Using An MBA To Do A Startup + The New GRE & GMAT
ApplicantLab |
October 5, 2023

In this episode of Business Casual, our hosts will discuss two important and relevant topics surrounding MBA programs today. First, they will explore the significance of MBA programs as incubators for business ideas and showcase the success of MBA startups. This discussion will encompass the diversity of ideas and the global locations where these startups are thriving. Second, the hosts will delve into the recent changes in the GMAT and GRE admission tests, with a specific focus on the shorter duration of these tests. They will also address the implications of these changes for test-takers and how the new scoring system for the GMAT may impact applicants.

Overall, this episode provides valuable insights into the value of MBA programs for aspiring entrepreneurs and sheds light on the evolving landscape of admission tests.

Episode Transcript

[00:00:07.210] – John

Hello, everyone. Welcome to Business Casual, the weekly podcast of Poets and Quants. I’m John Byrne, the editor of P. Q. And with me today, as always, are my co hosts, Maria Wich Vila and Caroline Diarte Edwards. Maria, as you all know, if you’re listeners of this podcast, is the founder of Applicant Lab and a Harvard MBA. And Caroline is an INSEAD MBA, but also the former Managing Director of Admissions at INSEAD and the co founder of Fortuna Admissions. We’re going to talk about two things today. Number one is an MBA program, a great place to incubate a business idea. And number two, we’re going to take a look at the new accelerated shortened test for admissions, the GRE, which has now gone live and thousands of people have already taken it, and the new shorter GMAT, which will be available to be taken on November 7. So, right around the corner, and we’ll talk about what you can expect from those two tests. I want to talk about MBA startups because this past year, 19% of the graduating class at Stanford started a business which is extraordinary. More commonly, it’s something like 5% at other business schools.

[00:01:29.920] – John

Stanford has always been on the high end and every year one of the things that we’ve done for quite a few years now is to take a look at the top 100 MBA startups of the year. And we do this by going to each of the schools and asking them to identify startups that have been launched in recent years. And then we go, we find out how much money these startups have raised, largely from venture capitalists and angel investors. This year, two INSEAD startups are at the top of the list. Gorillas, which is a grocery delivery service, has raised almost $1.4 million. Cap Chase, a fintech firm from INSEAD, has raised nearly a million. In fact, out of the hundred startups on the list, INSEAD has ten and those ten firms have raised more than 2 billion dollars. So you probably know if you’re interested in starting a business and you tell someone, oh, I’m going to do it in a business school, you know what they’re going to tell you. Take your money that you would spend on tuition and use it as your seed capital to launch your business. Don’t waste the time or the money to do it in a business school.

[00:02:50.220] – John

Caroline, what would you say to that?

[00:02:53.340] – Caroline

Well, John, obviously I would say that that’s bad advice. Of course, at business school, you’re going to get a lot of knowledge and skills and network that will minimize the risk, I think, in launching your business. Although I would say I wouldn’t necessarily launch it while you’re at business school. And I know some schools discourage that because it’s just difficult to have a very intense day job as well as a very intense full time MBA program to juggle at the same time. But it’s certainly a great place to develop your plan and get feedback and have access to an incredible network that can be a fantastic resource and source of funding and so on. We often hear criticism of business schools and MBA programs, particularly coming out of places like here in Silicon Valley, and it doesn’t add value if you’re going into a startup. But I think the numbers that you have in this article really contradict that. It’s incredible to see that nearly 20% of Stanford’s graduating class now start their own venture. I mean, that’s huge, right? And also we’re looking at the number of people who start a business when they come out of business school.

[00:04:13.380] – Caroline

But of course, there are far more people who, in the longer term, start a business. Right. Not everyone is able to launch their business straight out of business school because they may need to go and work for a consulting firm or a bank or a corporate to pay off their business school loans initially. And a lot of people then go into an entrepreneurial business sort of 510 years later. So business schools are incredibly entrepreneurial communities. And I think the schools have a lot of the top schools, offer incredible programs, electives courses. INSEAD she mentioned has a wonderful entrepreneur in residence program where you can get advice from people who really have that experience in the trenches and that’s invaluable to have access to that and get feedback in a safe environment. Where you can develop your idea, maybe build partnerships, partner with people who are your classmates, and also generate ideas that you might never have thought of. One of the things that your article highlights is the value of the diversity that you get in a classroom like INSEAD and the incredible exposure you get to ideas from all over the world that you might never have thought of.

[00:05:34.620] – Caroline

So that is also something that people draw on and people start businesses that wouldn’t have been on the horizon and on their radar screen before they went to business school. It’s a wonderful environment, I think, to be able to sort of cultivate your entrepreneurial ambitions. And it’s wonderful to see how many successful startups are coming out of business school. And it’s changed a lot. Right? I mean, that was not necessarily the case sort of 1020, 30 years ago. It has grown tremendously, and business schools have really cultivated a wonderful ecosystem that supports entrepreneurs. And it’s great to see that this is being so successful.

[00:06:25.370] – John

Yeah, it really is. The top 100 MBA startups that we cite in this article have raised a combined 9.2 billion. That’s the highest number total number of amount raised in the nine years that we’ve been doing this every year since 2015. Maria, your thoughts?

[00:06:46.930] – Maria

Yeah, I agree with Caroline. I think that, first of all, business school, for people who never dreamt of becoming entrepreneurs, business school does provide a great launching pad for eventual entrepreneurship. I think the statistic is something like 50% of HBS grads eventually go on to start a company at some point in their careers. But even when you’re at school, if you’re looking in the shorter terms of launch to launch something, you might meet a co founder, you might meet someone to bounce ideas off of. You might meet someone who gives you the opposite, who stress tests your idea. And they say, well, actually, I was working at Netflix prior to business school and that’s a terrible, like, this is why you shouldn’t even pursue this idea. So sometimes even getting that sort of a feedback might save you several years worth of pain and suffering. You have this hive mind from so many diverse backgrounds which can actually be such a benefit as opposed to being if you were to join simply a startup incubator where you would be surrounded primarily by startup people and tech people. They might have a very valuable lens, but maybe one or two very specific lenses through which they look at your business idea versus at an MBA program.

[00:07:56.300] – Maria

You’re going to get people from all over with all kinds of backgrounds to really stress test that idea. And a lot of programs really offer fantastic opportunities for you to actually, in a structured way, explore a potential business idea. One of the things that I was really happy to see within the top programs or the top startups on this list were Columbia Business School and UCLA Anderson. I will routinely tell people, I will say this until the cows come home, that if you want to start a business, UCLA Anderson is actually one of the best programs you should look at. Because in their second year, they have something called the business creation option, where you can spend that entire year for course credit, starting a business. So it’s not just something you would do in your spare time through the entrepreneurship center. It’s actually a course and it’s modeled after some of the top tech accelerators. So I was delighted to see, for example, that that’s a school that I think is they always punch above their weight class, in my opinion. And I was delighted to see a number of UCLA Anderson names on the list of the top 15.

[00:09:03.330] – Maria

So I don’t know, I think that there’s always quantitative data. You might say, well, I don’t know if I feel that business school is the right path for me to start a business, but the numbers don’t lie. I mean, this $9 billion worth of funding is not chump change. So I think the market is speaking, the investment community is speaking with their dollars. And so they certainly seem convinced that these are good and solid ideas coming out of business schools. So hopefully that’s enough to convince even the most doubtful skeptic.

[00:09:35.550] – John

The other thing about them is sort of the diversity of ideas that are being generated. These are not dating app companies. They are pretty sophisticated enterprises. Six of the top 15 are in fintech. There are several in biotech, ecommerce, real estate, childcare, automotive, car sharing, consumer goods, real estate. It’s pretty amazing. The list, and I think a lot of this has to do with the fact that many business schools now are trying to connect their graduate and undergraduate students at other university departments and schools with business school students. So it’s not just a bunch of MBAs getting together and doing their own thing, but in fact they’re finding partners in schools of engineering and computer science and medicine and law and launching companies with them from a multidisciplinary point of view. So that really adds a lot. In some cases, these startups actually commercialize discoveries that have been made on campus by others and yet are just laying there for the taking. And that’s often a very big source of it. And the truth is, look, yeah, you could take the money you would save from the tuition that you pay and use your seed capital and use that as seed capital.

[00:11:06.160] – John

But the truth is, what do you know about accounting, finance, strategy, marketing, operations? What do you know about truly leading a team and getting people to collaborate with each other? Never mind not really having a natural network of people of guinea pigs even to test your idea out, or having mentors like faculty who are serial entrepreneurs who can guide you along the way and help you pivot from one thing to the next. Because oftentimes your initial idea really needs to be cultivated and nurtured along and rethought. And that’s what a great business school entrepreneurship program can, you know, just piggybacking on what Maria and Caroline said. Schools in the past quarter of a century have devoted massive resources to entrepreneurship largely because so many students are interested in it. So even among the students who don’t launch a business right away, there is always in the back of their mind, yeah, this is something I would love to do sometime in my life. And then there are many people who launch it as a side hustle where you’ll take your job, your traditional mainstream MBA kind of job, but on the side you’ll nurture along a business and see how it goes.

[00:12:24.740] – John

And if it really starts taking off, then maybe you leave your job. And one thing that Maria pointed out, of course, is even if your startup fails, and obviously the failure rate is high and much lower, probably for MBA startups, incidentally, you have the MBA to fall back upon, which is not a bad thing. Now in many of the schools have in UCLA’s case, a sort of capstone course where you can either work for a company on a consulting team or you can start your own company. So you’re getting credit for your startup, academic credit, along with all the support and help and access to funding in many cases because there are many competitions at different schools that allow you to practice your ability to deliver an elevator pitch and your ability to therefore gain access to capital to fund your business. Of the businesses that we’ve highlighted here Caroline, are there any that really caught your eye?

[00:13:28.410] – Caroline

Well I was interested to see that INSEAD had highlighted some that are addressing issues of climate change and incredibly interesting ones around the world. So for example, there’s one that it’s an aquaculture startup called Good Tom which apparently means good shrimp in Vietnamese and they’re trying to change how farming is done across Southeast Asia by empowering farmers to be more efficient, sustainable and profitable. I thought that was very interesting and actually when I graduated from INSEAD I worked with the International Finance Corporation and one of our projects was working with Seaweed farmers in Indonesia. So that really jumped out of me as an interesting and exciting business. And then there’s one that is called Prono which is a CO2 removal company. So that’s obviously a very important area to explore. We place a lot of hope in those types of ventures to save us from climate change. So I’m thrilled to see that some INSEAD graduates are focusing on that and something that I would just add as well John is so as you know my husband is a venture capitalist and what he always emphasizes when he’s assessing an opportunity is he looks at two things, right?

[00:14:54.190] – Caroline

So he’ll look at the idea and see how viable that is and then he looks at the team and the quality of the team is really important because they know that as you said, likely things will change. You may have to completely change your business model at some point, right. You have to be very nimble as a startup and the market can change very quickly or everything can you may get due to competitive pressure, you might have to change your plan very quickly. And so whilst they are looking to evaluate an idea, they know that the idea might have to change. What they care about very deeply is the team, right? And the quality of the founders and they’re backing those people as much as they are backing the idea that they’re working on. And so if you have an MBA from a top business school, those investors know that you have had a really solid education that gives you the credibility that you’ll be able to tackle pretty much any issue that comes up because you have that breadth, that really solid foundation that you’ve gained during that business school program. So it gives them some security and some comfort that you bring a lot to the table if you’ve got that top notch business school.

[00:16:25.210] – Caroline

I think when you’re thinking about showcasing your idea to potential future funders then having that credibility and that business school education can be really powerful.

[00:16:36.930] – John

Yeah, totally. Maria, any of these stand out for mean?

[00:16:42.030] – Maria

I think the diversity of topics is something that really stands out for me. But know, for me, some of the fintech ones really stood out. But one thing that I also wanted to highlight is the diversity of locations, right? I mean, up until, I don’t know, recently, there was this idea that if you wanted to build a startup, you had to go to Silicon Valley, maybe New York City for Silicon Valley. But looking at the locations for some of these, I see Berlin, Mexico City, Jakarta, Singapore. Even Lahore, Pakistan. So one of the things that I think is really exciting about this list and why I think everyone should check it out is that it shows you not just the breadth of ideas, but the breadth of geographies. And that’s very exciting to me. I think there’s an acceleration of globalization in terms of access to capital and the ability to launch your business anywhere. So I thought that was really interesting.

[00:17:33.010] – John

Yeah, definitely. So if you want to check it out, go to Poets and Quants and you’ll see our annual story on the top 100 MBA startups of the year, and you’ll have a look at some of the ideas and some of the people behind them and the challenges that they’ve had to face in launching their businesses. Now, a lot of big news here for the current applicant class, particularly those who intend to apply in round Two and Round Three, and then after that are the new admission test. GMAT and the GRE both have undergone a major revamp and are much shorter than the earlier tests that were taken. In fact, the GRE takes now almost half the time you can take it in. Really, it’s only 1 hour and 58 minutes, which is remarkable. And the new GMAT, which will be available on November 7, you can take in 2 hours and 15 minutes. The launch date for the GRE was September 22. And on that day, thousands of people took the test for the first time. And these organizations largely reduced the length that it takes to take the test by eliminating questions. So the new GMAT, for example, knocked out a whole bunch of quant and verbal questions.

[00:19:12.450] – John

Same is true of the GRE. And in fact, in some cases, the new GMAT even eliminated sections. For example, there’s no longer an analytical writing section in the new GMAT, and the new GRE reduced that section from two essays to one. So that’s how they’ve been able to squeeze the time out of the test. The new test at the GRE cost $220 to take. The new test at GMAT cost $275 to take. And the big question, really, for admission officers is how valid will the new test be? Both the Graduate Manager of Admission Council and Educational Testing Service, which administers the GRE, insist that there’s no change in the validity or rigor of the test. So what are the advantages, Caroline, you think, of having a shorter test to take?

[00:20:18.150] – Caroline

Well, I’m sure that the schools are hoping that it will be a less intimidating test for candidates and therefore encourage more people to be willing to take it. I’m sure that the test administrators have invested a lot of time and effort in making sure that the validity is still there. Right. As you say, these tests are a very important predictor of academic capacity for business schools. Of course, it’s one part of the picture, right? It’s not something that’s going to get you in or and it’s not something that will automatically get you eliminated either way, but it is still an important part of the picture for most schools. And so I think that validity is expected to be there. But the schools will definitely be very carefully tracking that right to see if there is any change in the correlation of how people have performed on those tests and then how people perform academically on the programs. But the GRE is essentially, I think it’s more or less the same test. They’ve just cut it back, so it’s not as long. And the GMAT, they’ve actually changed some of the sections, so it’s a bit more of a fundamental shift in that test.

[00:21:42.240] – Caroline

So I would imagine that the schools will be carefully monitoring those, that there’s a new section in the GMAT. They’ll be looking to see how that performs. As we’ve mentioned before, I think in some ways it’s a shame that they’ve eliminated the essay. Write at the time when artificial intelligence means that schools may be wondering to what extent candidates have actually written their own applications or not. You wouldn’t be able to get AI to write your response to an essay or I think it would be much more difficult to use that in the context of a GMAT test. So that might have been a mistake. Time will tell. But I understand that they were trying to cut it back to make it more appealing in some ways, or at least less of a huge obstacle for people to get through.

[00:22:39.330] – John

That’s true. And I should remind everyone that one of your colleagues, Caroline Judith Silverman hadera has written a piece on this called What’s Changing in the New GMAT and GRE? You should look that up on the Poets and Quants site as well to give you an overview. Maria, do you like shorter tests?

[00:23:00.170] – Maria

Who doesn’t like shorter tests, right? Come on, teacher’s pet. What kind of a question is look, I think I think the shorter test, hopefully, as Caroline said, hopefully it’s going to be a lower barrier to entry. It’s going to be perceived as it’s going to encourage more people to apply if it is perceived as being easier. I think one of my quibbles that’s happened since the first time we sort of addressed these newer tests when we first found out about them, is I just realized recently that the GMAT has issued how it’s going to be scoring its new revised GMAT. So the GRE, as Caroline pointed out, they’re just eliminating some questions. They’re taking the same test but just making a shorter version of it. And so the scoring scale is going to be the same. So presumably a 163 and quant on the old one should be equivalent to a 163 and quant on the new one. The GMAT, on the other hand, has changed the scoring in a way that for me, from a marketing perspective, god bless these people. I think the psychometricians are amazing, but I think the marketing people at GMAT are just not really capturing.

[00:24:08.990] – Maria

For those of you who don’t know. Now, instead of going in ten point increments, the scores go in five point increments and INSEAD of going so from like, say, 200 to 800, it goes from 205 to 805. Okay, so great. More granularity. Perfect, right? Who doesn’t love more granularity? It lets you really get down into the weeds and it eliminates some of the pressure of going from like a 730 to a 740. However, unfortunately, they published a new percentile ranking chart. And for example, because of this new scoring system, it’s going to become a lot harder to get a score that quote unquote, sounds good. So to give you an example, a 98 percentile on the GMAT in the past would get you about a 750 on the old GMAT exam. But now on the GMAT Focus edition, it’ll get you around a 700 flat. So I am concerned. People have been asking me, should I wait for the new GMAT? Should I take the old one? And it’s an interesting conundrum because on the one hand, the newer GMAT, because it’s an unknown quantity, there might be some lenience there, right? Because the schools have not yet had a chance to really wrap their heads around it.

[00:25:16.870] – Maria

If you’re a little bit nervous about your score, maybe there’ll be sort of a pass this year or kind of like, well, maybe they didn’t do great, but it’s a new test and we’ll just kind of look the other way. However, if you are a good test taker, I think you should take the old GMAT because a 98 percentile 750 sounds way better than, say, 695. And I’m also concerned about for generations, the GMAT score has been what a lot of people in the business world have used as a shorthand way to assess an MBA student’s academic talent. And so if I’m an older banker and I’m hiring people, new associates to join my program, and they say on their thing, well, I got a 695 on the GMAT, I’ll think to myself, that’s not terrible, but it’s not great. But that would have been a 750 before. So it’s almost like even if you are a really strong test taker, your score is going to seem lower. So the psychometrics of what the test is testing might be solid, but the psychology of what that lower score might mean to the market. I don’t know, guys.

[00:26:30.200] – Maria

I don’t think it was a great if they’re going to have a completely new test, they should have gone with a completely new scoring system. Or if anything, made it easier to get a higher score. So then that way you feel better about yourself. I’m just sort of spitballing here, but I was flummoxed when I saw the fact that a 695 used to be a 750. Am I alone? Maybe I’m just sort of railing away here in my little cubicle, but I don’t know, guys.

[00:27:08.710] – Caroline

It might cause some panic from test takers who don’t realize what’s going on here.

[00:27:13.360] – John

Yeah, I hadn’t realized that, actually. That’s really remarkable because you’re right, the magic number for many applicants over many years has been like 700. Anything above 700 and you feel really good about yourself because, after all, it’s a damn good score when the average score on the GMAT is something like, what, 546, 550, something like that. But now this kind of gets thrown out the window on some level. A lot trickier.

[00:27:47.950] – Maria

A 700 used to be 87th, 88th percentile, and now it’s 98th percentile.

[00:27:56.090] – John

Yeah. Wow.

[00:27:57.950] – Caroline

It’s kind of going against the American trend of grade inflation.

[00:28:01.440] – Maria

I know. What happens to everyone gets a trophy.

[00:28:04.430] – Caroline

Yeah. That’s not fair.

[00:28:06.890] – John

Yes, I will. You know, you raise a good point about the marketing, because that could put more people in the GRE camp more than anything else. Never mind the writing requirement that the GRE is maintaining that the GRE itself, after I interviewed them, believes is a major advantage to their test for business schools. And they claim that the new Data Insights section on the GMAT is already covered in their Quant section, and they maintain maybe they need to change the name of it to reflect that, which is what they told me. But this scoring thing is a big issue, frankly. I’m glad you raised it, Maria.

[00:28:59.830] – Maria

And it’s sad because presumably the Focus Edition was launched entirely to counter the GRE. Right. I mean, you got to imagine that that’s the main it was not. That was the main driver. So gosh g way.

[00:29:15.010] – Caroline

Maybe a bit of an own goal there.

[00:29:17.570] – Maria

Yes.

[00:29:18.850] – John

Fascinating. Now, how did you discover this? Because I missed it.

[00:29:28.870] – Maria

It’s only because I was chatting a week or two ago with a GMAT tutor. I can’t take credit for discovering this. I think people in the GMAT tutoring community, because obviously they’ve had to be keeping on top of this way more than those of us in the broader admissions field have had to. Right. They’ve been obsessively following this understandably so. And so he’s the one who brought it up and was like, this is so sad.

[00:29:57.710] – John

Wow. Yeah. I think this is a major marketing mistake, frankly. That’s fascinating. Well, there you have it, everyone. Maybe there needs to be an MBA startup that creates a third new test seriously.

[00:30:16.910] – Maria

There we go. That’s a startup we’re starting, guys. Let’s do it.

[00:30:20.260] – Caroline

Better test than a new ranking, right?

[00:30:22.700] – John

There you go.

[00:30:24.790] – Maria

New rankings and new tests. And to the moon.

[00:30:28.650] – John

And of course, I might say that because of this revelation by Maria here, you can expect a story on this over the next day or two on Poets and Quants, because I think this is fascinating. Wow.

[00:30:43.930] – John

All right, everyone, thanks for listening. It’s John Byrne with Poets and Quants. You have been listening to Business Casual.

The Economist Dis on MBAs: Is the Degree Still Worth It?
Using An MBA To Do A Startup + The New GRE & GMAT
ApplicantLab |
October 5, 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.

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