PRIVATE EQUITY JOBS REQUIRE ‘FOCUS AND PERSISTENCE’
Generally, students who land in PE jobs have had experience with private equity before entering an MBA program. But Schein says, “There are certainly students who end up in private equity who have not come in with PE experience. Our recommendation to those students is to be really focused. It does take a lot of work and persistence and it takes a match. It takes a firm that sees something in a student that is of value to their firm. It really depends on what the firm is looking for and what the firm has to offer. If you are persistent and focused then the opportunity is there.”
Yet again, the most misinterpreted data in Stanford’s MBA employment reports are its actual job offer and acceptance numbers which always trail its major competitors. This year, for example, only 78% of the class had job offers by graduation and only 67% had accepted those offers. That was even lower than last year when 81% of the Class of 2018 reported offers by commencement and 69% of the students committed to an employer. Three months after graduation, of course, Stanford’s employment stats improve significantly, with 94% getting offers and 88% accepting them.
The comparatively lackluster placement rates say nothing about the demand for Stanford graduates and everything about the job preferences of the school’s students. A higher percentage of Stanford graduates are less likely to take mainstream MBA jobs with the global consulting, I-banks and tech firms that recruit on a tighter schedule. Instead, more of them seek jobs with startups, early stage companies, VCs and PE firms that do not recruit large numbers of MBAs and are less likely to fit into the deadlines for B-school employment reports. In fact, only 8% of Stanford’s MBAs got jobs through on-campus interviewing. The largest single group of students–30%–connected with their employers via alumni referrals, classmates, club events, class projects, or faculty.
THE ‘SHOW-ME’THE-MONEY’ JOBS
“When I think about students who come into our office and what they are looking for it is specific to their own career goals and values,” explains Schein. “They will look until they find something that meets their goals. They don’t feel constrained by the timing of their offers. And it means that those opportunities might well fall outside what is consistent to be traditional MBA recruiting.”
The actual compensation taken down by a student can vary significantly based on industry and job choice, pre-MBA work experience, class standing and luck. This year, the highest median salaries of $195,000 were pulled down by students who joined venture capital firms (it was the only MBA job category where the average base salary above $200K at $201,071). What followed VC in the salary sweepstakes is something of an anomaly: hospitality and travel, where the median base salary was $180,000 and the average was $185,000, but only 1% of the class took jobs in this sector.
Otherwise, the rest of industries that paid this year’s crop of Stanford MBAs the highest starting salaries were exactly what you would expect: Private equity (a median $170,000 and an average $176,015), hedge funds (median $165,000 and an average $169,400), consulting (median $165,000 and an average $151,083), and investment management ($152,500 median/$146,250 average). There were some surprises in the base pay levels of some industries, too. In healthcare, a sector that tends to underpay fresh MBA graduates, the median base salary for a Stanford MBA hire was $150,000. That was also the median for MBAS who went into enterprise software firms which paid the highest MBA salaries of any industry category in the tech sector.
It will surprise no one that the only sector where median salaries fell below six-figures was the non-profit space where the median base was $85,000. Yet, even the MBAs who accepted non-profit jobs had average salaries above the median at $103,333, helped along no doubt by an outlier who landed a non-profit position with the highest reported pay of $145,000.
MBAS HEADED INTO TECH FELL DRAMATICALLY AT STANFORD THIS YEAR
While more MBAs chose to work in financial services this year, 33% vs. 31% last year, the big news among industry choices was a sizable drop in the percentage of students deciding to accept jobs in the technology sector (see chart below). The number of graduates going to tech dropped nine percentage points to 24%, perhaps a reflection of the fact that technology is an ever-present fact of life across a wide swathe of sectors. Consulting remained unchanged at 18%. Healthcare attracted 6% of the class, while the transportation and logistics industries hired 4%. Some 3% of the Class of 2019 went to work in consumer goods, while another 3% accepted positions in media and entertainment. Real estate grabbed 2% of the graduates.
Schein notes that industry choices are self-reported by students and in recent years it has become harder than ever to classify a company in a specific industry. “If you look at Netflix, is that tech or entertainment?,” asks Schein. “Is Amazon a tech company or an e-commerce or logistics company? Our students are always looking for opportunities that are innovative and disruptive. It used to be that was in the tech sector but now that is increasingly true in healthcare and hospitality. I don’t see it as a negative at all. Even Google, could be considered something else than tech.”
The school noted that a record 447 organizations hired MBA students for both summer internships and full-time positions this year. A signal of the sheer breadth of GSB employers, 93% hired just one or two students (see chart above left). On the other hand, 15% of the entire class (versus 16% last year) launched startups in a broad variety of industries. The top five for these entrepreneurial graduates are: technology (27%), consumer products (23%), non-profit/social innovation (15%), finance (13%), and healthcare (6%). More non-U.S. students went the entrepreneurial route, with 20% of the graduates with non-permanent work authorization launching companies vs. 13% of the students who has permanent work authorization.