Rankings

With another email coming out to the student body regarding Darden's latest position in whichever ranking was most recently released, I feel the need to go off on a slight, (tame) rant about B-school rankings.

I almost wish that all the magazines and websites didn't even bother to produce rankings, since they are actually not useful for anything more than students being able to say, "I attend a top X school." (X being one lower than whatever the highest ranking achieved by the school happens to be) People comparing Wharton to Yale, for example, are bound to be disappointed. Yes, it would be easy to say "well, Wharton is ranked #3 and Yale is ranked #15, therefore I should attend Wharton." However, if the potential applicant preferred something like non-profit management, then Wharton might not actually be the better choice.

So there's really no substitute for actually visiting schools, finding out how the courses are structured, getting a feel for the student body and making sure that the firms/companies you want to work for recruit from that school. If you do this, you may actually discover that the comparison of the Top 20 B-schools is more of a comparison of apples to oranges to pomegranates, rather than apples-to-apples.

Lunch with the Dean

So, first of all, I've been asked to set the record straight. The students who showed up, respectively, at 7:31 a.m. and 7:39 a.m. on seating chart day were actually there as a joke. My fellow b-school-mates are not quite as dorky as I may have led you to believe in my previous blog post. (Though it is true that a substantial number of the good seats were taken by the time I arrived at 9 a.m.)

Moving along.

Today I was lucky enough to have lunch with the dean after he spoke in our class. Besides being a great opportunity to talk about Darden with the dean, there were two things that really stood out to me. First of all, he knew the lady serving us by name, but even more importantly, he told our entire table about the four ladies (all of whom he named) who stayed over night to ensure that the snowstorm would not keep them from serving breakfast to all of the executive education students. I found it incredible that the leader of the school would take the time to honour this woman whose role is so often taken for granted. Of course, Darden does have the most amazing serving staff I've ever met.*

Secondly, and more selfishly, I was impressed that the dean knew MY name. After lunch, he came over to shake my hand and wish me best wishes as I move to Boston.

Anyway, I could go on about the merits of the Darden dean, but I'm running late for dinner. All I want to finish with is a link to his new year's blog post on integrity, which I strongly encourage you to check out!

*Anyone who goes to Darden knows Theresa, the cashier/server who is always, always smiling. Today, when I saw her at lunch, I told her how much I appreciate how much she smiles, and she told me that one of her supervisors once told her that her uniform wasn't complete until she smiled. It's amazing what a difference it makes! She won the Friend of the Students Award this year.

Seating Chart Day

Today is the day we set the seating chart for the rest of the semester for one of my classes.

I felt really silly showing up at 9 a.m. for a class that doesn't start until 10 a.m., but I really wanted to claim my ideal seat: sky deck, slightly off center.

I felt silly, that is, until I realized that a good portion of the sky deck and all of the center aisle seats were already taken. One of my classmates was complaining that another classmate had showed up at 7:31 a.m. to steal HIS seat.

By 9:45, all that was left was the front row.

So I guess seating charts remain important even after high school.

The Value of an MBA

Naturally, being the nerdy business student that I am, I calculated the risks and NPV (net present value - essentially the values of future cash payments minus the current amount which must be shelled out) of an MBA before I took the plunge to head down to Virginia. It was a very important calculation for me, given that student loans for international students had outrageous interest rates, the job climate was inhospitable, and the risks of investing in an education without getting a payback were very real.

As I was chatting with a friend from undergrad over break who is thinking about doing an MBA in a few years, also wondering whether going down to the US for an MBA is worthwhile, I told her about all my analysis, and she suggested writing a blog post about it. So here it is... a few different ways to look at the value of an MBA.

First... calculate the NPV of the increase in salary garnered by an MBA. Take the following assumptions:

• If you consider that the average salary of a student pre-Darden is $50,000 (pulled from this oh-so-reliable source), and
• the average salary coming out of Darden is $102,000 (pulled from the 2009-2010 employment report), and
• the average age at graduation is 30 years old,
• you can calculate the difference each year between a salary that starts at $50,000 (no MBA) and a salary that starts at $102,000 (MBA), each growing at 2% (in this case, the difference in the first year would be $72,000; in the second year the difference would be $53,040).*
• Over 25 years (assuming early retirement at 55), at a 10% discount rate, this value comes out to over $550,000.
• For an international student, the cost and fees comes out to ~$100,000, plus $100,000 in lost salary.
• The NPV of an average MBA comes out to over $350,000.**
• Technically, this is a really conservative estimate, since most people who do MBAs tend to get salary increases higher than the rate of inflation. Also, if you consider that at 25 years out, the no-MBA salary is $80k and the post-MBA salary is only $165k, the differences in salary likely increase more with an MBA.

Another way to look at it would be to look at the payback period (for loans or "opportunity cost").

• If you take the above assumed costs as the loans required for an MBA ($200,000... though this would be on the high side!)
• Pay them out over the remaining life of the career (25 years)
• And assume an interest rate of 8%
• You are looking at paying back around $20,000 annually in loan payments. Thus you could land a job at only $70,000 to "break even" with an MBA and essentially live the same lifestyle you had before doing an MBA.
• Note: To pay back the loans in only five years, you would need the average MBA salary of just over $100k.

Anyway, the math is crude, but I know when I did the calculations, it made sense for me to take the risk. Without divulging any personal details, I figured that at the very least, my old company would likely take me back at a rate that would sustain my loan payments.

And of course, the other drawback of trying to quantify the value of an MBA is that it doesn't take into account the intangibles: the opportunity to meet international students, go on courses that are taught internationally, get exposure to companies who never would have looked at me before. Plus there is the value of the Network... which in some ways is as intangible as the great friends I have, but in others could be very quantifiable - support in launching new ventures, access to jobs or people to hire, contacts for expertise.

Everyone has their own way of looking at the decision to get an MBA, and I'll admit that it's definitely not for everyone, but for me it was a no-brainer.

*Yes, technically, you would have to grow the pre-MBA salary for two years before comparing it, but since this difference is immaterial, I ignored it.

**Any astute fellow students who have learned about the "flaw of averages" will tell me this is inapplicable, but I figure it represents a fairly conservative estimate of the value.

Christmas Break in Pictures

Well, I'm back in Charlottesville and back in class, but I've finally pulled all the pictures from my camera and taken time to remember a fun and varied Christmas break. Here are some of the highlights.

Above: rock formations in the DeSoto Caverns about an hour outside of Birmingham, Alabama

Above: the beach at Pensacola

Above: fireworks at the Magic Kingdom in Disney World

Above: people playing hockey on Lake Louise in Banff National Park

Above: Rock formations at the Garden of the Gods in Colorado Springs

A Fond Farewell to 2010

It's that time of the year. Time for reflection on a year gone by and anticipation of a year to come.

In many ways, 2010 was a culmination of almost two years of a lot of hard work. It was in 2008 that I began the long b-school journey with all the studying for the GMAT, followed by endless hours poring over different b-school offerings, visits to schools and essay after essay for applications. The beginning of 2009 brought good news of acceptance to Darden, then all the issues that come with a cross-border move: visas, international student loans, apartment/roommate hunting, etc. Then when I started at Darden, life and school were very, very busy. The first year at Darden was a LOT of work, especially as I was balancing the academic stresses with preparation for the job search.

Given all of this pre-amble, the focus in 2010 was really on the job search. Recruiting definitely had its highs and lows this year, but as I look at the end of 2010, I am very relieved and blessed to have an amazing job lined up. For the first time in nearly two years, 2011 will bring some "down time" of sorts as I get to relax and focus solely on learning for my last semester of b-school. (Haha, oh yeah, and finding a new place to live in Boston...)

Of course, I would be remiss if I didn't talk about some of the other adventures that came in 2010. As I've done over the past few years, I hit my three new places: Barcelona, Cape Cod and a whole host of places in the South (Nashville, Alabama, Florida). Travel has been an important theme in my life since I started at school and I look forward to doing a lot more of it in 2011!