. If you go to a school that’s ranked five and you say, I’ve got a full offer, full tuition fellowship offer from someone ranked 15th or 25th, they’re going to say, Great, have fun, have fun. That’s awesome. Good for you. Congratulations. That’s quite an accomplishment. I hope you have a wonderful two years there.

[00:20:43.120] – John

And that’s often the case. Right. I mean, what happens is the lower ranked schools are far more likely to give you more money than the higher ranked schools, because they do understand that they have brand, there’s value associated with that brand. And if you want to walk away from it to get an MBA that costs less, you’re probably losing some brand value.

[00:21:06.390] – Caroline

Yeah.

[00:21:06.980] – Maria

You just have to decide what’s important to you.

[00:21:10.390] – John

Yes, totally. So, Caroline, how much did you pay for your NZ MBA?

[00:21:16.970] – Caroline

I’m not exactly sure, but I think it was around 48, 49,000. Well, that’s a bargain. So just below €50,000. Talking Euros, I was just playing around with an inflation calculator. I don’t know if the inflation calculator is exact or if it’s perfect, but anyway, it came out as today, that would be about €73,000, and the actual tuition today is about €97,000. So it’s quite a big difference. So similar lines to those US schools that we’ve been discussing. Quite a big jump above inflation.

[00:21:58.590] – John

Right. We should say, without dating you, what year you earned your MBA.

[00:22:04.950] – Caroline

2000 and 320 years ago.

[00:22:07.260] – John

Not that long ago, really. If you think about it, it’s in the least this century, not the 19 hundreds or whatever.

[00:22:22.430] – Caroline

So the school has also increased scholarships, and they’ve increased also increased the average value of scholarships. They increase the number of students or the percentage of students who get scholarships. So more people are getting support, but nevertheless, it’s about one third of the class who get scholarships, so two thirds who aren’t. So it’s a lot of money.

[00:22:46.140] – John

Still, Caroline, you got a bargain. That’s all I got to say.

[00:22:51.590] – Caroline

I’m happy with that.

[00:22:53.430] – John

So there you have know, MBA. It’s more expensive than it’s ever been. On the other hand, so are the rewards. When you look at the compensation people are getting, they are at record or near record levels and have been for a number of years. There’s been a nice big bump up in the last three to five years in MBA compensation for new jobs. And there’s probably more scholarship money out there than there’s ever been in the history of business education. Because it’s kind of surprising when you look at these numbers, because at many schools, and I will just tell you this, the MBA has become a lost leader. And it’s hard for people who look at these tuition rates and say, how is that even remotely possible? Well, it’s partly because of the discounting that’s going on. If you can afford to pay full, the schools are very happy to pay to collect your money. But if you can’t and you’re a highly desirable candidate, they’re going to try to do a deal with you. And what schools are doing is basically buying the best talent that they can through scholarship and discounting. And essentially they’re trying to get a higher ranking, which casts a shadow over all the other schools programs.

[00:24:12.780] – John

So when they do their specialty master’s programs, or if they’re in the undergraduate business arena, that’s where they’re bringing in the money, where the scholarships tend to be few and far between. That is also true of executive MBA programs where there’s very little scholarship money compared to full time residential programs. So don’t faint when you look at the article and you see these big numbers, you need to put them into some framework of context and I think that would help a lot. Maria and Caroline, thank you once again for your insights and thoughts. And for all of you out there, good luck paying those bills. This is John Byrne with Poets and Quants. It’s.

The Economist Dis on MBAs: Is the Degree Still Worth It?
Business School News | General | P&Q Podcast "Business Casual"
Why MBA Degrees Cost So Much
Maria |
August 5, 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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