Are Stanford MBAs Really Worth More Than A Quarter Of A Million?
Maria |
February 2, 2023

In this episode, our hosts John, Maria, and Caroline are going to talk about something that might motivate you more to pursue an MBA:  Stanford’s recently released employment report shows that their Class of 2022 set records for Year 1 starting salary, expected performance bonus, and total compensation – the average of which now exceeds a quarter of a million dollars!

Episode Transcript

[00:00:07.290] – John

Well, hello, everyone. Welcome to Business Casual, the weekly podcast of Poets and Quants. I’m John Byrne of Poets and Quants, and I have my cohost here, Caroline Diarte Edwards and Maria Wich Villa. Caroline, as you all know, is the former Director of Admissions at INSEAD, who is a co founder of Fortuna Admissions and Maria is the founder of Applicant Lab. So we’re going to talk about two things today. One is something that’s a real wow, and that is the latest compensation numbers to come out of the Stanford Graduate School of Business. They are a new record not only for Stanford, but for all business schools in the world, the median total compensation. Now, this means your salary, your sign on bonus and your expected performance bonus in year one now exceeds a quarter of a million dollars for a newly minted Stanford MBA. That is just remarkable. The actual number, incidentally, is $257,563. Now, that’s one thing we want to get into. The other thing we want to get into is for all of you people who want to make that kind of money, should you apply in Round Three to an MBA program, and particularly to Stanford, where you can apply in round three?

[00:01:38.990] – John

As many of you will know already, Harvard does not have a round three. Maria, would you pay a Stanford MBA if you were in a hiring role at a company? Would you pay a Stanford MBA $257,000 to start?

[00:01:57.000] – Maria

If they’re going to make my company $3 million or more in profit, then sure.

[00:02:01.700] – John

She’s doing the multiple.

[00:02:07.690] – Maria

The market go capitalism, right? Supply, demand. If these employers are willing to pay that much, it’s presumably because these graduates are providing a minimum that much value, but presumably much more value than that to whomever is employing them. So, great. Good for them. Haza, haza.

[00:02:31.550] – John

Now, the base salary, what this comes down to is 182,272 for base salary. Sign on bonus, about $34,000, and then the expected performance bonus. And this could be an optimistic number because you never know what can happen is $91,000, up from 78 the year before. So a really big jump in that number. There was also an increase in the actual salary number as well. Caroline, what do you make of this? Why do you think Stanford MBAs make much more than MBAs from any other school in the world? Why?

[00:03:09.800] – Caroline

Well, Stanford is in the heart of Silicon Valley and it attracts a lot of people coming from venture capital and private equity and a lot of people who plan to stay in that industry or who are looking to make a career switch into private equity or venture capital. Right. This is the sort of mecca for those people that career focus. So I don’t think it’s that surprising that they are ahead of the game in terms of average salary for graduates. And also, it’s a very small class, right, compared to some other programs like Harvard Business School. So Harvard actually may be placing more people in terms of actual numbers into private equity and venture capital overall, but it just happens to be a high percentage of the Stanford class and therefore that pushes the average up. So I think it is largely driven by that particular industry.

[00:04:11.550] – John

Yeah, that’s really true. The interesting thing about that, and this bears on admissions, is that in most cases you can’t get a PE job or VC job out of business school unless you’ve had prior experience in the field or at least experience in investment banking. So this also suggests that admissions on one level is favoring people who come from private equity or venture capital because there’s no other way that 26% of the class, more than one in four of the graduates are going into one of the two fields. And the three most lucrative fields that MBAs can enter are private equity, venture capital and hedge funds. And in all three of these there are usually very large year end performance bonuses that are given to everyone who works on those teams. And that is really the secret of why these numbers are so big. And you look at even Wharton, Columbia and Chicago schools that historically are well known for their finance programs and tend to put a lot of people in finance jobs, their numbers come not close at all to the numbers at Stanford and private equity investor capital. Harvard’s close. 22% of the latest graduating class at Harvard went into PE and VC, but no one’s at this kind of level at 26%.

[00:05:39.840] – John

And that’s really the secret behind the big numbers here over the years. Caroline, have you noticed that people who do come from these backgrounds have any kind of advantage in admissions at Stanford? Because I can’t imagine they can place this number of people without an actual concerted admissions policy. I know I’m creating a conspiracy theory here, but I just don’t think it’s possible that you can put one in four people out of your graduating class into those two fields without admissions focused on this.

[00:06:15.610] – Caroline

Right. Private equity and venture capital notorious for favoring people with a very relevant background for recruitment. So it’s not always easy for people to switch into those industries. Post MBA people do do it, but it’s one of the tougher career switches to make. And so I’m not sure what percentage of the incoming class is coming from that industry. But I think that it’s not just Stanford. I think that young professionals coming from those industries typically do pretty well across the board with admissions to the top schools. I saw that at Incyed. I think that’s also the case at Harvard Business School, and it’s partly because there are fewer people right, with those backgrounds than there are, for example, investment bankers or management consultants. So it’s not such a common profile that it has become so ridiculously competitive as it has for some other typical pre MBA feeder profiles.

[00:07:19.630] – John

And here’s another interesting thing about the employment report, one that you might not expect given what’s happening to the tech sector right now. More Stanford MBAs went into tech in 2022 than in previous years, making more money, and many more started their own tech ventures. Now, one wonders, when the pink slips are given out, how many of them will go to Stanford MBA? I tend to think that if you land a Stanford MBA, you don’t want to let a Stanford MBA go. Maria, am I wrong or is it just a dollars and cents calculation for a company that’s wanting to reduce expenses and they don’t really care?

[00:08:01.870] – Maria

I mean, I don’t want to give the same answer twice to the questions that I’ve been asked, but if that Stanford MBA shows up and they knock it out of the park, no, I’m not going to lay them off. But if they show up and they’re like, I have a Stanford MBA and I’m just going to sit here and stare at a wall and not do anything, then of course I’m going to lay them off. I think once you get out into the re real world and you’re working your work itself, your work performance itself is what dictates whether or not you’re on the chopping block or not. I think going back to the topic of, yeah, a lot of people are getting into venture capital and private equity, but that’s because a lot of them already had it. I would say that I have definitely seen that, and I think specifically, it’s not just simply having a job at a venture capital firm or any job at a PE shop. I think the people who are having a lot of success, in my mind, they’re sort of a hierarchy. And if you want to get into, say, a Stanford or a Harvard from the Pevc world, it’s not just enough to simply be working in it.

[00:09:03.570] – Maria

I think you have to have been for example, you have to have evidence that you’ve been driving portfolio decisions, that you have had an impact on the investment committee where you work. The people that I have worked with who have had the most success at the very elite schools, for example, they have convinced their private equity fund to invest in a new sector that they were not previously considering, or they take over a portfolio company for six months and they turn it around. So just as a heads up, when we’re talking about the fact that these people have this experience in order to get into the higher the higher the school is, the higher that Bar is for not just simply saying, well, I work at firm X or firm Y, but actually having that track record of impact. And so then if you think about it, it becomes a self fulfilling prophecy. Because if I accept the people in the applicant pool who have been who were the temporary COO or whatever of a portfolio company. And during those six months, they turned the company around. Of course, then those people will command a higher salary when they graduate because they have an actual track record of saying, look, we raised our second fund and I helped divert some of that.

[00:10:14.800] – Maria

We were going to invest more in, I don’t know, cryptocurrency. And I said, no, let’s instead do something else. And that turned out to be a really good bet. And I was able to turn this company around, this portfolio company around, in other words, because these people have these achievements. The sorts of achievements that get them into Stanford to begin with are the sorts of achievements that I believe firms are and should be willing to pay for, assuming that they can replicate that track record of success and in fact, build upon it, given that they now have the MBA education in their pocket. So I do think that the school does select for those people. So it does become a self fulfilling prophecy.

[00:10:57.570] – John

Yeah, exactly. So if you’re out there and you’re thinking, oh my God, if I go get an MBA, I can make not only more money, but a lot more money. In fact, I can graduate and get a job and earn a quarter of a million dollars in my first year out. Think twice, if not three times about that, because we are really talking about exceptions in special circumstances. And with the economy going the way it is, I would expect that we’re not going to see record compensation for the graduating class of 2023. If anything, we’ll see a little setback probably, don’t you think?

[00:11:41.330] – Caroline

Yeah, I think that’s likely. But in any case, for someone who’s thinking about going to business school, I wouldn’t take the short term trends into account because it’s a long term project. Right. Or at least it’s a medium term project heading to business school. So someone applying now is going to be graduating the earliest in a couple of years, and the economy may well be very different then. So no one has a crystal ball and can predict exactly when is the perfect time to head off to business school, so that when you graduate, you are at the peak of graduate salaries. And in any case, right, these things, I think they sort of iron out over time. So if you do happen to be coming out into the market when there is a terrible recession, maybe you won’t get your first choice job or employer, but people find ways to take additional steps and maybe make that career transition a year down the line or two years down the line. The MBA is something that serves you in the long term. So it’s not just about landing that immediate post MBA job, but it’s about equipping yourself to manage your career effectively in the long term.

[00:12:53.550] – John

Yeah, very true. Which leads us to round three. These are the deadlines that at many schools are the final deadlines for admission in the fall of this year and 2023. And most of them are in late March and early April. In fact, on April 11 is the deadline day for round three at Stanford, Chicago, Yale, MIT and Cornell. April 5. It’s Kellogg. March 27. It’s Dartmouth Tuck. March 20. It’s Wharton. But we also know that Round Three tends to be the smallest round, and it’s the round where admission officers often are looking for people who fit a certain profile to help the diversity of the class. Is it worth even applying in Round Three? And I’m imagining that there will be many people who could apply in Round Three, given the extent and the lateness of many of these tech layoffs, where you have a lot of young people who may not have a graduate degree and this could be a perfect time for them to apply. Maria is round three sensible.

[00:14:09.090] – Maria

Normally I tell people to not even bother with round three, that at this point you might as well just wait the extra six months and apply in round one, mostly because I feel like most of the seats on the bus have already been given out, and so it’s basically standing room only by the time you get to round three. However, I do think that this year has been a very strange year. And we keep saying that every year it’s like, oh, this year is an even stranger year. But what’s been strange about this year is that the quote unquote end of COVID last year and there was the end of COVID so to speak, and the war for talent and employers were throwing all kinds of money at people to get them to stay and to get them to come back to the office. And so I think in the earlier part of the admission season, that is mostly Round One and even into Round Two, I think a lot of young people were thinking, well, I’m just going to stay at my job and make this money and have a nice life. And now with the layoffs that have started really taking off in sort of November, December, and even now into January, I think admissions applications, I think applications for domestic candidates have been down this year pretty significantly.

[00:15:19.660] – Maria

And yet I think that they are they might pick up all of a sudden very quickly. And so I think the schools themselves are signaling to us that they are, that this round three is not like other round threes, because the schools have started saying things like, well, maybe if you’ve been laid off, maybe you don’t need a GMAT. Maybe we’re willing to overlook certain things and we’re willing to roll out the red carpet and extend the deadlines for you. And I don’t think the schools would be making any of these concessions and certainly not signaling these concessions if they themselves were not looking at this Round Three in a very different way than they normally do. So I do think that this Round Three, especially for domestic US candidates applying to US schools, I do think that this is a rare time. I can’t believe I’m saying this, but I do think that Round Three is a viable round this year.

[00:16:08.710] – John

Yeah. Just in the past week or so, Dartmouth Tuck announced that they’re offering GMAT and GRE waivers for laid off workers. And not just tech workers, but workers of any industry who have laid off for their full time program through March 1. Kellogg has extended its test waiver through Round Three, basically continuing its overture to laid off tech workers. What do you say about all this, Caroline? I think you are less than they say. Or about round three.

[00:16:41.120] – Caroline

Yeah, I totally agree with Maria that this year is different with the top US schools. I think that they’ve been disappointed with the application volume that they’ve seen so far. And they anticipate that as we head into a period of perhaps a recession or at least an economic greater economic uncertainty and with more layoffs, they anticipate that the following season is likely going to be much busier for them. Right. So they’re expecting that probably there’ll be higher application volume for Rounds One and Round Two in the next season. So the fall of 2023 and spring of 2024. And so they’re trying to pull some of those candidates forward exactly to apply now. I would certainly encourage candidates to give that a shot, especially if now is the right time for them to go to business school. And if they have been laid off, it’s not ideal to have to wait until the fall to apply and then they would be heading off to business school 18 months from now. Right. So that would be a very long time to wait if you are not sure what you’re going to do in the meantime. So I think it makes a lot of sense for those candidates to apply now.

[00:18:01.000] – Caroline

I would imagine that with a school, it’s not going to be a magic formula for getting into, for example, Stanford, right? Perhaps there will be a couple of extra slots and some people will be lucky. But it’s still going to be very competitive. Right. It doesn’t mean that there’s now some sort of magical backdoor to get into business school. A lot of people will have the same idea. But still, I think that now may be a better time to apply than in the following season for many candidates. Sorry, I was just going to say, having said all that, I think it is very much a phenomenon with the top US schools that Round One and Round Two are particularly competitive. With the international schools. That is not so much the case. And many of them have more than three rounds rather than four rounds. Some of the other international European schools have five or six rounds or rolling admissions, so that it just gives you more options for when you can apply. And those could be great options for candidates who are thinking, right now, I’d really like to head off to business school later this year and not have to wait for another full year.

[00:19:16.450] – John

Right, exactly. And I think another point that we have made already in earlier podcasts was the sense that we felt admissions officers were putting a lot more people on waitlists because they didn’t know how each round would fall, given the decline in domestic applications. And if that’s true, it would indicate that there’s a little bit more room in the available classroom seats for Round Three candidates, because there are probably too many on the waitlist from Round One and Round 02:00 A.m.. I right on that.

[00:19:55.860] – Caroline

Yeah. I think there may be some movement on the waitlist now. You’re right that there has been a lot of weightlifting this season. I think it’s an uncertain period and likely rounds one and Round Two were a bit disappointing, so they’re sort of hanging on to some candidates to see what else they get coming through the pipeline now.

[00:20:17.830] – John

Right. If you apply in Round Three, should you apply differently in any meaningful way from someone who would apply in Round One or Round Two? I can’t imagine that you would, but maybe I’m missing something.

[00:20:29.820] – Maria

Maria, I think the fundamentals of your application would be the same. However, you may want to explain why now, why are you applying now in Round Three? If you were laid off and business school wasn’t originally something you were considering or you were only mildly considering it? I do think that explaining the circumstances to why you’re applying in round three, I would address that probably in the optional essay, just to make it clear that what your thought process has been and why now is the time for you to apply. Because it is uncommon to apply in round three for the US schools. So that’s the only difference. But everything else I would do exactly the same.

[00:21:08.780] – John

And I imagine there can be no better justification than, I just got laid off, I was intending to get an MBA all along, but I wasn’t going to do it until next year. But because I’m laid off, it’s just a great opportunity for me to take the time out, to develop more skills and to go for it now. Isn’t that right?

[00:21:27.580] – Maria

Exactly.

[00:21:28.570] – Caroline

Yeah, I think so. And just from experience of reviewing candidates in the final round, it is yet it is more common and that’s probably why schools allocate far fewer places to their final round. It is true that there is more variable quality in that final round, so you tend to get more candidates applying in the last round who have just, you know, they’ve prevaricated, they haven’t got their act together and they’ve sort of thrown things together at the last minute. The average quality is typically higher in the early rounds because then you get the candidates who are really well prepared and have been planning this for perhaps years in advance and have really thought very carefully about their timeline. So you want to make sure, if you are applying in a final round, that you make it clear that you’re not one of those sort of last minute candidates who has thrown things together in haste. Right? So I think it’s always important, as Maria said, to put together a strong application and do a thorough job. But perhaps even more important in the final round, just because the schools are so used to seeing candidates who are somewhat slapdash apply in that final round that you can stand out if you submit a really well, thoroughly thought through application.

[00:22:58.090] – Caroline

And just be careful to make sure that you haven’t made any careless errors in your submission, because they do see that more frequently in that final round.

[00:23:07.310] – John

So this could very well be the case where the late bird gets the worm, right?

[00:23:14.080] – Caroline

Absolutely.

[00:23:15.150] – John

So that old proverb, the early bird gets the worm, one who rises first is the best chance for success, may, in fact, not necessarily be true this time, particularly because of all the layoffs and the different sort of waiver policies and extended round three deadlines that we’re seeing schools offer right now. And given the decline in domestic applicants, So even if you don’t can’t get in, I also think in round three, what it is to me is practice. Practice for round one next time, if in fact you don’t get in. Because if you’re doing an application now and a standardized test this late in the game, you may not be able to put your best foot forward, let’s face it, but you’ll be laying the groundwork for a really good application around one of the following time and that’s worth something as well. So for all of you out there, good luck on your MBA journey. Maybe you will get into Stanford, maybe you will be among the stats next time, earning a quarter of a million dollars to start. We hope you are. This is John Byrne with Poets and Quants. Thanks for listening. Thank you.

Are Stanford MBAs Really Worth More Than A Quarter Of A Million?
Maria |
February 2, 2023

[00:00:00] John Byrne: Well hello everyone, this is John Byrne with Poets and Quants, welcome to Business Casual, our weekly podcast with my co-hosts Maria Wich-Vila and Caroline Diarte Edwards. Today we have a special guest, Heidi Hillis from Fortuna Admissions. She is based in Australia, is a senior expert coach for Fortuna, and has three degrees, all from Stanford, a BA in English literature, that’s my degree, an MA in Russian studies, and an MBA from the Graduate School of Business. And we have Heidi here to discuss some really fascinating research. Here’s what Fortuna did. They dug into the last Two class profiles of the Stanford Graduate School of Business.

That’s the class of โ€˜23 and the class of โ€˜24. They looked up all these folks on LinkedIn to identify a little bit more about their backgrounds, including their former employers and their places of undergraduate education to come up with an incredible analysis. Heidi, welcome.

[00:00:46] Heidi Hillis: Thank you. I’m glad to be here.

[00:00:48] John Byrne: Heidi, what is, what are the big takeaways from your deep dive discovery?

[00:00:54] Heidi Hillis: It’s hard to know even where to start. I think there’s a quite a few interesting kind of trends that we’ve seen that have taken place over the years. We were mentioning before the call that traditionally there hadn’t been, 10 years ago, if you’d looked, you wouldn’t have seen so many tech companies represented, but now there’s a big presence of tech companies who are feeding a lot of these MBA programs in Stanford in particular.

I think that the thing that was really interesting was, looking, not just at where the companies that were feeding the students, the applicants to Stanford. When they were working there, when they were applying, but actually the paths that they took prior to their current job.

So how many people were working, if you look at McKinsey, for example, or Bain and BCG, those are obviously companies that feed a lot of applicants to the program, but we found 20%, which seemed to be normal of, the class came from consulting, but if you actually look into the numbers in their background, You would see that actually 37 percent of these two classes had worked at McKinsey sometime prior, or actually in consulting, so it was, it’s The kind of the patterns that are behind, what you would normally see in terms of what Stanford tells us.

So you get a sense of the paths that people have taken. And so that’s something that was really interesting to see.

[00:02:16] John Byrne: Absolutely. And of course, this is this analysis goes so far beyond what any applicant would learn by simply looking at the class profile that the school up because, this level of detail is never available to people.

[00:02:33] Heidi Hillis: No, and yeah, for example, you could see that, Stanford will say that they have around, each year around 50 percent of applicants are international, which is a great statistic and gives you lots of hope if you are an international student. But when you dig into the numbers, you actually understand that.

75 percent of the people who get into Stanford actually went to a U. S. University. So even if you’re international, it does have does seem to have kind of an advantage of having been educated in the U. S. That seems to be something that they look for. However, I think. The concentration of universities in the U.

S. that are feeding to Stanford is something also that, if you’re looking at it, you might find a little bit dis, disconcerting. There’s a few programs that are really, obviously the top. Programs as you would expect places like Harvard, Stanford, Yale, the Ivies but if you look at the international universities very diverse from all over the world, really lots of people from different places, which is also really interesting.

[00:03:38] John Byrne: Yeah I tell you, one of the things that struck me in the data is how consistent it is. 10 years ago, we did the same exercise at Stanford and a bunch of other. Schools from Harvard and Dartmouth and Columbia and talk and a few others and back 10 years ago, we found that 25. 2 percent of the class of 2013 were from Ivy League colleges.

And the Ivy League 8 schools, not including Stanford. And if you included Stanford, it would have been 32. 6%. So now, let’s move forward to your data. And in 23, 30. 7 percent went to Ivy League schools, even above the 25. 2. And in 24, 27. 9 percent went to Ivy League schools. So it looks like Stanford has gotten even a little bit more elitist than it was.

Yeah,

[00:04:41] Heidi Hillis: It’s, it is it’s what the data says, right? Obviously, this is a sample. We have 80 percent of the two classes. So we don’t know where those other people went. And that might skew the data a little bit in another direction. But it is, if you look at there’s 15 schools, that include the Ivy’s and then you have UC Berkeley and obviously Stanford that really are contributing, 49 percent of the class of 23, 47. 3 percent of the class of 24. So that is a pretty heavy concentration and But, if you actually look into the data, you see a lot of people also, each of these is actually an individual story.

You see a lot of people who come from other schools as well. So it’s not like you have to give up hope if you come from a different school. I see a lot of individual stories that, from the whole range of U. S. schools that really are feeding into Stanford. So I think what the data doesn’t also tell you, unfortunately, is how many of these Of people from these backgrounds are actually applying.

So

[00:05:39] John Byrne: good point.

[00:05:40] Heidi Hillis: It’s it’s hard to know. And sometimes I think people this is. A path that a lot of people who go to these schools plan to take from the very beginning. So I would see, it would be interesting to know that I don’t know that we will ever find that out. But, um, that’s something to keep in mind as well.

[00:05:56] John Byrne: Yeah. And that’s a fair point. Because how reflective are these results of the applicant pool reflective of an elitist attitude probably a combination of if I had to guess, but, it is what it is, and these institutions obviously are great filters, so you come from McKinsey, Bain, BCG, and you go to Harvard or Stanford or Penn, and you pass through a fine filter, and it makes you less of a admissions risk than if you went to, frankly, the University of Kentucky and worked for a company that no one knows of.

That’s just the reality of elite MBA admissions, right?

[00:06:40] Heidi Hillis: Yeah. And so you will see that the people who are not going, you’ll see a lot of the people who you would, the profiles that you would expect, the Harvard undergrad that then goes to Goldman that then was working at a PE firm.

That’s a really typical profile that you’ll see. But you’ll also see some really, unique and interesting ones, which I think, Okay. Helps you understand that if you don’t have that path, you also have a real chance at these schools, and maybe even more of a chance, again, not knowing, how many of those Goldman P.

E. Harvard grads are applying. So I’m thinking of the guy that I saw who he went to UPenn undergrad, studied engineering, started out a kind of pretty typical path working in private equity, but then made a big pivot to work for go to Poland where he was working in a real estate investment firm and the head coach of the Polish lacrosse team.

So you have really interesting profiles like that, that you can see that. aren’t necessarily taking that typical path. And sometimes that really does help you stand out.

[00:07:42] John Byrne: True. Maria, what surprised you most about the data?

[00:07:48] Maria Wich-Vila: Wow. I think we already covered, the, one of the biggest ones was the number, the percentage of people who would had some sort of either their undergraduate or graduate education within the United States.

Intuitively, I had felt that was true. And sometimes when I try to, give some honest, tough love to applicants from certain countries, and they’ll say, oh, but Maria, I think you’re being a little too pessimistic. After all, X percent of the applicants at these schools are international, and Y percent are from a certain geography internationally.

I’ll say yes, but that doesn’t mean that they’re all Solely from that area. A lot of them are, do have significant international educational experiences. I think another, speaking of the international piece the percentage of people who had significant international work experience as well was something else that really jumped out at me.

Because it would signal to me that Stanford really does value this global perspective both within probably its domestic applicants and also its international applicants. So I thought that was also a really interesting piece of data that jumped out at me.

[00:08:52] John Byrne: Now remind me what percentage was that?

[00:08:56] Heidi Hillis: People who are international

[00:08:58] John Byrne: who have had international work experience.

[00:09:01] Heidi Hillis: I think it was 30%.

[00:09:02] Caroline Diarte Edwards: Yeah. Yeah. Yeah, it’s pretty

[00:09:04] John Byrne: impressive.

[00:09:04] Caroline Diarte Edwards: 30%, which I was thrilled to see. As well as coming from in Seattle and Europe. Obviously the international schools put a heavy emphasis on international experience and I hadn’t fully appreciated that. A school like Stanford would also.

really value that to the same extent. And it’s great to see that candidates are making the effort to get outside of the U. S. and get international experience because I think you gain so much from that exposure. And you bring more to the classroom if you’ve got that experience. I know that both Maria and Heidi.

I’ve worked outside of the home countries as well. Pre MBA and I think that you just have so much more to contribute to the whole experience. And it was great to see that 30%.

[00:09:50] John Byrne: What else struck you, Caroline?

[00:09:53] Caroline Diarte Edwards: We talked about the concentration of academic institutions, and I was also surprised about the concentration in employers.

So while there is a very long list of employers where the students have worked pre MBA when you dig into the career paths that they’ve taken there is some interesting concentration. Heidi had noted that the reports that There are 26 companies that account for nearly one third of the class in terms of where they were working right before Stanford.

But when you look at their whole career history, those same 26 companies represent over 60 percent of the class. So that is, yeah, that’s quite extraordinary that so many of the class have experience of working at quite a short list of companies.

[00:10:46] Heidi Hillis: I think that’s reflective of, if you really think about it, you have a lot of these companies.

You’re talking about the Goldmans and the Morgan Stanley and McKinsey that have really large programs that recruit out of undergrad that are really training grounds for. A lot of people that then on to do, work in industry or go on to work for in finance in particular, a lot of people starting out at some of these bulge bracket banks and then going into.

Private equity or smaller firms. So the diversity within finance in terms of where they were working prior to MBA is quite large compared to consulting because there just aren’t as many consulting firms, but a lot of people in financing, a lot of different firms, but they, a lot of them really do start out in these training programs, these analyst programs that are so big and popular.

[00:11:34] John Byrne: Yeah, true. And looking back, I did this exercise as well. The feeder companies to Stanford 10 years ago in the class of 2023, 22. 8 percent from McKinsey, Bain, BCG, and your data, 22. 5 percent work there. Incredible consistency over a 10 year period. When you look at the top six employers 10 years ago, they were McKinsey, BCG, Bain, Goldman, Morgan Stanley, and JP.

Morgan Chase. They accounted alone for 34 percent of all the students in the class of 20, 2013 at Stanford. In your data for 23 and 24 they account for 29. 8%, just a few percentage points less. So remarkable consistency. And I think you’re right, Heidi, this is a function of the fact that these firms bring in a lot of people who are analysts and actually expect them after 3 to 5 years to go to a top MBA school.

So there’s a good number of them in the applicant pool to choose from and let’s face it, they’re terrific candidates.

[00:12:46] Heidi Hillis: Yeah. I think another pool of really terrific candidates that you see, and I don’t know what the 2013 data was saying, but is the US military, which is really, I think, again, something that I felt having worked with lots of military candidates myself, understand that, Yeah, intuitively, I would have expected, but to see it in the data is actually really interesting.

You just see Stanford in particular, I think, is really looking for leadership potential, and it’s so hard to show that as an analyst, as a consultant, but as in the military, these people have such incredible leadership experience that it really helps them to stand out.

[00:13:23] John Byrne: Yeah. And let’s tell people what the data shows.

How many out of us military academies,

[00:13:28] Heidi Hillis: In all in total, we had, 20 over the two years. So that’s in the two classes that we found. So that’s, a pretty large number. And they come from all the different academies, right? So you’ll find them from different, not academies, in the army, navy and the marines.

So you’ll see that. And you also see quite a few, in the data we’ll, we see a lot from the Israeli military as well, but that’s actually a little bit difficult to because every Israeli does go into the military. So it’s they have that in their background. Any Israeli candidate would have Israeli military background as well, but again, that’s.

Place that people can really highlight their leadership. So you had eight people from who had been, who were Israeli and obviously had military experience where they were able to demonstrate significant impact and leadership prior to MBA.

[00:14:18] John Byrne: Yeah. In fact, 10 years ago, roughly 2%. of the class went to either West Point or the U.

S. Naval Academy. Good number of people actually from the military. Maria, any other observations?

[00:14:34] Maria Wich-Vila: Yeah, I was also surprised at the fact that within those top employers And when we look at the tech companies, it was Google and Facebook and Meta with a pretty large showing. Google was actually the fourth largest employer after the MBBs and, but then, I was expecting there to be an equal distribution amongst those famous large cap technology companies.

So I, I would have expected even representation amongst Google, Meta, Microsoft, Apple, Nvidia, Amazon, et cetera. And yet. Apple and Amazon only had one or two people each versus Google at 25. So I thought that was really fascinating and it makes me wonder if perhaps it’s a function of maybe Google and Meta might give their younger talent more opportunities to lead impactful projects, perhaps.

I’m just guessing here, but maybe Apple and Amazon perhaps are more hierarchical. And maybe don’t give their younger talent so many opportunities, but I was really surprised by that. I would have expected a much more even distribution amongst the those famous those famous tech companies.

[00:15:40] John Byrne: Yeah. You’re right. And I crunched the numbers on the percentages and Google took three and a half percent of the two classes and that’s better than Goldman, Morgan Stanley, JP Morgan Chase. Facebook had 2. 7 percent and Microsoft at 1. 5, and I was shocked at Amazon because, Amazon is widely known as the largest single recruiter of MBAs in the past five years.

At one point, they were recruiting a thousand MBAs a year, but in, in one sense, maybe Amazon quite doesn’t really have the prestige. For Stanford MBAs who might rather work elsewhere, I think that might be is, you look at the employment reports at a lot of the other schools and Amazon is number one at a number of schools and very low percentage of people from Amazon going to Stanford.

We don’t know, of course, how many. Leaving Stanford and going back to Amazon, but it can’t be that many.

[00:16:41] Heidi Hillis: I wonder if there’s something about just a proximity effect here. You have the plate, like the meta and Google just being so close to Stanford, maybe it just, attracts more people applying because they.

They’re almost on campus and maybe, just being Amazon all over the world and different places could be not attracting as many. I don’t know.

[00:17:03] John Byrne: Yeah, true. The other thing, the analysis shows, and this is what you also gather from the more public class profile is really the remarkable diversity of talent that a school like Stanford can attract year after year.

It is, it blows you away, really. The quality and the diversity of people despite the concentration of undergraduate degree holders or company employers, it’s it’s really mind boggling, isn’t it?

[00:17:33] Heidi Hillis: Yeah, they come from everywhere and really interesting paths and even the people I think that, have those kind of typical paths, you see a lot of diversity within them as well.

So I think, even if you’re coming from a Goldman or a McKinsey having lived in another country or gone to done a fellowship abroad or running a non profit on the side. These things are actually what helped them to stand out. But you do see some really interesting, I think, profiles, too, of people who’ve just done, you get a sense of what it would be like to be in the Stanford classroom.

People from really unique and different backgrounds. People who come from all different countries and lawyers, doctors people who have run, nonprofits in developing countries people running large programs for places like Heineken or Amazon too. But, it’s a real diversity of backgrounds.

[00:18:27] John Byrne: Now, Heidi, I wonder if one is an applicant. Is this discouraging to read and here’s why if I’m not from Harvard, Stanford, Penn, Columbia, Brown, Cornell, Dartmouth, and if I didn’t work for McKinsey, Bain, BCG, Goldman, Google am I at a disadvantage and should I even try? Some people look at the data and come away with that conclusion.

[00:18:52] Heidi Hillis: I think it’s a reality check for a lot of people. I think it’s just, it’s really, it just helps people understand, what it, the difficulty of this, why it’s so competitive, but I think that there is, again, behind the kind of the percentages, you do look at these individual profiles and I would get, I would actually take a lot of hope from it if I were looking, as an applicant, because especially if you are.

Maybe a little bit more of a big fish or small fish in a bigger pond or big fish in a smaller pond you go to Rice or you go to Purdue or, and you do really well, those are the people who, they’re definitely looking for that diversity of background as well as the international.

I think that’s really neat. think that, instead of looking at the data and saying, why not, why I shouldn’t even apply, it’s why not me look at these other profiles of people who have taken really unique paths that that do get in. So I think it is actually a Kind of a mix of both, it is a reality check for a lot of people, but it’s actually, there is so much diversity in the data as well.

I think also one thing that we haven’t really covered is about is just the prevalence of social impact in, that’s really taken hold of the class. I don’t, again, going back to your 2013 analysis, I’m not sure how easy it was to tell that, but a lot of you can see reflected in the both the types of organizations people are working for, but also their titles and the kinds of work that they’re doing that that there’s a huge 40 percent of the class of the two classes had some kind of social impact in their background.

Whether that’s, running their own nonprofit on the side or volunteering or. Running trans transformational kind of programs within companies that are, either in finance or consulting or in industry. That’s a big trend. I think that people can take heart from as well.

So if you’re working if you feel like you’re in an organization where you’re not getting the leadership that you. can use to highlight your potential for Stanford, that’s definitely a place you can go is working for in volunteer capacity for a non profit or on the board of a of some kind of foundation.

Those are the kinds of places that you can highlight your potential

[00:21:00] John Byrne: true. And I know we have a overrepresented part of every applicant pool at an elite business school are software engineers from India. And I wonder in your analysis, how many of them did you find from like the IITs?

[00:21:18] Heidi Hillis: That’s a good question. The IITs, it was again, it was one of these you have about 50 percent of classes internet, so 25 percent of the class. was educated outside of the US. The IITs are going to be up there. Let’s see from India, 2. 1 percent of the class came from India. So probably, I don’t know offhand exactly how many of those were IITs, but

[00:21:43] John Byrne: I’ve had a lot of them.

[00:21:45] Heidi Hillis: Yeah, probably a lot of them. Although I think, that’s the other thing is that people who come, to work with me from India, they feel like if they haven’t gone to IIT, then that’s going to be a disadvantage. But I think, you’ll find that there are, there’s representation of other universities as well.

Definitely.

[00:22:00] Caroline Diarte Edwards: Yeah, I was just looking at the list of undergrad institutions. And for example, you’ve got Osmania University from Hyderabad. So it is not, it’s not all IIT. Okay.

[00:22:12] John Byrne: Yeah, exactly. And Caroline, 1 of the things about the institutions that are really represented here and that I don’t really see unless I missed it.

I didn’t see a Cambridge or an Oxford. Two of the best five universities in the world. And I wonder if that’s just a function of fewer people in the applicant pool or what? What do you think that could be about?

[00:22:36] Caroline Diarte Edwards: I had a look through the uk Institutions and you have got cambridge in there.

I think I also noticed. Bristol university there are a few different universities. So i’m aston university, which is not it’s not on a par with Oxford or Cambridge. So I think that speaks to the point that Heidi made that you don’t have to have been to an elite school to get into Stanford.

Aston is a good solid university, nothing wrong with Aston, but it’s not it’s not one of the top UK universities. So there’s definitely some interesting variety in the educational backgrounds of the students going to Stanford. And

[00:23:16] John Byrne: then, yeah, it is if you’re a big fish in a small pond, like Afton, you’ll you could still stand out in the pool.

[00:23:26] Heidi Hillis: Absolutely. There’s a lot of really interesting background, you have look hard on blue and you have Miami University and some really smaller universities abroad. I think. Again, it’s really, if you look at that, it does give you hope because it’s really what you do afterwards and if you, obviously, if you come from one of these schools, you probably want to be in the top, 5 percent of the graduating class, you want to show that you have the GPA that can support an academic background that they feel comfortable that you’ll be able to compete academically, but, and maybe that’s what you’re Offset by the, the GMA or the scores, you don’t know, we don’t have those on here.

But, um, the path post university really becomes much more important in those cases. What you’ve done since then where you’ve, how you’ve risen from starting at a entry level position to, running a division or heading a country group or something like that.

[00:24:21] John Byrne: And as far as Cordon Bleu goes, every good business program needs a Cordon Bleu, for God’s sake, right?

You want to eat well at those NBA parties, don’t you?

[00:24:32] Heidi Hillis: Absolutely.

[00:24:35] John Byrne: Maria, I’m sure that was true at Harvard.

[00:24:38] Maria Wich-Vila: I wasn’t the one doing the cooking but I certainly, I was certainly a member of the wine and cuisine society where I happily participated in the eating and consuming a part of that.

But to, to the point that we were just recently talking about. regarding being a big fish in a small pond. Not only have I seen it personally with applicants that I’ve worked with who did not attend these elite universities, but even many years ago, I attended a, an admissions conference where Kirsten Moss, who was the former head of admissions at Stanford, she actually told stories about how they’ve accepted people who even attended community college.

But within the context of that community college, they had really moved mountains. And she said that one of the things that they look for is, Within the context and the opportunities that you’ve been given, how much impact have you had? So maybe you don’t have an opportunity to go to Yale or MIT or IIT for your undergraduate, but whatever opportunity you have been given, have you grabbed that opportunity and really made the most of it and really driven change?

So she specifically called out, I believe, I believe there were two students that year at the GSB who had both started their educations, their higher educations at community college. Anything is possible. It really is about finding the people who, wherever they go, they jump in and make an impact.

[00:25:55] Heidi Hillis: Yeah, I think that to that point, I think it can almost be a more difficult if you’ve gone to Harvard and then worked at one of these, gone on one of these paths because we know that there’s, that’s an overrepresented pool in the applicant pool to stand out among those to have had that, that pedigree sometimes can be a disadvantage, right?

If you haven’t done as much as you should have with that, or if you started at that high level to show that level of progress over the course of your career is actually a little bit more difficult. Okay. And coming from a community college and rising to, a country level manager in some places is actually puts you at a significant advantage, I would say.

[00:26:31] Maria Wich-Vila: Because it’s hard for those people, it’s hard for those people to stand out, but also I think some of them go on autopilot, right? I think some people are on this kind of achievement, elite achievement treadmill, where they’re not even really thinking about what do I want to do with my life?

They’re always reaching for whatever that next, what’s the best college to go to? It’s Harvard Princeton. Yeah. Okay. Now that I’m here, what’s the best employer to work for? It’s McKinsey, Bain, BCG and without actually perhaps stopping to think about what is my passion? What impact do I want to make in the world?

And so I feel sometimes those autopilot candidates, I feel a little bit bad for them because they’re doing everything quote unquote and yet sometimes when you speak with them, that passion just isn’t there. And I do think that may ultimately harm them in the very, very elite business school.

Admissions because business schools want people who are passionate because at the end of the day, in order to do hard things, you’re going to need passion at some point to get you through those low periods. And so I think that’s something business schools look for. And I do think that sometimes these.

These kind of autopilot candidates might sometimes be at a disadvantage.

[00:27:29] Heidi Hillis: Yeah, I think that, to that point look in the data, when you look at it, you see so many people who’ve gone to McKinsey, Bain, Weasley, or Goldman, but then there’s a, you see a lot of success for people who’ve actually pivoted.

So those pivots that are post The second or third job really do show you that, if you’re if you get a candidate who’s coming from, still at McKinsey, okay, that’s fine. They have to be the top 5 percent of McKinsey, like they have to be going to get so many McKinsey applicants that the only the, you can look at the data in a couple ways.

One is, oh, my God, they took 12 people from McKinsey and the others. Oh, my God, they only took 12 people from McKinsey, right? That’s So if you want to be one of those 12, you have to be the top 12 in the world, right? Whereas if you’ve gone to McKinsey and then done an externship at a health care startup and then moved on to be a product manager at for health at Google, that kind of a path is definitely showing a little bit more, maybe risk taking, maybe ability to follow your passions.

So I think that. When I see candidates who come to me, for example, and they’re like, not thinking about applying now, but maybe in a year or two, I say, look for an externship, maybe think about pivoting out of one of these places and looking for some operational experience.

And because you see in the data that works.

[00:28:42] Maria Wich-Vila: And they’re doing themselves a service not only in terms of enhancing their admissions chances, but even just in terms of determining, what do I want to do with my career? If I do eventually want to go into industry, what functional role do I want to have?

What industry do I want to work in? So it’s, it actually benefits them in the long term to do that as well, even if they don’t go to business school. I think those secondments and externships and second job, post consulting jobs are extremely valuable. Totally agree with you.

[00:29:06] Caroline Diarte Edwards: And I’m sure they also bring more to the classroom as well.

I would think that’s also why Stanford is selecting some of those candidates, because not only have they worked at McKinsey, but they’ve also led a non profit in Africa or worked in private equity or whatever it is. So they have much more breadth that they can bring to the classroom. And I think that It’s seen as a very valuable contribution

[00:29:29] John Byrne: in Heidi.

Did you see that? The majority of the candidates to examined actually did work in more than one place, right?

[00:29:37] Heidi Hillis: Yes, most of them did. There were very few that, you see working at one place. And I would say that those are people that would have really risen through the ranks.

Someone who’s worked at Walmart and become, started in, I don’t know, in one state, but then to become a regional manager and things like that really are going to onto a global role. The people who have stayed at one place really have shown significant career progression within that.

And then the other people I think you do see a lot of movement. The big. The most typical would be from investment banking to private equity and then you do find in finance, there’s a little bit less kind of movement into other industries. You see a lot of people staying within finance, but within finance.

Yeah. Yeah. The other industries, especially consulting or other, tech, people are really moving into other places and it’s becoming, it is a little bit difficult. We have these categories that we’ve talked about, for example, healthcare, but it’s hard to categorize some of these companies.

Are they healthcare? Are they tech? There’s a lot of overlap. And so everything’s a little bit of tech in something nowadays. So whether it’s finance and fintech or education and ed tech or health care and health tech, these are all merging and combining. It’s hard to categorize them.

[00:30:53] John Byrne: So looking at the data here I wonder if you’ve seen your old classmates in the sense that these new people are very much like the people you went to school with at Stanford. I

[00:31:05] Heidi Hillis: put this out and it’s really interesting to a lot of my classmates downloaded the report and read it. And a lot of them came back and said, oh, boy, I would never get in now.

It’s these people are super impressive. I think that you see a lot of. It’s just become more and more competitive. And I think that with more information and more people every year applying, it is becoming really difficult. I think that you do see a lot of, I am encouraged by the diversity part of it that you see still Stanford.

I feel like they do take risks on some really interesting profiles and candidates that maybe some other schools are less likely to do. And so that’s what does give me. A lot of hope when I get some kind of really nontraditional candidate who wants to, their dream school is Stanford. I feel like, I say all the time, there’s a 6 percent chance.

You’re going to get in, but there’s 100 percent chance. You won’t get in if you don’t apply. So you’ve got to, you got to give it a go. And that’s, the attitude that we take to it.

[00:32:04] John Byrne: Indeed. So for all of you out there read Heidi’s article on our site, it’s called who gets in and why exclusive research.

Into Stanford GSB and I’ll tell you one conclusion I have about this is that, man, if you really want to get into Stanford, you need a Sherpa, and and Heidi would be a great Sherpa for you because the, just the profiles of these folks, where they’ve been, what they’ve done, what they’ve accomplished in their early lives is so remarkable that To compete against, in this pool for a spot in the class you need every possible advantage you can get.

And and having an expert guide you through this trip probably would be a really big advantage. So Heidi, thank you for sharing your insights with us and the research, the very cool research.

[00:33:01] Heidi Hillis: Thank you

[00:33:03] John Byrne: and for all of you out there. Good luck. And if you want to go to Stanford, you got to check out this report.

Okay. It will inspire you to up your game, even if you are from Harvard, Stanford, Wharton, or wherever McKinsey, Bain, BCG, Goldman, Google, you want to look at this report and you want to really think about. What it will really take to get in. I think it will inspire you, motivate you to really put your best foot forward.

Thanks for listening. This is John Byrne with Poets& Quants.

Maria

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