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 Kaufman believes that MBA programs “teach many worthless, outdated, even outright damaging concepts and practices.”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…

  • sasamat

    Good grief, the Internets (sic): so much noise, so little signal.

    Don’t read Kaufaman, read Pfeffer: http://www.gsb.stanford.edu/jacksonlibrary/gsbonly/articles/PfefferFongArticle.pdf

    and if you find yourself intrigued by a Stanford GSB prof who would preach such sacrilege, read Henry Mintzberg http://www.mintzberg.org/ from McGill and read his book “Mangers, not MBAs” for the full meal deal.

  • Scott the Tyrant

    Josh has done one thing quite well. He branded himself and that is no easy feat. Furthermore, some of these comments seem rather harsh considering the guy is simply trying to educate people and earn a living doing it.

    Of course, in typical fashion, once Josh is REALLY successful most of you will perform orally to gulp down the semen of his success.

  • Analogously, B school is like a gladiator arena, where people survives by actually fighting. That experience and learning cannot be taught outside the arena.

    Josh K.,
    MBA is not only done for getting out what is written in the books. You have to agree. It is a multidimensional learning experience as explained by others in their responses.
    Probably the only motivation you have in doing this is selling your stuff to those who are lured into the fact that you can deliever the same experience as a MBA does, to everyone, by a consultancy at a much cheaper cost. That is a farce. And I don’t buy that.
    Initially I was little appreciative of the fact that you brought out this discussion, which has been worthwhile till the point you say that MBA education is not worth for a very few, if not rare, of the population that includes YOU. But when you start selling courses and books for teaching management, it just dilutes your credibility.

    Thanks for bringing out this discussion. But I am not visiting your website nor buying any book, nor recommending anyone to visit this page.

  • Bharat

    Josh Kaufman is a big loser and an ignorant chap. He doesn’t know about the people here in India who have graduated from Harvard and London Business School. They are great achievers.

  • MH

    First and foremost my question is who the fuck is Josh Kaufman and why should anyone care what he thinks?
    This is a largely stupid article.
    One of the first points he makes is how expensive MBA’s have gotten these days and consequently un-worth-it, partially as a result of that ever increasing price tag. That in and of itself eliminates any shred of credibility. Personally, the $150K price tag is not the major (economic) consideration. The real thing I struggle with is losing 2 years of income, which is several times a multiple of the 2 years MBA expenses. If I go to b-school I’ll idealy (and on currently on track to) leave a $250-350K a year income on the table for 2 years. Opportunity costs, tuition, room & board = $500-700K. So even if MBA programs have jacked up their tuitions 50% in the last 4 years, that $50K is a less than 10% increment to my existing cost of an MBA. 300K lost comp x 2 years + 100K tuition = 700K total cost, 50K increase in tuition 50K/700K = 7% increase. So right off the bat, his cost argument is moot. The increasing tuition cost has a minimal impact on the big picture 2 year economic cost of an MBA.
    Second, this idiot proposes that because he read a bunch of textbooks he is equivalent to a Harvard/Standford MBA. Time after time, I’ve heard the same thing: people who go to (elite) business school tend to keep going and continue to excel and torpedo through their careers while their non-MBA-getting counterparts tend to stall out and hit a cieling of sorts. This is what I’ve heard Jamie Dimon say. This is what I’ve heard Steven Schwarzman say. And when I hear them say something, I don’t have to ask “Who the fuck is Steve Schwarzman and why should I give a shit about what he says?”
    Third, he bases most of his argument on this stupid fuckin academic study. I’ve done an academic study as well and I’ll have you know there is very little difference between an academic white paper and a pitch book valuation, other than the formatting. I came up with my conclusion first (its human nature) and the data just happened to support my presumptions. For every study telling me one thing, I can find 10 more telling me the other.
    Forth, am I the only one seeing this, he worked at P&G for a number of years, alongside well-educated professionals, and now is launching a brand of his own. If he had worked alongside a bunch of SUNY Oneonta communication majors would he have the same knowledge and insight he has now? Probably not.
    So in sum, this douch is sophmoric and pretty immature in my personal opinion. He fails to acknowledge that 90% of what he knows he learned from working alongside harvard and wharton MBA’s, and not from reading textbooks. He seems to think that the sole cost of an MBA is the $’s spent, and the sole benefit is the textbooks lessons taught. He doesn’t recognize that one of the primary reasons and benefits of an Elite MBA is the fraternity and professional network you develop, the team work and management skills taught, and all the past experiences all your peers bring with them and share collectively.
    Lastly, this article is making this kid out to be some sort of deeply innovative, cutting edge entrepreneur. Since when was a self-taught MBA cirriculum groundbreaking? The article says if Josh Kaufman would have pursued an MBA, he likely would have gone to Harvard or Stanford. Did he get admitted to either of those institutions? Because admission is a little known requisite to getting an MBA. I didn’t read the entire article so I could have missed that he did in fact get into Harvard and Stanford. I’ve probably shared this before, but throughout college my college experience and even after it (non-target) it was very challenging to get into IBD. It was an uphill battle and one I started with a handful of friends and classmates. Only a few of us had the drive, luck and persiverience to crack our way in. The ones that fell by the wayside still to this day insist they see no value in a banking job, as if they had the option of accepting one. They’d just as soon quit trying because they’re intropectively defeated and don’t think they’re good enough (and Im not saying there is such a thing as not being good/smart enough for banking), than acknowledge externally that failed, often under the guise of “I dont want it.”
    Truth be told, I may or may not get an MBA. And I’ve heard several people tell me that “You need to seriously consider the benefit it will offer you, because everyone is different and it very well may not be of much value to you while it may be very valuable to someone else.” But almost all of these people are significantly older and are themselves graduates of MBA programs I’d be interested in attending. So I value their opinions. I have absolutely no interest in listening to a 28 year old with a undergrad from cinncinati U (not that theres anything wrong with that) who runs a web site telling me the merits of not getting an MBA. Shame on that web site for presenting him as if he’s some sort of oracle on all things MBA.. and primarily promoting his product, which is all he’s doing.

  • Mr Love

    I very much agree with the author. From my personal experiences, unless you attend an ivy level bschool, obtaining an MBA from any other institution is not worth the price. If I was to apply to an MBA, I would only apply to the top programs where connections are priceless and one public program when you can attend part time at a fraction of the price and then choose from there. But to each its own. Obtaining an MBA at 150k form some university in midwest, northeast, or whatever the case may be is totally not worth it because you’ll end up doing the jobs with undergrads at the same pay but with a mini mortgage. BUT, because not many HR hiring managers may agree with this (after all we all know that some HR departments can’t think straight), an MBA at times may be required to break that glass ceiling. To all, wishing you good luck in your studies.

  • DC

    I see both sides of the argument and my wife and I are a great example to represent both sides. My wife is switching careers after years in biotech and earning her MBA will help open up more opportunities with the potential to earning more than before. In the biotech space it’s hard to make a 6 figure salary even with more than a decade of experience if you only have a BS or even a MS. PHD is certainly much more expensive than any MBA out there.

    I personally am in financial sales in the derivative markets and I do not see myself getting an MBA simply because the math does not work out. My earnings are not based what degree I have but on my skills in sales and trading. An MBA would likely have a nominal + opportunity cost of over $500k and I am almost 100% certain that I will not see a $500K return by investing in an MBA.

  • Josh may have a point. Going to business school is indeed a very costly endeavor and one could argue whether the syllabus of any given program will make you a better manager who excels in his career. However, his view of business education might just be a bit too simplified because business school and the experience it offers is not only about the core education itself. It is also a place where you build an extensive and invaluable network of contacts, an international place where you tackle problems in teams and learn to deal with and overcome cross-cultural boundaries. It’s a place where you can become part of a group that has embarked on the same journey and a place to hone your communication, analytical and interpersonal skills. I don’t think establishing this network and gaining those skills can be done sitting home alone with a book in hand…

  • Nik

    This is an interesting argument and I have read the study. One fatal flaw I see in it, and this goes for most any social science project, is you only get to study each person once. We can’t go back and study Bill individually with an MBA and w/o an MBA. My assumption (I know that is a dangerous word) would be that a large number of people earning an MBA do need it in their professional development. Those such as yourself, Mr. Kaufman, don’t; this includes Bill Gates, that Facebook guy, and a long list of other widely successful business elites (but it is interesting to note that a large number of them were accepted into some heavy-hitting schools, which may prove the point that they are good filters for future successful people, maybe the best route is to get in and drop out after a year? It’s hard to say.) Some people need the academic environment to develop as professionals and scholars. It may not be for what we traditionally think it is for either. It may be that they need guidance to pull the pieces together, be it from peers or instructors. I guess what I am saying is I would not be so quick to discount an MBA based on some statistical analysis. It is the outliers that we all want to be in the business world anyways, and whatever path an individual sees as the path of least resistance is probably the correct one. Statistics do a fantastic job of diminishing the importance of those outliers, and if that is what we want to be why should we trust anything they tell us about them?

  • JayC

    I normally am the one telling people that MBAs have become way overpriced and are negative ROI, so kudos Josh for such an articulate presentation of that perspective. But….this is not always just a financial calculation. Many of the choicest careers (I work in entertainment strategy) are all but closed to non-MBAs. Yes, I bought an expensive interview with my MBA, but my alternative was to stay in my pre-MBA career. I’d probably be making as much now, but wouldn’t like my career nearly as much, and shifting course from what I was doing before would have been really difficult. For what it’s worth, 5 years out of my MBA I see business school as the turning point in my career. It allowed me to re-invent myself as a marketer and change the direction and trajectory of my career path. I’m thankful for that and consider the money well spent.
    Disclaimer: I went where the scholarship money was, and did my MBA for <$60K, all in. I agree that current MBA prices are too high. Furthermore, I got lucky. Many MBAs today, even from top schools, will end up taking the kinds of jobs they didn't think they'd have to after graduating.

  • d


    I agree. This comes back to scarcity. Things in limited supply are, of course, more valuable. The number of college and undergraduate has simply created more supply than demand. So what becomes the measure? It is more about the quality of the institution rather than the 2 or 3 letter degree you hold.

  • This is the age old question right? The underlying assumption here is that if no one went to get an MBA that it wouldn’t in some way become a stamp of approval again and highly coveted.

  • d

    There are plenty of people that are successful with just an undergrad. I think this gets back to the individual. If you’ve put your best foot forward at everything you’ve done, then you are likely to find success no matter what route you go though both paths would probably look different. If you’re one of those people that doesn’t have the people skills, patience, work-ethic, etc., you would probably not get hired at a top company whether you just had an undergrad degree, online MBA or HBS MBA (though if you are this person, you would have never gotten into HBS in the first place).

    Though I agree with Josh that the opportunity cost of an MBA may not be worth it, I think this can be said about all types of education. Overall, I agree with what Josh has said though I think a few things are off. MBA’s from the top schools are definitely beneficial for those that want to switch careers, those looking to meet driven and connected people, and have a high quality education. MBA’s from the rest generally don’t have this type of benefit and the recent statistics support this, however, MBA’s from lower rank schools generally don’t cost $150K. Nonetheless, Josh provides a valid perspective. Self-education is important no matter what your educational background and level is. If the only time you learn is when you’re in a classroom, you’re going to have problems no matter where you earned your degree from.

  • Steve Gara

    Although my comment does not touch upon MBA’s directly, it may be interesting to note that in line with the arguments raised by Josh regarding MBA’s, there was also a study done some time ago which pointed out that there was no correlation between a CEO’s astronomical salary and organizational performance. In other words just because you’re paying a huge salary to a CEO, does not gurantee additional performance anymore than the CEO that is paid less…the study is out there on the Internet….

  • Josh K. I feel you. I’ve been saying this to my mid-20 friends for last two years. The reality is that, most students graduate school at 22, then work for nice company for 3-4 years but they find it very boring and money just doesn’t give them motivation to wake up and head to cubicle. Then they discover the golden ticket to get away from the boring job — MBA school. They prepare for a year studying GMAT, polish up resumes with last-minute volunteering works, interview skills, essay, blah blah blah.

    I’m 26 and recently asked many of my friends why they’re so caught up with MBA. Their answers? because it’s the ‘right’ thing to do. We’ve been told that college is a must for good job, but then we realize it’s hard to move up the chain, so they now go after MBA thinking it’ll give them more money when they return and still in 20s. False. Many of my friends have this thinking process which is really shame but that’s just the reality.

    What’s even more funny is that these friends don’t read a SINGLE book on self-improvement, development, and management books. I’m not 100% against MBA, but I don’t see myself getting an MBA. I’ll gladly bypass 150K job because I know it’ll come with 150hrs/two weeks. I’d take my 40hr job and spend time sharpening my learning outside, spend time w/ family & friends, and travel around the world.

    I’ve come to realise that my goal for working is not to be rich and drive BMW, but to make money so I can achieve my other dreams of enjoying this life as memorable as I can.

  • Cecil Chua

    Just to correct a number of errors:

    Pfeffer and Fong: “These findings echo those of others who have observed there are almost no economic gains from an MBA degree UNLESS one graduates from a top-ranked program”

    This contradicts Mr. Kaufman’s statement: “Top MBA grads do get higher starting salaries, but they’re also paying $1,000 – 2,500 a month in student loan debt. When you look at salaries after education costs, it’s pretty much the same, or slightly better for non-MBAs.” and “Top MBA grads do get higher starting salaries, but they’re also paying $1,000 – 2,500 a month in student loan debt. When you look at salaries after education costs, it’s pretty much the same, or slightly better for non-MBAs.”

    Top business schools have been demonstrated to be economically worthwhile, where the term “economically” TAKES INTO ACCOUNT THE COSTS. The problem occurs when you move to “lower quality” schools, which are the vast majority.

    A second misconception is that you can learn everything from a book. Certain concepts like double-entry accounting, various forms of depreciation, cash flow management, time value of money, research methodology (for doing market surveys for example), contract law (offer, acceptance, etc.) and business process modeling, to name a few aren’t easy to pick up in a book. It is much easier to pick up these concepts after going through a two way or multiway discussion (i.e., in a classroom).

    For those concepts that CAN be picked up in a book, one issue is whether the non-MBA holder can INSTINCTIVELY make the appropriate decisions under circumstances. Certain business school methodologies (e.g., case study discussion) are meant to promote appropriate instinctive decision making.

    That being said, are MBAs worthwhile? As mentioned in other posts, the answer is “it depends.” Definitely an MBA is a way of increasing the circle of contacts a person has. It is also a way for engineers, doctors, etc. to pick up business skills they otherwise wouldn’t. If one already has a bachelor of business and is seeking the MBA to achieve career progression, however, the MBA has much less value.

  • james

    An MBA from a top school is the best way to make a career transition. I agree that if you’re already in a career that you enjoy, with numerous opportunities for upward mobility, perhaps an MBA does not make sense. But for many people, an MBA is necessary to break into a certain field and/or learn essential business skills. Josh was able to learn a lot of these concepts by rigorous studying, and I applaud him for that. But reading books is not going to enable an ex-teacher to break into management consulting; a top MBA will, however.

    There are also non-monetary benefits of business school. The networking, becoming lifelong friends with very smart and interesting people, traveling to different countries, partying, etc., are all aspects of business school that are talked about fondly by virtually every MBA alum I’ve met. You can’t really quantify these life experiences, but I place enormous value on them, and it’s one of the reasons I’m applying to business schools this year.

  • Rob

    @Greg: Great point of view! I definitely agree that for those having trouble making a lateral career move, a degree seriously greases the skids. I have a friend who did extensive traveling after school and then ended up in Event Planning for a marketing department of a Fortune 100 company. She realized that she wanted to do more serious strategic work, and just didn’t have the experience to make the move. An MBA will give her that option.

    On the other hand, I have several friends who have manage several promotions without MBAs, and we’ve all made the calculation that going back and taking 2 years out of the work force at this point is too high an opportunity cost. I don’t see any ceiling at this point that an MBA would be necessary to boost me through in my industry, so I doubt I’ll ever go back, even though my ambition is to run a marketing organization at a software company en route to CEO.

    I think that Josh is fundamentally asking people to focus on making an ROI calculation that, frankly, most people don’t make. They *assume* that getting an MBA is a good thing to do based on a cultural understanding of its worth rather than hard data. As any marketing group will tell you, perception matters more than truth. The dominant perception is that an MBA helps make you rich. For some people, it’s certainly great and necessary. For others, it’s not and there is an alternative to gain the knowledge necessary to excel at business. Focusing on ROI is a step the schools would like you to skip.


  • John Ballentine

    What would you (anyone) think of MBA’s from non-top schools? I have one from the Moore School of Business here in South Carolina. I financed it have not seen the ROI I really expected.

    I do have to say that the MBA gave me confidence. I deel that I can sit at the table with anyone on any business related topic and hold my own. But it DOES NOT make you an expert in anything. That is up to you….

    Does anyone have any advice for someone that has gotten the MBA from a mid-tier school (THe Moore School does have a highly ranked Internation Business School) that feels they are not getting the most of the education?


  • Abhishek Jha

    Hi Omar,

    You are being excessively harsh on Kaufman.

    The example he is giving of the consultant girl being from HBS is not irrelevant at all.Consulting is a dream job for MBAs. But do you think all MBA get into Top Consulting Firms.

    Chances are high that you wouldnot attend a Top 5 MBA and thus maynot land into your dream job.

    What he is trying to say that MBA is no surefire way to success and a lot less certain than most of US would like to agree.

    There should be a survey of every B School saying how many students got the job they desired before they started the MBA program.

  • Spencer Maxwell

    Hi Josh,

    I am thinking of getting an MBA because – I don’t know what I don’t know. I don’t necessarily want an IB or MC job. But I hear so many MBA students say that the program opens their eyes to what is possible in business, things that they never thought were possible before taking the program.

    What can you suggest to do that would have the same effect?

  • Colin

    For me, Josh’s approach is very helpful. I’ve spent over a decade in training for my profession (surgery) and the opportunity cost for me to go get an MBA is prohibitive. I will, however, soon be a co-owner of a multimillion dollar company (the medical practice of my partners and I). It behooves me to learn as much as I can about running a business. I don’t need the title. I don’t need the connections. I need the knowledge.

  • Rob

    MBAs today are a dime a dozen. What matters is what you know and the truth is that the people who take their education into their own hands will come out on top, whether that involves getting an MBA or not. For some people an MBA from a top school might make sense. But I’ll say it again, with schools like the University of Phoenix, the credential doesn’t carry the same weight that it did a decade ago. You may not like his perspective on the value of an MBA, but if you value business education then you have to respect the value Josh is providing. I have degrees in economics and finance and I have learned a great deal from the PersonalMBA. I recommend it to all my friends and I will continue to do so.

  • Josh,
    Memorizing take. I think for professionals who choose their career path right after college, stick with it and dedicate serious time — as Josh has — to one vocation, an MBA might be a waste. Incidentally, my most successful friend did that – working at Interbrand fresh out of school for three years in New York City.

    After three years, he moved to Interbrand’s Cincinnati office to work with his biggest client – P&G – and eat Skyline chili. Now he’s working for a much smaller branding agency back in New York. He is an absolute success, has high earnings and is in a senior position at 29. An MBA would have been a complete waste.

    For professionals who explored other paths, traveled, experimented in the arts or in low-paying humanitarian jobs, going to B-School probably has more benefits. If someone works for, say, Teach for America, the earnings tradeoff is going to be a lot less than $350,000. The student will also get a lot more upward mobility and focused business learning if he/she goes to B-School than by staying at Teach for America.

    Are there studies that look at students coming into B-School making less than, say, $70k a year? I think value depends on where a student is coming from.

    I also thought it was interesting that all of the student-based criteria for this study focused on individual performance. Have you come across a study that analyzes the organizational success produced by MBA grads? Earnings is only a narrow slice of the results this type of education can influence.


  • Omar – sorry you feel this way. I’ve been at this for six years because I think business is a tremendously important area of life, and I enjoy helping others learn useful skills. Although this interview focuses on the costs vs. benefits of MBA programs, I’m far more focused on my broader goal – teaching people useful business skills, whether or not they have MBAs.

    What you’re viewing as opportunism is mostly circumstance – I’ve been doing this for a very long time, but with the massive tuition inflation trend of the past few years, college costs have become a major social issue. I started working on my book two years ago, in an effort to share what I’ve learned over the years. The purpose of the book is to help people make good business decisions.

    If you’re interested in the details of the MBA research, you can read Pfeffer and Fong’s study in its entirety online and judge for yourself: http://www.aomonline.org/Publications/Articles/BSchools.asp

    Top MBA grads do get higher starting salaries, but they’re also paying $1,000 – 2,500 a month in student loan debt. When you look at salaries after education costs, it’s pretty much the same, or slightly better for non-MBAs.

    Re: MIT and free rides – if you go to school, funding your degree with scholarships is always a good idea. (I funded my undergrad degree completely via scholarships.) At that point, it becomes a matter of opportunity cost: if you feel like exiting the workforce for a few years to complete a degree is worthwhile, then go for it. The major issue is debt, so if you can avoid it, so much the better.

    Re: your psychoanalysis – my self-education wasn’t important because I felt like I needed to fit in, although I did find it intimidating to work with MBA-holding peers at first. It’s important because, when it came to making very real business decisions with millions of dollars, I was capable of contributing just as much as my MBA peers. Pursued diligently and intelligently, self-education works very well.

    As with all long-term decisions – it’s your money, it’s your life, and it’s your choice. Just make your choices with your eyes wide open, consider all of your alternatives, and don’t discount viable options just because they deviate from the status quo.

    Thanks for sharing your thoughts.

  • Omar

    Ok guys lets see what’s going on here, he’s trying to sell books and get website hits.

    There are serious flaws in his reasoning and logic:
    He points to one study from Stanford, which holds up his point of view, but omits the obvious difference in MBA salaries and positions. He also doesn’t tell us under what context this study is based. Does it include consultant/IB/rotational info from top companies? Because those job are near impossible to acquire w/ out an MBA. The entire landscape for MBA vs. Undergrad (which as pointed out above Kaufman should also be against) has changed so much on the last 10 years that 40-year-old data is useless. How can we even compare MBA’s to non-MBA’s? The starting positions are so distinctive today that this study is basically moot for the majority of industry functions.

    Another point to make is that perhaps Kaufman at 28, doesn’t need an MBA for his job at P&G, his entire experience is based in one industry, function and company! How can he speak to other sectors that employ MBA’s?

    A quote from Kaufman: “After I went through the self-education process I felt like a peer,” Well, I’m glad your need to belong with worthless MBA’s was finally fulfilled with your self-study.

    Lets just say Kaufman is right. The bottom line remains that he cannot decide if an MBA is the right decision for anyone but himself. Here is a not so extreme example: what if I have a full ride to MIT? Is it still a bad choice for me Mr. Kaufman?

    I love the story of the poor Harvard grad who is now forced to be a consultant, one of the most coveted jobs for MBA grads. What a crock!

    Ok now I’ll tell you I really feel.
    I used to be like Kaufman. I always pointed to the next big thing or the next great entrepreneur and would say “see look they don’t have degrees” Then the real world came crashing down. What Kaufman is effectively saying is that you can be one of the special ones who are successful without school. The fact of the matter is that for everyone who chooses not to get an advanced degree and becomes successful there are a plethora of people who fail and wind up never reaching MBA money.

    Kaufman and his motives are transparent. He is riding the current wave of anti-MBA sentiment to the bank. His opportunistic viewpoint is based on blanket statements and niche experience, which while not completely irrelevant, accounts for a small percentage of MBA jobs.

    Kaufman, you may not need an MBA to do your job but doesn’t mean the degree is the waste of time for anyone other than yourself.

  • Thanks for a great interview, John! Good discussion as well…

    Kellen – yes, this argument can be made for the social sciences as well. Undergraduate programs suffer the same structural issues, with the added factor of more employers using bachelors degrees as a screening criteria. The same general principle applies: if you absolutely need the credential, get it as quickly and inexpensively as possible, then focus on learning economically valuable skills on your own. MBA programs are certainly *a* way to switch careers, but the path is very expensive and not particularly efficient.

    Andrew – why is taking yourself out of the workforce for two years and taking on massive amounts of debt better than teaching yourself, particularly if you have a family? You can learn the essentials of business far better in far less time, and spend more time doing things that will improve your situation. Much of what makes self-education effective is being able to learn directly from the best teachers in the world – the focus of my work has been teaching people what they really need to know, and directing them to the best resources to get the best return on invested time.

    James – unfortunately, the view you have of the effectiveness of MBA programs is very common, but completely unsupported by data. Research does *not* indicate that “an elite MBA will reap dividends that will more than make up for the lost earnings and loans” – it’s flat at best, and the exact opposite at worst.

    What public data exists indicates graduating from business school has no effect on life satisfaction or career outcomes, and the debts are a huge burden. Reams of outcomes data are collected by b-schools every year, but precious little of it is ever publicly released – if the research was clearly positive, schools would use it immediately as marketing material. The almost total absence of publicly-available outcomes research from business schools is very telling.

    As I said in the interview – if you intend to graduate from an MBA program, I wish you every success. Just remember that you’re making a highly leveraged bet on your own future, you’ll be taking on mortgage-level debts that are non-dischargeable, research indicates that the outcomes data is not in your favor, and there are *many* other viable ways to reach your goals that involve far less risk.

    Hope this helps!

  • james

    With all due respect to Mr. Kaufman, I think his view is totally misguided. I agree that NON-elite MBA (outside the top 10) is not worth the opportunity cost. After all, most of the value of an MBA is the networking, prestige, and brand, not the actual in-class learning. An MBA from a top program like harvard, stanford, wharton, etc., opens doors that you otherwise would not be able to. For instance, a person who wants to get into sales&trading, hedge funds, or asset management, would benefit enormously by going to an elite business school, where top companies in those fields come to campus to recruit. Getting an interview with say, goldman sachs asset management, while you’re a student at wharton, is significantly easier than trying to land one if you’re not in b-school.

    Kaufman is technically right that an MBA is a $150,000 price tag to get an interview. But getting your foot in the door is oftentimes the hardest part, and an elite MBA will reap dividends that will more than make up for the lost earnings and loans.

  • I understand where Mr. Kaufman is coming from, but I don’t agree. I especially don’t agree if the MBA student has no previous business education.

    Many MBAs come from liberal arts or science backgrounds, and dedicating two years to learning business and management fundamentals is worth the investment.

    Personally, I don’t feel that I’d get a complete education by trying to cram in hours of reading every night while also juggling a full-time job and a family/social life.

  • Kellen

    Couldn’t this argument be made for all the social sciences? Or for undergraduate business programs as well? Would Kaufman have been hired at P&G without an undergraduate degree?

    The education is secondary in MBA programs anyway; career opportunities are the draw for prospective students. That’s why so many people do find value in an MBA. It’s the most efficient way to switch careers.