Sunday, February 14, 2010

Mo money Mo problems

For a while, I have wanted to write a post about money at Stanford and more generally, at top American business schools because I don't believe that the spending mores of GSB students are unique among business school students.

Two events spurred me to stop delaying:

1) 2nd quarter tuition is due tomorrow. (That's two for two that I have paid on time!)

2) The weekly GSB email of compiled announcements and deadlines informed me today that the Stanford Board approved a 3.5% tuition increase for incoming GSB students. Class of 2012 will be paying $53,118 while members of the class of 2011 (current first years) will still be paying only $51,321 because the school commits to keeping tuition flat during each student's two years of study. (Before I get comments from readers who are outraged that I consider $50K+ a paltry sum, please take a deep breath and realize that "only" is being used facetiously in the previous sentence. Thanks.)

The issue that has been troubling me is the buy-now pay-later spending habits of members of the GSB community. I don't have time tonight to discuss in depth, but I want to begin to write about how we Stanford business school students spend money and what that means about our attitudes towards our job prospects, how that might limit our abilities to take risks, and why everyone else should also be worried.

How we spend money: Recklessly (e.g., mid-week trips to Vegas, regular jaunts to San Francisco and wine country via party bus, numerous official events that cost >$30 per person, international travel every chance we get). How we pay for it: Loans for the vast majority of us. How we treat people who express concern about not being able to keep up: Dismissively and derisively.

How we implicitly view our job prospects: Optimistically. Clearly if we are willing to saddle ourselves with US$200K in debt, we are confident that we will be able to pay roughly $10K per year for the first twenty years of our post-MBA careers. Important to note is that if we decide to stop the principal amortization clock for any reason (e.g., inability to find a job because of prolonged elevated unemployment levels), interest continues to accrue.

How this debt limits our career choices: Safe bets on consulting and banking take the place of start-ups. It's tough to pay down debt when you're getting paid in equity from a start-up or bootstrapping your own venture with credit cards or money from friends and family. The monthly fixed payments from debt skew career choices towards well-worn tracks, while existing debt load makes it difficult to take out a new loan to start a business.

Why everyone should worry: There may be more reasons, but two immediately come to mind:
1) The first stems from the issue I raised above about MBA grads veering away from riskier careers. This is problematic because well-trained managers should be trying to start new businesses to solve the world's problems. Losing a portion of young, energetic, but debt-strapped MBAs does not bode well for the "innovation economy."
2) This endemic attitude is inherently irresponsible and short-sighted, and it is distressing to see the business leaders of the future refusing to make tough choices about how to spend their own money.

Monday, February 1, 2010

The Summer Hunt

I am trying to be very focused on my summer internship search, which should take me out of OCR (on-campus recruiting) for the most part. However, I am finding the job board and classmates' aspirations to be very distracting.

A winery in northern California, a New York private equity fund, Apple's online store--none of these are great fits for what I want to do this summer. However, when I think long enough about them, I seem to be able to fit them into a box that makes them acceptable enough to invest 30 minutes writing a cover letter. But do I really want to invest a couple hours preparing for an interview and then an hour actually doing the interview on campus? And if I got an offer, would I accept it? No and no and no.

But the real problem is actually not the 3-4 hours applying and interviewing for a job I don't want. The problem with this strategy is that when I expand the universe of jobs to pursue from truly excellent fits to maybe-I-can-get-them-to-fit jobs, I am completely inundated. There are enough potential positions that are truly excellent fits that I barely have enough time in the day to make the connections I need to pursue them, so opening up that universe by even half a degree is to truly open the floodgates.

Time to refocus.