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McKinsey? Goldman? Forget It. More MBAs Opt To Spend Summer At Startups

Interns around computer

Six MBA interns at the Earnest headquarters in San Francisco. Pictured from left to right are Cathy Hsu (Chicago Booth), Sabina Robinov (Harvard), Saagar Kulkarni (Harvard), Gideon Silverman (Stanford), Eva Wei (Wharton), and Megan Terraforte (Wharton). Photo courtesy of Earnest

The Mission District of San Francisco is a microcosm of dichotomies.The city’s oldest neighborhood, it was first home to the Ohlone tribe, then Spanish missionaries, European immigrants, Latino immigrants and now startups. Homelessness, drugs, and prostitutes exist next to tiny bars overrun by hipster techies with bank accounts bigger than their horn-rimmed glasses. Grunge collides with brick buildings that were once factories and are now converted apartments and office space. It’s a true visual of a gentrification war.

In an old furniture manufacturing building with aged hardwood floors exists budding fin-tech startup, Earnest. Founded by Harvard MBA Louis Beryl, 34, and finance vet Benjamin Hutchinson, 36, in 2013 and launched in March of 2014, Earnest hopes to be the next company to disrupt the student loan market, a business that has already seen Stanford and Wharton MBA startups establish a lead in the field with SoFi and CommonBond, respectively.

Undaunted by the existing competition, Earnest is growing fast with significant financial resources behind it. Beryl and company have already raised $32 million in two rounds of venture backing—their latest Series A round, which closed at the end of January garnered $17 million and a flurry of media attention. Alan Cooper, head of communications at Earnest, explains the growth and the struggles that come with it during a stroll to nearby Blue Bottle Coffee (of course) to grab a micro-roasted cup of joe.

THE BAY AREA STARTUP SCENE HAS BECOME A MAGNET FOR INTERNING MBA STUDENTS THIS SUMMER

He talks about how the company has grown from 30 employees at the end of 2014 to 83 now and how it’s nearly impossible to nail down new office space large enough in a sweltering Mission real estate market. Median commercial and residential rent in the Mission has been soaring, even above the outlandish city averages. Right now, they have three separate spaces as they frantically search for one central location.

The current space is typical of a Bay Area-based startup—a couple of large rooms with some couches and many Apple-littered desks. Cooper kindly asks a couple of 20-somethings with MacBooks to scram from the couches to make room for a meeting and the purpose of Poets&Quants’ visit—to get to know the seven MBA interns Earnest has hired for the summer.

The interns come from a Who’s Who of the business school elite—Harvard, Wharton, Booth, and nearby Stanford all for the same broad purpose—to learn more about fin-tech and what it’s like to work at a Bay Area startup. The geography and culture of the area is in itself enough for them to get the gist of the scene. The office sits next door to Lyft and down the street from Mission Cliffs—an indoor rock climbing and workout gym where fixed-gear bikes are crammed into an overflowing set of bike racks.

NEARLY TWO-THIRDS OF HARVARD FIRST YEARS EXPRESSED INTEREST IN SPENDING THE SUMMER AT A STARTUP

The interns are your typical twenty-something and thirty-something MBA students from top business schools: bright, diverse, and clean cut (except for the occasional hipster five-o’clock shadow, of course). They largely wear Bonobos or J. Crew business casual. There is interest and respect for one another, and the only sign of school rivalry happens when Gideon Silverman, a Stanford student boasts that “Stanford is the greatest incubator in the world” and venture backing behind Stanford startups would be “one of the largest economies in the world.” Saagar Kulkarni, a Harvard MBA, was quick to defend his school’s entrepreneurial prowess, as was Megan Terraforte from Wharton.

All of the interns either come from the East Coast or another country and largely have traditional professional backgrounds. They’ve worked for McKinsey, Bain, Google, Salesforce, New York Life, and JP Morgan. And they are part of a growing trend of MBAs seeking summer internships at early stage ventures.

“Interest in interning at a startup is definitely increasing,” says Kristen Fitzpatrick, managing director of career and professional development at Harvard Business School. “I would say it’s more of a 10-year phenomena that continues to increase.” This summer, Fitzpatrick predicted the majority of Harvard first-years could be at startups, based on a Harvard survey that’s received a 67% response rate so far. “We are still in the process of gathering this summer’s data but about 600 out of 900 MBAs expressed interest to be at a startup this summer,” she says. At Wharton, job postings from startups have gone from 130 three years ago to 400 in the past year.

That two-thirds of Harvard’s first-year class are eying startups over such sure-things as McKinsey, Bain, BCG, Goldman, Morgan Stanley, Google, Amazon, Procter & Gamble and General Electric is nothing less than an ambitious bet on the future. Summer internships at those blue chip companies are virtually required to get a full-time job offer. Looking askance at those opportunities is to limit one’s options at graduation. The fact that this sea change in MBA desires is occurring speaks to the confidence of forthcoming graduates in the economy and the job market but also to changing ideas of what bright, young professionals want out of the world of work.