MBAs And Tech: Open Arms Or Détente?

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MBAs And Tech: Open Arms Or Detente?

The art of politics is saying one thing while deftly doing another without anyone noticing. By that standard, the tech sector has the political touch of a Ronald Reagan.

Forget Stephen Curry and the Warriors. Considering the rhetoric, MBA bashing is no doubt the Bay Area’s favorite sport. Just look at these gems over the years:

‘For every full-time engineer, add $500,000 [in company value]. For every full-time MBA, subtract $250,000.’ – Guy Kawalski

“By offering ridiculously high salaries, companies like Goldman Sachs and McKinsey always get the top pick of the graduating M.B.A. crop. M.B.A.s who don’t get the plum jobs sometimes feel like they had to settle for less when joining a startup. They start their careers with inflated perceptions of their skill and value. And then they undergo a harsh period of adjustment from the elite world of business schools to the rough-and-tumble world of startups.”  – Vivek Wadhwa

“MBA graduating classes are actually a reliable contrary indicator: If they all want to go into investment banking, there’s going to be a financial crisis. If they want to go into tech, that means a bubble is forming.” – Marc Andreessen

Indeed, you could argue that tech entrepreneurs and MBAs talk like Mars and Venus. To techies, MBAs bog themselves down in rigid models and never get any “real” work (i.e. sales and development) done. Not to mention, the rules governing tech change faster than any MBA curriculum. In contrast, to many MBAs, techies are perennial teenagers who live only for the moment and fail to consider “mature” issues like scaling. Such divergent mindsets create a backdrop ripe for conflict. Just one problem: The axiom of opposites attract applies here. And tech companies are making an uneasy, if not constructive, alliance with MBAs.

Exhibit A: 16% of Class of 2015 MBAs went into tech according to Bloomberg Businessweek. That’s good for third place behind the traditional one-two punch of finance and consulting. And that’s just the tip of the (thawing) iceberg:

  • Tech companies now pay higher starting salaries than financial companies based on data from Businessweek’s 2015 survey of 9,000 MBAs.
  • Four of the 15 biggest consumers of MBA talent were tech companies, including Amazon, Microsoft, Google, and IBM according to data collected by Businessweek in 2015.
  • 24 of the 67 companies listed in S&P 500’s Information Technology Sector Index are headed by MBAs.
  • Nearly 25% of the 157 “unicorn” startups (Worth $1 billion or more) were launched by MBAs.

Amazon is an example of this changing dynamic. In 2015, the company plucked 34 MBAs from the University of Michigan’s Ross School of Business’ full-time MBA program. That made them Ross’ larger employer, higher than McKinsey (22), Deloitte (20) and the Boston Consulting Group (14). Even more, Amazon was far-and-away the biggest destination for internships, with 32 Ross students spending a summer there – the same totals as McKinsey, Deloitte, and PwC combined.

In statement to Quartz, Miriam Park, director of university and assessment programs notes that MBAs are attractive to Amazon managers “because they value the deep analytics and fresh perspective of an MBA hire.” Park also credits the team exposure and natural ambition of MBAs as a boon to their business. “Amazon teams run like small start ups – you see that in the breadth of roles we regularly hire MBAs for. And what we hear time and again from these MBA hires is how much they love the amount of responsibility they get – making business decisions that often affect millions of customers.”

In a 2015 interview with Poets&Quants, Park further cited being “curious” as an important way to start fast at Amazon. “They [should] get into the data and truly understand how it relates to the customer. We also make [MBA hires] full participating members of the team. So if you’re curious, ask questions, and get to the data, there won’t be any issues.”

Like any business, speed and performance are paramount, adds Park. “Amazon is very much about the application of learning, experimentation, and prototyping.  Speed matters in business.  Many decisions and actions are reversible and are not one way doors, and students who can dive deep, and also invent quickly have a great home in our company culture.”

So are MBAs and tech barons now finally ready to play nice? To a point, you could say. But don’t expect the needling to stop.

Keith Rabois, an investment partner at the VC firm Khosla Ventures, channels his inner Andreessen in grudgingly dismissing an MBA degree as a red flag.  “They tend to get hired after the company is already successful and it becomes a very bureaucratic organization,” he tells Bloomberg Businessweek. “They will probably keep you out of trouble, but they won’t create any value.”

As you’d expect, Sri Zaheer, dean of the University of Minnesota’s Carlson School of Management, doesn’t buy into Rabois’s argument. And she delivers the perfect zinger to the tech sector to drive home her point. “If they were a little more clued up about how to make money in their businesses, we wouldn’t see these tech bubbles and the craziness that happens every few years.”

Bazinga!

Like politics, the tech sector and business schools can sometimes be more fractious than friendly. As tech industries mature and MBA programs integrate the lessons of the last 20 years into the curriculum, you can probably expect more results than resentment in the future between these partners.

DON’T MISS: Where Tech Firms Are Finding Their Talent

Sources: Bloomberg Businessweek, QZ

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