10 Years Later: How Columbia Business School Weathered The Financial Meltdown

“ALL’S WELL THAT ENDS WELL?”

Many are also creating their own jobs, often with the help of technology that break incumbent holds on information, making services less expensive, more transparent, and easier to access than ever before. One example is Jon Stein, a 2009 Columbia MBA and 2016 Fortune 40 Under 40 member. As a student, he launched Betterment, a personalized online asset management that now boasts $15 billion dollars in assets under management.

In other words, some MBAs watched the old order collapse…and found opportunity in its remnants. “Rather than despairing, they saw an opportunity to build a business,” Resnick says.

This year marks 10 years since Hussain graduated from CBS. Like many, he has kept close tabs on his classmates. He is thrilled to see his classmates go on to do “some really cool and interesting things.” Some ended up following traditional paths. However, many others had to pivot after the meltdown, eventually moving into areas they hadn’t even considered. That makes his class’ performance all the more impressive, he says.

“I’ve had classmates who’ve founded their own companies in areas like FinTech – cutting edge stuff and raised great rounds of financing. I have friends who went into the media side and are working on new media for larger outlets. We have folks who’ve been successful in banking – they did get an internship and a full-time offer. We have folks who did consulting post-graduation and have ended up in different areas like pharmaceuticals and consumer goods. The part that I love is that these people are around the world. They are leaders in their respective organizations.”

FINANCE GRADS FIND A HOME…IN CONSULTING

The meltdown also shifted the industries where Columbia Business School grads chose to work. Among the Class of 2008, for example, 55.6% of graduates found work in financial services. Fast forward ten years and that percentage stood at 32.2%. Over that same period, the percentage of 2018 grads entering technology nearly tripled, going from 5.6% to 15.7%. In 2008, consulting scooped up 22.2% of Columbia MBAs. Ten years later, that number climbed to 33.6% — a higher percentage than financial services.

That doesn’t necessarily mean the influence of finance has leveled off at Columbia. “We had been fortunate,” Resnick admits. “Before the crash, we had been deepening our relationships with the top consulting firms. As our alums started to populate major consulting firms, these firms were serving in advising capacity to some of these financial services institutions. Some of the students who may have opted for investment banking before, but their skill sets were coincident with these consulting practices. So those firms started to pay more and more attention to CBS students. This provided alternatives for those who were looking to being engaged in financial services, but more from a service end to those companies.”

Consulting wasn’t the only industry undergoing a transformation. In finance, there has been a shift from the sale side to the buy side, which plays into Columbia’s traditional strengths in private equity and value investment, says Resnick. The financial market has also grown increasingly segmented, another big difference before the bubble burst in 2008.

“We’re more diverse in terms of where students go,” Resnick adds. “In finance, it has been interesting to see the evolution of roles in FinTech. We also have students in Financial Economics who are taking the Big Data jobs. So our alums were a little ahead of the industry.”

A BRAVE NEW WORLD

Over the past decade, technology has also disrupted business school recruiting. For example, Resnick’s team now use online tools to help students prepare resume drafts. At the same time, the school relies more heavily on virtual recruiting and interviewing as comfort and quality in the medium have risen. However, it is used more as a supplement than a replacement, Resnick says.

“There is so much to be said for in-person, human touch.”

While on-campus recruiting remains significant, it has shrunk to an extent since 2008, Resnick says. In a post-meltdown world, she believes summer and in-semester internships have grown more critical at the expense of 2nd year recruiting. One reason why ‘try before you buy’ has taken deeper roots? It goes to the types of companies recruiting students: startups and mid-sized companies. Such firms can’t afford to make mistakes on pricey MBA talent. Even more, says Resnick, they often lack a deep well of experienced recruiters or formalized structures of their larger counterparts. Still, these firms have become popular with MBAs – and represent growth potential for Resnick’s team.

As a result, Columbia has approached these firms like long-term consulting projects, one where small steps often represent major milestones. “Small firms recruit a little bit differently,” Resnick acknowledges. “They don’t bring the same group of large students and do more of the career fairs these days or networking events where people can establish relationships for opportunities that may come later. With startups, we provide a lot of support. They don’t have the bandwidth to do structured recruiting.”

TIME TO GET “SCRAPPY”

Such targets also require Resnick’s team to be more resourceful. Case in point: Columbia holds treks to Silicon Valley, which sometimes include growing firms that Resnick is wooing. Such visits introduce prospective employers to the caliber of graduate they may someday need. The team’s approach shifts in Columbia’s New York City backyard, where setting up meetups is the preferred means for interacting with young firms.

Bottom line: recruiters are expected to offer more support as students are veering away from big banking and more towards customized career paths. “We’re working with startups to almost provide a recruiting function,” adds Resnick, “where we might help them with a job description. Our roles as recruiters have changed.”

Recruiters aren’t the only ones who need to do more as the halcyon, pre-meltdown days fade from memory. Hussain, for one, believes networks matter now more than ever as traditional recruiting and career paths fall by the wayside.

“You have to get scrappy and think about your network,” he urges. “At a place like Columbia, you can create a plan and map out your network, whether it is professors or alumni or current students. That’s how I knocked out my plan. I knew the traditional forms of recruiting would be challenging, so I took inventory of the folks who could potentially help me.”

WHEN RISK IS CHEAP, THE END IS NEAR

Could circumstances ever become as dire for MBAs as they were in 2008-2009? These days, it is fashionable to project the next bubble, with student loan debt and public sector pension liabilities being touted as the next precursors to economic Armageddon. Professor Greenwald, however, is more concerned with attitudes being an omen for worry.

“If you want to know when a crisis is most likely to happen, it’s when people think there is no risk at all,” he says. “When there is no risk at all, buying insurance in the financial markets is incredibly cheap.

Everything was really cheap. So everyone who was skeptical that there was a new Millennium of prosperity without risk was pretty well positioned. When you see a situation where risk is being priced at ridiculously cheap levels, watch out!”

Hussain agrees. Aside from the dot.com bust, he looks back at the years preceding the financial meltdown as an “epic bull market” – a time when people were increasingly blinded to the downside. When it hit, he says, it was a full-fledged reminder of the cyclicality of the markets. When the next bear rouses from its slumber, Hussain believes it is best to take the long-term view…and ride it out.

“It’s the nature of markets. You need to have faith. In business school, you have a lot of folks you can tap into. You have the tools at your disposal to deal with adversity. it is a question of how do you utilize those tools. It’s not going to be easy. It’s going to take lots of elbow grease – getting on the phone and sending out emails. It just shows you that in the worst of times, you’ll have the backing of a tremendous institution that can help you. It doesn’t feel great when you’re in the middle of it all. Looking back, I realize that it really helped me a lot.”

DON’T MISS: MEET COLUMBIA BUSINESS SCHOOL’S MBA CLASS OF 2020