Why Josh Kaufman Thinks Business School Is A Waste

Josh Kaufman, founder of PersonalMBA.com

If Josh Kaufman had gone to business school, he probably would have graduated this year with an MBA from Harvard or Stanford. But Kaufman, a 28-year-old entrepreneur who had worked as an assistant brand manager for Procter & Gamble, thinks business school is pretty much a waste of time and money.

MBA programs, he says firmly, have become so expensive that students “must effectively mortgage their lives” and take on “a crippling burden of debt” to get what is “mostly a worthless piece of paper.” Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.” And if that’s not bad enough, he insists that an MBA won’t guarantee anyone a high-paying job, let alone turn a person into a skilled manager or leader.

“Business schools don’t create successful people,” insists Kaufman. “They simply accept them, then take credit for their success. With heavy debt loads and questionable returns, MBA programs simply aren’t a good investment—they’re a trap for the unwary.”

In an era when MBA bashing has become almost fashionable, Kaufman is emerging as business schools’ most unforgiving critic. With his shaved, completely bald head, neatly-trimmed facial hair and rimless spectacles, he looks the part of a young prophet you might find on a city street corner. Founder of PersonalMBA.com and the author of the forthcoming “The Personal MBA,” he’s a passionate advocate for what he calls self-education. Instead of paying up to $350,000 in tuition and forgone earnings to go to Harvard, Stanford or Wharton, Kaufman says a better way to learn business is to open the pages of classic business texts and learn on your own.

Through the economic meltdown, of course, MBA bashing reached new heights. Eager to find a scapegoat, critics happily assigned blame to business schools for teaching MBAs the merits of financial manipulation that led to a global financial crisis. A Dilbert cartoon strip last year had Alice telling a co-worker, “I hear you have an MBA. Just like the jerks who ruined the economy.” Even a recent Federal Express commercial pokes fun at a stereotypical MBA’s super ego and arrogance. But Kaufman, who renounces the notion that he is an MBA basher, goes far beyond mere name calling. He strikes at the central issues of the degree: Is the education worth the price? Is what you’re taught valuable for a successful career in business? His answer: An emphatic no.

Much of Kaufman’s argument rests on a study published eight years ago by Stanford Business School professor Jeffrey Pfeffer of Stanford University and Christina T. Fong of the University of Washington. The pair analyzed 40 years of data and studies and came up with a provocative and startling conclusion: “There is scant evidence that the MBA credential, particularly from non-elite schools, or the grades earned in business courses are related to either salary or the attainment of higher level positions in organizations.”


As Kaufman quotes from the document, he is almost giddy. “It’s the first and only systematic study I’ve seen,” he says. “They crunched 40 years of data on job rates, positions, and salaries. They asked whether getting an MBA provides benefits or not. Their answer was no. It does effectively nothing. It had no impact.”

His epiphany occurred five years ago, when he was working at P&G headquarters in Cincinnati as an assistant brand manager for the company’s Home Care division. He had joined P&G straight from the University of Cincinnati by virtue of the school’s cooperative education program. Almost all his peers and managers boasted elite MBA degrees. To overcome his feelings of intimidation and to prepare for the job, he began reading, and reading, and reading, from textbooks, such as the “Essentials of Accounting,” to “Competitive Strategy” by Harvard professor Michael Porter and “The Effective Executive” by the late management guru Peter Drucker. Every day, he would spend hour after hour reading in a quest to deepen his understanding of how the business world worked.

“After I went through the self-education process I felt like a peer,” says Kaufman. “There’s the general impression that getting an MBA puts you on a pedestal in terms of your knowledge and experience and what you’re able to contribute to a business. But I was able to walk into a boardroom and hold my own with people who had graduated from Stanford and Wharton. It was very exciting.”

  • MBAstudent

    Totally agree with this. I’m an MBA student right now at Sloan, but I did it for very selfish reasons.

    – Wanted to have fun for two more years aka college
    – Got 75% paid for and getting a engineering degree as well
    – Want to spend all my free time skipping class and not doing homework to read books, questions myself, see speakers talk and really LEARN.

    Most of my classmates would be successful with or without the MBA. I think the real challenge is removing their insecurity and confirmation bias going forward.

  • Some quick hits:

    Out of all of these takes, I can relate to Rishona’s the most. Everyone’s situation is different, and what makes sense for you might not make sense for someone else, at a given place in their professional development. So be an adult, do you homework, and don’t let anyone talk you out of a course of action if it makes the most sense for you.

    Re MH: That there is some tough love. Raw. I’d buy that guy a beer.

  • James

    I would agree there is nothing one can’t learn on one’s own by reading books. However, the overwhelming majority of folk will not have the self discipline required to pour over volumes of books unless they are forced to via adherence to a course syllabus, deadlines, exams, papers, etc..

    I personally advocate for state subsidized programs. I achieved a 4.0 finance MBA from a state University to the total tune of $12,500. That’s it. Many of my professors are top-notch in their fields. My mentor in the finance department has an undergrad & Masters from MIT, as well as a PhD from Berkeley. Sure, the bar is not held quite as high at this school, but it’s no joke, either. It’s what you make of it. I feel I learned a ton.

    I also got an immediate raise in my position which paid off the total cost of the MBA in less than 1 year.

    For me personally, it was totally worth it.

  • SJ

    A philosophical debate, however we live in real world don’t we?

    Since when has it stopped to matter where we live, which car we drive and what we do during our free time? There were always spiritual saints, mind over matter genuises but that has always been true for about 1% of the population. This population is independent of the normal and would do well with or without the stereotypes.

    For the other mere mortals a CV is in fact a marketing tool where a few labels do well. It also demonstrates that the individual is motivated, wants to take the risk on himself and has survived under pressure (assuming after graduation).

    I have been through a lot of high profile education committees and sometimes you connect with the employer only because you came from the same school etc.

    Then birds of the same feather flock together… YOu get the right of admission in to that world. A top tier MBA has a tough entry point, Nobel laureate faculty, rigorous schedule that tests you on multiple fronts at the same time, how could it not improve the individual.

    Finally it is worth it? Even a mortgage can lead you to a foreclosure, then why not invest in yourself. Afterall in this case one invests in oneself. I am sure with a HBS the consultant lady would end up doing great for herself with a lettle perseverance.

    I believe MBA (or any education) is a tool. The quality of the tool is in the hand of the craftsmen, MBA is not an end in itself but it enhances individual’s ability to make the best out of the given opportunities.

  • This premise (that an MBA is not needed, or that it is a waste of time and money) is a very common one. Yet each time I read a piece focused on why someone should not get an MBA, I am very surprised at the widespread claims and assumptions about both MBA programs and MBA students.

    Mr. Kaufman raises some excellent points, and there is quite a bit of wisdom in what he has shared. However as a current MBA student, I don’t see that this piece speaks to me…or even many of my program peers. You see, I am a low-income earner (I gross less than $30K annually). I come from a poor background and my public high school was one of the worst ones in the entire state. College was the first opportunity I had to make connections outside of my own very limited, very low-standard of living. However, I guess that I pre-dated all of the opportunities (went to college in the 90s) to go to an Ivy-League for free, because although I was accepted to some great private schools (like Rollins College), I just could not afford to attend them. I went to a large state school for undergrad and with no mentor and no plan, I dropped out.

    I spent the bulk of my 20s working low-level retail and food-service jobs. My resume was picked off of Monster.com for what I thought was a decent position, but it turned out to be nothing but glorified telemarketing and high-pressure sales. I was fired, but one of my co-workers gave me the number to a temp agency. I had several very low-level assignments with them including stuffing envelopes for non-profits, filling in for secretaries, and being a greeter at traveling conferences. Most of these were minimum wage positions. However my 5th assignment was at an insurance company. I came in to do filing, but the company’s general counsel noticed that there was something about my work ethic, and that I was reasonably intelligent. She gave me an amazing opportunity and mentored me. 4 years later, I was the escrow accountant, and performed all financial transactions on all of our closings (and I also increased my pay from $9.50/hr to $$22.00/hr).

    However I was still a college dropout. I’ve had people openly remark to me that I was very smart to not have a college degree. I thought about going back, but work always got in the way. But a major car accident where I sustained serious injuries. I had to leave my job, and a year later I had a major employment gap AND no degree to put on my resume. So I opted to go back, and earned my BA at age 29. I knew even at that point, that it would behoove me to go to graduate school.

    Since my BA is in the liberal arts, I opted for an MBA, not because of any prestige associated with it, but because in comparison to many graduate level programs, it is pretty general in scope. My work experience was limited to small business accounting…I observed, but did not have the opportunity to work with topics such as marketing, finance or information sciences; coursework that can be found in just about any reputable MBA program.

    Yes, I can most definitely learn about these topics and get more bang for my buck education-wise at the local Barnes & Noble. But I’m sorry, I cannot put “read X amount of books at Barnes & Noble” on my resume! A degree is (and you can’t argue with this so much) a symbol that you took classes and did well enough in them to pass. It is a standard that many hiring managers are looking for when sorting through a pile of resumes. I’ve sat on several hiring committees, and this definitely goes on where I work (at a government job).

    Also in regards to ROI, my MBA is costing me $13K. You can’t even buy a new car for $13K! True when bundled with my undergraduate loans, my total student debt is somewhere around $75K. However, I came from a very poor background. My family don’t own homes and they don’t even buy new cars. Many of my peers in my hometown sunk all of their debt into new cars, credit cards and homes. I decided to sink mine into education (no house or credit cards here). Even if I can get to a position making $60K annually, then my education is worth it. That is because I was only making $17K as a cashier at K-Mart, and no one wants to “network” with you when you say that is what you do.

    So yes, I am banking on my MBA to impress someone and show that I am not the idiot that people would assume that those who work in retail and food service (in their mid-20s…not as a college job) to be. Yes, I have 1 great employment streak to put on there, but it is also followed by a significant (1 year+) employment gap. In order to play in the game, you need the right equipment. Was I willing to pay even $50K for an MBA? No. So a “top-tier” program wasn’t even in the running for me…I don’t care what type of doors it could open! In all honesty, top-tier programs would not have accepted me anyway; not with my ho-hum work experience.

    The bottom line is that I do not want a corner office, and I am not shooting to make 6-figures (although that would be very nice!). I am just looking to prove myself and show others that I would be a valuable asset to their organization. I am not even really looking to expand my network so much, because like I said before, no one wants to network with people who don’t have the right job title and/or lifestyle (I am currently a secretary…hence the severe pay-cut over what I made before). Even as an “MBA student”, I am able to command more respect from others. I do not necessarily agree with this (I am the same person…my intelligence and work ethic didn’t all of a sudden increase once I started graduate school); but I also can’t deny it either.

    My own sliver of advice to anyone out there considering an MBA is completely assessing your current situation and skills. Where do you want to go? How will an MBA help you to get there? What are you willing to give up, and what will you settle for? You yourself will know that much more than any expert writing articles or even books! You have to look honestly at your own situation. I happen to know the answers to all of these questions when it comes to myself. I implore all other MBA students and prospects to do the same!

  • Mike

    I’m a potentially prospective MBA applicant, so I’ve thought a lot about this. I also have a master’s from an Ivy, which ran a pretty penny, so I understand some of the sentiments expressed here.

    One issue: there is not much talk here about the difference between a Top-10/15 US MBA and the rest of the programs. Regional MBA programs (especially with high price tags), should be approached with extreme caution. Alright.

    Also, little is said about the kind of loans that MBA students are using to pay for their degrees. If you can get away with obtaining only gov’t-sponsored loans (stafford, perkins, grad-plus), and keep from private loans and credit cards, you are in much better shape and there are really generous repayment options (ones that would actually make that closing story about the Harvard MBA going to work for the Man instead of in Africa moot — see: direct consolidation, income based repayments, and Public Service Loan Forgiveness).

    Yeah, I also have problems with the strict-financial-ROI discussions. (Except if we are talking outside of the top-10, as discussed). So, yes, you do learn all the fundamentals of business. That’s good. And you do it will brilliant people who are excited and talking about new ideas and new directions an industry is moving (I took some MBA classes at Wharton). You have profs who are overwhelmingly PhDs who are publishing and discussing with you all of the newest research in their industries. Yeah, it’s a bit of mental masturbation, but it’s also helpful — and not all found in a book — and then afterward you study on a beautiful campus, go play rugby, and then go drinking with classmates in the evening. I’m sorry, AND this is going to help my career (loans notwithstanding)?

    If you are going in strictly looking at financials, I’d argue that the vast majority of master’s degrees (which, I might add, can be just as expensive at MBAs) have questionable strict-financial-ROIs. Lamentable or not, in many ways the master is the new undergrad — people who believe it’s a huge boon to their employability and wallet are fooling themselves, or just not up on the economy.

    Rather, the MBA is about the experience, building your resume and network, perhaps switching careers, and to use as a bulwark against doing work that you hate (like 99% of America/the world). If you want a decent pay and the luxury of having some flexibility of employment (ie “hey, you’re moving from your consulting house in NYC to do microcredit for 2 years in India, that’s Great!” — a convo I recently had with an MBA friend) a top-10 MBA isn’t a terrible option. Just don’t put it on your credit card!

  • Jim

    I do think that Kaufman has some very valid points.

    But it’s worth pointing out that he based a lot of his personal experience on having worked in brand management. Many CPG companies are known to recruit MBA’s and non-MBA’s into essentially the same assistant brand manager positions. I worked in CPG and always felt that having an MBA was less important at my company, especially for those who were recruited out of undergrad, but clearly every industry is not the same when it comes to the MBA stamp.

    As Been There, Done That said, the connections and the experience are also really important aspects of business education that I think are left out from Kaufman’s analysis. It’s a little overly simplistic to call business school a “6-figure interview.” In fact, I have many friends who have Ivy League MBAs, and I personally recently accepted a place at one of the top 2 European business schools. I did this mainly because I wanted to work in luxury or fashion, and wanted the experience of working in Europe. It would be virtually impossible to make this career move and get visa sponsorship as an American without business education or contacts in Europe. So my reasons are clear.

    But I also do think a lot of bright students apply to business school thinking it is the “right thing” to do after 3 grueling years as an analyst, without thinking clearly about what their goals are. While I think it is shortsighted to think of the MBA experience strictly in ROI terms, some of the negatives, particularly for those considering schools outside the top 15 in the US (and perhaps the top 5 or so in Europe), should be well thought out before taking out those loans!

    I think the takeaway from this entire post is that… students should weigh the pros and cons of an MBA seriously, and know exactly what they’re trying to get out of their degrees. That way, if they decide to go, not only will they write much more compelling essays, but they’ll also get the most out of their 6 figures in loans, and be less inclined to agree with Kaufman years after graduation.

  • Been There, Done That,
    Thanks much for a really thoughtful response. You’re absolutely right: getting an MBA is not always a no-brainer especially given the considerable costs and sacrifices involved.

  • Been There, Done That

    I’m utterly appalled at the rancour and disrespect that some of these posters have towards Josh for delivering a message that is worthwhile. I think the points he makes are very valid and should be considered by everyone who wants to pursue a MBA.

    I have a degree from an Ivy… and the debt that I incurred (110K) has been the albatross around my neck ever since I graduated. I went in with such idealism and came out with debt that basically made it necessary for me to sell myself out to the highest-paying company. I empathise with the HBS graduate Josh references in his article… I didn’t get the degree so I could whore myself out to corporate America in order to pay off the debt.

    As other posters have noted, that MBA is not just a piece of paper; it’s the opportunity to create/build networks and friendships, ones that will hopefully last far beyond your grad years. I spent two of the best years of my adult life learning from and networking with some of the most brilliant minds from around the world…it was the most intense and intellectually satisfying time of my life. However, the price tag sure was hefty and I still question if that investment was worth it and when it will pay off…