Friday, January 2, 2009

Reasons for an MBA to go to the Internet industry…. Are there any?

By Pedro Neira, IESE MBA 2006

IMPORTANT: Through the whole article and part 2 of this article when I use the acronym “MBA” I’m referring to “Full time MBA” programs from a Top Tier Business School in Europe and the US (see updated rankings here: BusinessWeek or Finantial Times). When I mention and MBA here I’m not referring to any of the following: online MBA’s, Part Time MBA’s, Executive MBA’s, Masters of other kind nor MBA’s from schools that are not consistently listed within the top ten mentioned rankings.

Career choice after MBA Graduation: one of the most important decisions in your professional life

Doing an MBA is a dream come true for lots of professionals. The reasons for doing it are as diverse as the backgrounds of the people who are finally accepted: industry change, higher salaries, get access to top multinational companies, increase opportunities of future promotion, work in a different country, exponential increase of your professional network, etc and… of course … to learn about Business Administration in the process. Nevertheless, one thing is true for everybody: it’s probably the only time in your professional life where, if you really want it, you could work pretty much in any company in the world. In most cases, you don’t even have to actively apply because most companies go to recruit YOU on campus. Depending on the economic cycle and your background, is not rare to see yourself in a position where you have more than one offer and you have to choose the one you like the most. Can you think of any other point of your professional life (in the past or yet to come) where you actually have two or three amazing job offers at the same time? If you can, you’re a really lucky person. For the rest, this is a once in a life time opportunity and you have to choose wisely.

There are lots of things to consider when making your career choice after the MBA, but I won’t get into detail here; this would be material for another article. The only thing I think It’s worth mentioning here is that for me the most important factor is that you really like what you’ll be doing. It’s my personal view that if you get into an industry or a job that you really like, you’ll end up being very good at it, and probably making more money in the long run than your peers that chose with a different criteria (high starting salary for example) as their most important factor.

Having said that, if what you like to do or what you’re passionate about is the Internet/Technology/Media industry, the rest of this article might give you some tips to decide and help you evaluate some pros and cons of getting into this particular sector where MBA’s are not so common. The goal here is to give you reasons in favor and against taking a job in this industry (by someone who made this choice a couple of years ago) so you can take a better informed decision.

The internet Industry for an MBA

At a first glance, it might seem that there are not too many reasons for an MBA graduate to get into the Internet/Media Industry. The opportunity cost is just too high: You know you will earn less money (than your consulting/Banking peers), your title has much less value (in an “engeneering/technology” driven industry) and it will be much more difficult to find a Job. So… why would an MBA from a top tier school should consider the Internet Industry?

First let’s take a look at some of the drawbacks…

“MBA Culture”??... Non existent

It’s no secret that this industry is ruled by technicians, engineers and programmers. This is reasonable given that most of the early innovations in the industry have been driven people in the “technical” side more than the “business” side of the industry. Just look at some of biggest names in the industry of the last 20 years: Sergey Brin and Larry Page (Google creators), Bill Gates (Microsoft), Pierre Omidyar (eBay), etc, all of them where programmers or mathematicians (maybe the only exception here could be Jeff Bezos, Amazon). These companies, with Microsoft and Google at the top of the list have created corporate cultures where the programmer is the king, having all other functions as regarded as secondary. Many smaller start-ups have followed the market leaders developing similar corporate cultures of their own creating an entire industry where Business People (meaning Marketing, Finance, Sales and other functions) are secondary. In this setting MBA’s are no exception. There is no tradition for hiring MBA’s (the industry is still too young), there are no resources specially dedicated for these kind of professionals, there are very few MBA’s working already in the industry and in general I could sum it up saying that that there is not an “MBA Culture” in the Internet Industry.

MBA Hiring Expertise … Not there yet

The Internet industry is new compared with other MBA demanding industries like banking or consulting. These industries have worked with MBA’s in the past and know the value they can obtain from them so they have specific hiring programs for MBA’s, HR staff specially trained to hire MBA’s, internship programs, rotational programs for MBA’s, etc. This means that they have a lot of experience hiring MBA’s over the years and also that there are lots of MBA’s already working in these companies. Usually big consulting firms (Bain, McKinsey, BCG, Booz Allen, AT Kerney, etc) and investment banks (or what’s left of them) are the first to come to campus to recruit, even 2-3 months before any other company. Big salaries and the opportunity to eliminate the uncertainty of getting a job early on drive many people, usually many bright people, to these industries. But this is how it works for the Consulting/Banking industry … on the other side the spectrum there is the Internet Industry…

As mentioned before, this is an industry clearly led by engineers/programmers, in which Business People tend to be a necessary, but not vital part of the company. Starting from here, is natural that most of the recruiting resources and efforts are directed to hire the best programmers and the brightest engineers right out of college. As a former MBA student, this is something you could clearly see while still looking for a job during the second year. Just to put an example on the “big three” names on Internet and their hiring processes while I was still on campus 2005-2006.

- Yahoo: Didn’t come to any Career Recruitment events, didn’t post any Internship or jobs but at the end hired one person for an Internship. This is one of the different types of mistakes when recruiting on campus: Not posting publicly available jobs/internships. If you want to get the best candidate, the usual path is to post it through the Career Services Department so the position is available to all the students. This creates more applications, more competition and the possibility for the company to choose the best candidate from several different applicants.

- eBay: This company did have some former MBA students in their staff but during the two years of my MBA they didn’t post any job or internship so there’s not much I can say about their recruitment process. Maybe in their case it was just a matter of demand and supply: They already had the necessary share of MBA’s they needed for their current structure.

- Google: Google was the funniest case of the three. They just didn’t want to show up at our career fairs or company presentations but somehow, our Career Services Staff managed to convince them. They came, made a company presentation and brought nine people in, the most of any company that year (usually companies bring the head recruiter and one or two alumni). At the end they didn’t have any internship programs to offer, there were not MBA type of positions and nothing was really clear. They ended up hiring nobody from our school that year… which judging by the resources invested, was not a good strategy.

As you can see, In general these companies don’t have well organized process for hiring MBA’s. Up to a certain point this is understandable because the industry is still very young (more or less 15 years old). My hope is that this will change in the near future. As new blood comes to the Head positions of Recruiting Departments from other industries, special internship programs for MBA’s will be designed and more resources will be devoted to hire MBA’s on a regular basis. For now, we can only hope that the few MBA’s that managed to get into these companies do well with their careers, climb high in the ranks of their organizations and can prove their value to an industry that is still skeptic with MBA’s.

Value of an “MBA” to the Internet Industry

Is well known that the MBA title has a different perceived value across different industries. As mentioned before, the experience and knowledge that a top tier MBA programs can bring you are most valued in industries like consulting, banking, private equity and other financial organizations. Lower perceived value means lower starting salaries after graduation and this is another of the drawbacks of choosing to work in this industry.

If you’re not in USA you’re not really in the Internet Industry

This drawback only applies to European MBA’s (like mine for example). Just like many other industries, the internet industry has also a geographical concentration. Like banking (London), Luxury Goods (Paris), the Internet Industry is highly concentrated in the US, and specially around the area of Palo Alto/Silicon Valley. This is bad news for European MBA Students. Also, when US Internet firms go to recruit MBA’s, most of the recruiting will be done inside the US, not in Europe or somewhere else, leaving few opportunities for European MBA Students.

The question here is obvious for an MBA graduate considering going for the Internet Industry: Why would I choose an industry where there is no MBA culture at all, my title isn’t recognized like in many other industries, there are much less positions available and on top of that, salaries are lower?

Seems hard to overcome all of these issues, but there are also some very strong reasons in favor that I will explain in the next part of this article: Reasons for an MBA graduate to go into the Internet industry…. Are there any? (Part 2)

Copyright MBA Internet Marketing Manager


rakesh said...

nice your opinion which is a better option: mba as a fresher or after some job experience...

Pedro Neira Ferrand said...

Definately after some job experience. What you'll take out, what you can learn from the MBA will be much more if you have at least 3-5 years of experience than going straight from college.
Doing an MBA as a fresher would be to waste a very important opportunity

kgao said...

Pedro, nice post. I must say that people like you (and many others) are building quite a nice European entrepreneurial culture - while the US is still preeminent it won't stay that way forever.

I also blog about management consulting/recruiting issues at

Best of luck with your ventures!

Boyet Manuel said...

I have an MBA myself, but applying it in the real world is not much of use. I have invested a lot of money and time for it but I've learn the in-and-outs of my business on the streets for free. Besides the role of most company CEO's are sacrificial lambs.