There are lots of varying opinions about the value of an MBA. They include lots of hype and misconceptions. In this post I want to provide my opinion about whether an MBA is worth it for Software Engineers. The short answer is “it depends” For the long answer, you’ll have to read the full post.

I have a full-time MBA from a top-7 Business School. Before the MBA I used to be a Software Engineer. When I started the application process, I thought that I had a clear idea about the value of the degree. However, now that I’ve completed the degree and I’ve worked for several years, I realize how far my understanding was from reality.

In this post I will cover the following topics:

1. Benefits of an MBA
2. Post-MBA professional options
3. MBA rankings
4. Full-time vs Part-time vs Executive MBA
5. Total Cost
6. Application process (including how to get free profile reviews)

Benefits of an MBA

Why should you get an MBA? There are so many things that you will gain from an MBA Program. I’ve tried to capture the most important ones in the list below:

1. Knowledge
   • The breadth of the topics that are covered during an MBA program is staggering! Especially for people with engineering degrees, everything will be new.
   • During the first year of the MBA, students learn a core set of new skills, including:
     • Marketing
     • Finance
     • Operations
     • Accounting
     • Economics
     • Strategy
     • Statistics
   • During (mostly) the second year students take a set of electives, based on their interests that include wide set of areas such as:
     • Negotiations
     • Entrepreneurship
     • Teamwork and Leadership
     • Communications
     • Industry-specific classes, e.g. in technology, retail, real estate, healthcare, etc
     • Advanced versions of the core classes, e.g. value investing, marketing strategy, competitive strategy, game theory, etc
2. Skills
   1. Presentations
      • Most of the classes have presentations, e.g. for single/group projects, consulting projects, etc.
      • These presentations could be not only in front of professors and students, but also could be in front of company executives, non-profit boards, investors, entrepreneurs, etc
   2. Spreadsheet modeling
      • Most classes will require number crunching in Excel
      • Almost every exercise will include a large set of data that need to be analysed, in order to provide a recommendation, e.g. whether to enter a market, buy a company, determine the financial status of a company, etc
   3. Writing
      • Business writing is a core skill of MBA graduates
      • MBA students write class reports, company analysis, pitch decks, business plans, marketing plans, etc
   4. Teamwork
      • Most classes will involve group projects and group discussions
      • Learning from your classmates is a core part of the MBA
   5. Leadership
      • Most people, who enter the MBA are accomplished “Type A” leaders.
      • Leading teams or learning from those who do is core learning
3. People
   • MBA students have 3-7 years of professional experience in a variety of areas, e.g. consulting, banking, military, nonprofits, healthcare, manufacturing, retail, technology, etc from all around the world
     • Each school publishes a report with the incoming class profile that includes lots of relevant data. You can find it by googling “ mba incoming class profile” (without the quotes)
   • During the MBA, it is fascinating to learn from such a variety of people that you’d never typically meet otherwise.
     • Class discussions on specific topic might take different turns based on whether somebody’s background is in finance, nonprofit or media
     • Group assignments are a great way to learn from others, e.g. consultants and bankers will be able to analyse spreadsheets and create models much faster than anybody else
     • Hanging out with classmates creates multiple long-lasting relationships and a very strong network
   • After the MBA, your classmates will become leaders in all types of industries all around the world. Your network has the potential to become much stronger than you ever imagined
4. Experiences
   1. Consulting projects
      • Lots of opportunities: Pro bono projects, class projects, experiential learning projects
      • Lots of potential clients: startups, non-profits, big companies, etc
   2. International travel
      • Several MBA programs provide options to learn about business in a different area of the world, e.g.
        • Exchange programs
        • International consulting projects
        • Trips to different countries
   3. Join a nonprofit Board
      • Lots of nonprofits collaborate with MBA programs and allow students to join their Board of Directors
   4. Entrepreneurship
      • Start own startup during the MBA
      • Use projects to build your startup (e.g. do market analysis, build business plan, talk to experts in the area, etc)
   5. Access to all types of experts
      • Imagine being able to call almost anybody and asking them questions. People open to talk to MBAs
      • MBA alumni even more open
      • Classmates and professors are experts in their areas
5. Fun
   • Networking during the MBA is probably more important than your academic performance. And what’s the best way to network with people? Having fun with them
   • Remember how much fun it was during your undergrad years? The MBA is your last chance to relive something similar to those years
   • However, it might be even better, since you have more money, more freedom, more options, etc
6. Break from work
   • After having worked for a few years you might be wondering if your life will continue the same way: work, work, work
   • The MBA is your last opportunity to have a break from work
   • Sometimes this break is expected, e.g. in consulting and banking the MBA is expected, in order to proceed to the next level
7. New employment options
   • You might feel stuck at work, doing the same type of work and not being able to change
   • MBA levels the recruiting field: can search for jobs on any area or start your own

Post-MBA professional options

Don’t apply for an MBA, if you want to remain technical

The first factor to consider is what you want to do after the MBA. It is true indeed that an MBA can open a bunch of professional doors that were not available before. Some options include investment banking, Consulting, marketing, finance, operations, entrepreneurship, etc. However, the most important decision is to understand what interests you.

Very often Software Engineers think that an MBA will help them get promoted, become engineering managers or get a raise. In reality, though, the MBA won’t help in any of these goals. If you want to remain in a technical role, where you write code, then the MBA is not a good degree to pursue. Getting an M.Sc. in Computer Science or a related field would be a much better option.

What types of positions do MBA graduates go for?

Fortunately, this is very easy to find as all MBA departments publish employment reports for showing the industries, the functions, the salaries and the locations of their graduates. You can find the employment reports of the top 7 MBA departments in the following links:

1. Harvard
2. Stanford
3. Wharton
4. Kellogg
5. Booth
6. MIT
7. Columbia

In order to find the employment report for the university of your choice you can Google “ mba employment report” (without the quotes).

Looking at the latest (2019) employment reports for the above universities, it seems that 75-80% of the graduates end up in 3 industries:

1. Consulting (mostly Management Consulting)
2. Banking (mostly Investment Banking and Private Equity)
3. Technology (mostly Business Development, Product Management, Marketing, Operations, Finance, Sales and Strategy)

The following matrix includes interesting aggregated 2019 data, such as top employers, levels and salaries.

You can find a long-term comparison in the compensation between high-tech, consulting and banking in Blind. I have copied the picture below. Click on the picture to enlarge it.

The remaining 20-25% of MBA graduates are split between a variety of industries:

• Consumer Packaged Goods (CPG)
• Healthcare
• Retail
• Nonprofits
• Real estate
• Consumer products
• Energy
• Transportation

Of course, the exact split varies between each university. It’s best to look at the latest employment reports for each department, before deciding which ones you should target.

Some additional factors to consider:

1. Department area of focus: What do you want to study? For example, Kellogg is known for its strength in Marketing, whereas Booth and Wharton are known for their strength in Finance. As a result, the graduates of those departments will have a specific tilt towards those functions.
2. Location: Which part of the country do you want to spend 2 years at? Also, most universities (especially those below the top 10 programs) have a much stronger alumni network and recognition in their own region.
3. Age: Most MBA applicants have 3-5 years of experience, which means that they are 25-27 years old. If you are 28+ years old, then your chances of admission in Harvard and Stanford are minimal. Other departments are more flexible.

Additional thoughts, if you want to stay in high-tech after the MBA

1. Roles: The MBA is a good degree to help you transition from a Software Engineering role to one of the following roles in a tech company:
   • Product Management
   • Marketing
   • Operations
   • Sales
   • Finance
   • Business Development
   • Strategy
2. Compensation: The total compensation in the above roles is lower than that of a Software Engineer in the same level. As is shown in the matrix above, most high-tech firms hire MBAs in the L4 level. So, if you are already a Senior Software Engineer in a big high-tech company before the MBA, then your post-MBA compensation would probably be lower. In those cases, it might make more sense to go for an Executive MBA.
3. Age: A good window to start the MBA is after have 3-5 years of work experience, i.e. around 25-27 years old. Remember that regardless of your age when you finish, you’ll be hired as an L4. Since you’ll be spending 2 years to get the MBA, this might slow your career trajectory.
4. The MBA levels the playing (recruiting) field: Don’t assume that just because you are in high-tech pre-MBA, this will give you an edge post-MBA. The MBA provides a new start for everybody. You will compete for the same positions as somebody with a background in music, nonprofits, finance, consulting, theater, arts, etc. The people, who interview best will get the job. Your previous experiences in writing code will be totally irrelevant, as the post-MBA roles are non-technical.

MBA Rankings

If you are interested in attending an MBA program, you should do your best to join the best one that you can. The caliber of your classmates, your post-MBA options and the total value of the MBA will be directly proportional to the school that you attend. Also, as we you will in the section about the costs for the MBA, the MBA tuition is similar for most of the top 30 schools.

There are lots of different MBA rankings:

1. US News
   • Probably this is the ranking that is more “intuitive”, since it matches the perceptions for the brand name of each school quite nicely
   • However, it only evaluates US programs
2. Financial Times
   • Also, another good list
   • It’s benefit is that it looks at all programs worldwide
3. QS World University Rankings
   • Another popular list with all worldwide programs
   • The disadvantage is that sometimes the rankings have high variations from year to year, which means that one year you might find a particular program in a high rank and the next year it could be much lower. So, be careful when you use this list as your deciding factor about which school to join

Finally, there is a set of subjective lists for US programs:

• Top 3 schools (aka “HSW” due to the initials of the top 3 schools)
• Top 7 (aka M7 or “Magnificent 7”) schools
• Top 15 schools
• Top 20 schools

Each list is a superset of the above lists. This is is not an “official” ranking, but it definitely matches people’s perceptions about each program.

Total Cost

In order to calculate the total cost of an MBA, we need to determine the following numbers:

• Costs
  • Direct costs (~$100k/year)
    • Tuition ($60k-$75k/year for most top 30 schools)
      • You can find the annual tuition for each school in their website
      • US News has a list with the annual tuition numbers for all schools
    • Additional living expenses (~20-30k/year)
      • This includes room & board, books, travel, insurance, personal expenses, food, etc
      • Each school has a list of estimated expenses in their website
  • Opportunity cost
    • This includes the salaries that you will lose for the time that you’ll be doing your MBA
• Monetary benefits
  • Scholarships
    • Many MBA students get some type of scholarship or financial assistance. The exact amount is known shortly after admission to the program and varies a lot
    • It is important to differentiate between a scholarship (which is free money) and a student loan (which has to be repaid back with some type of interest)
      • It will be easy to get a student loan to cover the full cost of the MBA, however you should also consider the interest rates, etc
  • Internship salary (for 2-year MBA programs)
    • If you do a traditional 2-year MBA program, then between the first year and the second year of the MBA program, you will do a paid internship. The salary for this internship will be around $20-$30k
    • This might not sound like a lot of money, however remember that the taxes will be negligible, since you’ll be in a very low tax bracket during that summer
    • You can find more information in the employment report of each MBA program
  • Post-MBA salary gain
    • Check the employment report of each program to find out the average post-MBA starting salaries and compare them with your current salary
    • This will allow you to determine how much you should expect to boost your salary after the MBA

Let’s just take a look at an example that will help put everything in perspective. The following numbers are just for illustration purposes

1. Costs
   • Direct costs: $100k/year ($200k total)
   • Opportunity costs: $100k/year ($200k total)
2. Monetary benefits
   • Scholarships: $25k/year ($50k total)
   • Internship salary: $30k
   • Post-MBA salary gain: $50k/year (e.g. going from $100k/year to $150k/year)

In this particular case, your full cost for the 2 years of the MBA will be $400k. Your earnings during these years will be $80k, so your actual cost will be $320k. However, you will be able to recoop this amount within 7 years after the MBA (based on the $50k/year salary gain).

Of course, the above numbers are just an example. You should look at your own situation and write down the numbers that correspond to your particular scenario. Just be mindful that when you calculate the value of the MBA, you should also include the non-monetary aspects that were explained in the previous section and not just the monetary cost.

Full-time vs Part-time vs Executive MBA

In this section, I wanted to compare the 3 types of MBAs: Full-time vs Part-Time vs Executive MBA.

Application process

Finally, in this section I wanted to talk about the MBA application process. The following is the list of what is required to apply for an MBA.

• 2-3 Essays (might include video)
  • Different per school, changes every year
  • Each essay will require lots of revisions, until it feels “right”
  • Don’t assume that you’ll be able to copy-paste from one school to the other. It is best to customize the essay for each school (e.g. adding school-specific keywords, etc), even if the essay questions are exactly the same (most often it won’t be)
  • It takes 1-2 months to finalize the essays for a particular school
  • It definitely helps to visit the school beforehand, so that you can write about your impressions about the school in the essays
• GMAT
  • Each school publishes a GMAT average. It’s best to be 10-20 points above that average
  • If you haven’t picked schools, yet, then shoot for 730+
  • It takes 2-3 months of daily work to reach that level
• 2 professional references
• Resume
  • Very different than a technical resume.
  • There should be no technical buzzwords, programming languages/IDEs/toolsets, etc
  • Focus should be on the impact, leadership, teamwork, awards, etc
• Transcripts from undergraduate/graduate degrees
• Interview (for a subset of the applicants)
  • It definitely helps to visit the school beforehand, so that you can write about your impressions about the school in the interviews

Some tips:

1. Take advantage of the MBA forums:
   • If you want a free profile evaluation (e.g. to find out what would be the best schools to target, based on your profile) or more information about the MBA application process, you can always ask the opinions of other MBA candidates, as well as MBA application consultants in the following forums:
     • GMAT Club
     • Beat the GMAT
     • Poets and Quants
     • Reddit
2. Apply early: Most schools have 2-3 rounds of applications. It’s best to apply in the first round, as it has the most open slots.
3. Start preparation early: The application process takes a lot of time, so you should start preparing early. Ideally, you should start preparation one year before the first round of the applications (i.e. typically, start preparing at the beginning of an calendar year, so that you can apply towards the end of the year)
4. Application is time consuming: Assume that you’ll spend 2-3 months on the GMAT and 1-2 months for the essays in each school
5. Visit schools: It is best to visit the school in person, so that you can write about your impressions in the essays and talk about the during the interviews
6. Pick a set of 5-7 schools to apply: Have some dream schools, some target schools and some backup schools
7. You can always re-apply: If you don’t get accepted one year, you can always apply the next one

Good luck!