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A Software Engineer's Path to Financial Independence and Early Retirement (FIRE)

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Is An MBA Worth It? Detailed Guide On How To Decide

Is An MBA Worth It?

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There are lots of varying opinions about the value of an MBA (Master Of Business Administration). They include lots of hype and misconceptions. In this post, I want to provide my thoughts on the question “Is an MBA Worth It?” for Software Engineers. The short answer is “It depends on your career goals” ūüôā 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 MBA 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 vs Online MBA
  5. Total Cost
  6. Application process (including how to get free profile reviews)
Is an MBA Worth It for Software Engineers? - Benefits of an MBA

Benefits of an MBA

Is an MBA worth it? There are so many skills 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 a 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. Soft 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 skills
      • Most people, who enter the MBA are accomplished “Type A” leaders. 
      • Leading teams or learning from those who do is core learning
    6. Communication skills
      • Communicate with a diverse set of peers and professionals, fostering effective interpersonal relationships crucial for leadership roles.
      • Learn how to pitch ideas, make strategic decisions, and deliver compelling business proposals in the corporate world.
  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
    • Amazing¬†professional network¬†that includes many¬†influential individuals
      • Each school publishes a report with the incoming class profile that includes lots of relevant data. You can find it by googling “<university> 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 topics 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 analyze 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 your own startup during the MBA
      • Use projects to build your startup (e.g. do market analysis, build a business plan, talk to experts in the area, etc)
    5. Access to all types of experts
      • Imagine being able to call almost anybody and ask them questions. People open to talk to MBAs
      • MBA alumni are 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 ūüôā
    • 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 job opportunities
    • 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 in any area or start your own
Is an MBA Worth It for Software Engineers? - Post-MBA professional options

Post-MBA professional options

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

The most important factor to consider is what you want to do after the MBA. This is the most important decision that will help you answer the question “Is an MBA worth it?”. 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 career 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.

I want to make it very clear: If you want to remain in a technical position, then the answer to the question “Is An¬†MBA Worth¬†It?” is a definite¬†NO,¬†because the MBA is a¬†business degree, so it is more well-suited for those interested in a¬†business career. In this case, it might be better for you to look at a different¬†advanced degree, such as a¬†Master’s degree. Take a look at my blog post:¬†MBA vs MS for Engineers: Which Route Should You Follow?

What types of positions do MBA graduates go for? 

Fortunately, this is very easy to find as all MBA departments publish employment reports showing the industries, the functions, the salaries, and the locations of their graduates. You can find the employment reports of the 7 top schools 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 “<university> MBA employment report” (without the quotes). It is important to view the reports of both the¬†full-time MBA programs¬†and the¬†part-time MBA programs, as they might differ.¬†

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.

IndustryTop EmployersLevel(s)Average Starting Salary
BankingGoldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, Citi, BofAAssociate (details)Base: $160k
Bonus: $50k
ConsultingMcKinsey, Boston Consulting Group, Bain, Deloitte, PWC, AccentureConsultant
(details)
Base: $150k
Bonus: $30k
TechnologyAmazon, Google, Microsoft, FacebookMicrosoft: 60-61

Google: L4

Facebook: L4

Amazon: L6 (with a salary that corresponds to L4)
Base: $140k
Bonus: $35k

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

Is an MBA Worth It for Software Engineers? - finance vs consulting vs high-tech
Tech vs consulting vs banking salaries. Courtesy of user YjkBtn from the teamblind.com forum. 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 MBA grads 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 to Harvard and Stanford are minimal. Other departments are more flexible.

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

  1. Career path: 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 at the same level. As is shown in the matrix above, most high-tech firms hire MBAs at 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 having 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, so it is great for those, who are making a career change. You will compete for the same positions as somebody with a bachelor’s degree in music, finance, theater, history, 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.
Is an MBA Worth It for Software Engineers? - MBA Rankings

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 will in the section about the costs for the MBA, the MBA tuition is similar for most of the 30 top business 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 of the brand name of each school quite nicely
    • However, it only evaluates US programs
  2. Financial Times
    • Also, another good list
    • Its 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 not an “official” ranking, but it definitely matches people’s perceptions about each program.

Ranking categoryMBA programSpecialty
Top 3 (“HSW”)Harvard Business SchoolGeneral Management
Top 3 (“HSW”)Stanford GSBTech
Top 3 (“HSW”)Wharton (University of Pennsylvania)Finance
M7 (Magnificent 7)Kellogg (Northwestern University)Marketing
M7 (Magnificent 7)Booth (University of Chicago)Finance
M7 (Magnificent 7)MIT SloanTech
M7 (Magnificent 7)ColumbiaFinance
Top 15Haas (Berkeley)Tech
Top 15Yale SOMNonprofits
Top 15NYU SternFinance
Top 15Darden (University of Virginia)General Management
Top 15Tuck (Dartmouth College)General Management
Top 15Fuqua (Duke University)General Management
Top 15Ross (University of Michigan – Ann Arbor)General Management
Top 15UCLA AndersonFinance, Tech
Top 20Johnson (Cornell University)Real Estate
Top 20McCombs (University of Texas – Austin)Accounting, Tech
Top 20Tepper (Carnegie Mellon University)Tech
Top 20Kenan-Flagler (University of North Carolina – Chapel Hill)Accounting
Top 20Marshall (University of Southern California)Accounting
Is an MBA Worth It for Software Engineers? - Total Cost

Total Cost

The MBA is a huge financial investment. 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 on 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 on 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 recoup 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.

Is an MBA Worth It for Software Engineers? - Full-time vs Part-time vs Executive MBA

Full-time vs Part-time vs Executive vs Online MBA

In this section, I wanted to take a closer look at the 4 types of traditional MBA programs: 

  • Full-time program
  • Part-Time program
  • Executive MBA program
  • Online MBA program

Each type of program is the right choice for a different type of individual. Being a full-time student is not the only option.

MBA typeAdvantagesDisadvantages
Full-time program1. Full immersion in the program.
2. Best networking options with fellow students and professors
3. The best option for those interested in changing careers/industries
1. Total cost, as explained in the section above, which might total $500k or more
2. Lots of time spent on recruiting and securing a job
3. Best to apply after 3-5 years of professional experience, i.e. not recommended for people over 30
Part-time program1. Lowest expenses, since there is no opportunity cost due to missed salaries
2. Ability to implement learnings directly at work
1. Very tiring, since this is a heavy academic workload on top of your full-time job.
2. Not a good option, if you want to make a career change
Executive MBA program1. Optimal for people over 30 years old
2. Great way to meet other executives in similar companies
3. Low cost, if sponsored by your company
4. Might be a great option, if you feel stuck in your career and need additional ammo to get to the next level or to find a higher-paying job in a different company
1. High cost, if no company sponsorship
2. This is a heavy academic workload on top of your daily work
Online MBA program1. Greater flexibility in terms of when and where you can study, allowing working professionals to balance their job, family, and education more effectively.
2. Lower tuition costs and no need for commuting or relocating, saving students money on transportation and accommodation expenses.
3. Attract students from around the world, creating a diverse and global learning community that exposes students to a wide range of perspectives and ideas.
4. Allow students to progress at their own pace, which can be beneficial for those who need more time to grasp complex concepts or who want to accelerate their studies.
1. Online programs have fewer opportunities for face-to-face interaction with peers and professors, limiting the development of valuable professional networks.
2. Some students may struggle with self-discipline and time management in an online education environment, leading to lower engagement and completion rates.
3. Limited access to physical libraries, campus facilities, and career services compared to their on-campus counterparts.
4. While online MBA programs from reputable institutions can be just as rigorous as on-campus programs, some employers may still hold biases against online degrees, affecting job prospects in certain industries or roles.
Is an MBA Worth It for Software Engineers? - Application process

Application process

Finally, in this section, I wanted to talk about the MBA application process. The following is the list of what is typically required to apply for an MBA. Of course, you will need to check the MBA Admissions section on the website of your target graduate school to determine the exact requirements.

  • 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 of the school in the essays
    • The goal of these essays is to evaluate your leadership skills and your previous leadership positions
  • 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
    • For to best way to prepare for the GMAT read my blog post Optimizing GMAT Preparation: Expert Strategies for Top Scores
    • The official source for the GMAT is the Graduate Management Admission Council (GMAC)
  • 2 professional references
  • Resume
    • Very different than a technical resume.
    • There should be no technical buzzwords, programming languages/IDEs/toolsets, etc
    • Showcase all your leadership positions
    • The focus should be on the impact, leadership skills, 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 of 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:
  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 a 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 on 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 them 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
Is An MBA Worth It? Conclusion

Conclusion: Is An MBA Worth It?

In the dynamic world of business, the pursuit of an MBA can be a pivotal decision for young professionals seeking to enhance their career prospects. Business school graduates of top MBA programs often find themselves in high demand among corporate recruiters, thanks to their well-rounded business skills, proficiency in data analytics, and project management capabilities. The National Association of Colleges and Employers’ reports reveal rising job offer rates for MBA holders, as businesses increasingly value their technical skills and financial management expertise. These graduates can aspire to influential positions such as VP roles, joining the ranks of business leaders who have made their mark in various industries.

While the allure of higher salaries and career advancement is undeniable, it’s crucial for prospective students to assess whether pursuing an MBA is the right move at the right time in their professional journey. Making an informed decision about entering a full-time or part-time MBA program is essential, as it can significantly impact one’s future career development. The decision to pursue an MBA should be guided by clear professional goals and a commitment to higher education as an investment in one’s own success.

Moreover, it’s essential to recognize that an MBA isn’t a one-size-fits-all solution. Choosing the right program tailored to individual needs is imperative. Some may opt for full-time degree programs to fast-track their career, while others might prefer part-time options to balance their current job. Ultimately, the pursuit of an MBA should be driven by the right reasons, with an emphasis on personal and professional growth in the ever-competitive business world.

Now you have all the information that you need to answer the question “Is an MBA worth it?” for you. 

Good luck!

About Me

I am an engineer with 15+ years in the tech industry, including roles at Google, Amazon, and Microsoft. I've been a Software Engineer, Product Manager, and Technical Program Manager. I also have an MBA from Kellogg School of Management with Majors in Finance and Marketing.

What drives me? A passion for empowering engineers to achieve Financial Independence and Retire Early (FIRE). I reached FIRE, when I turned 40 years old. Whether it's through personal finance strategies or career insights, I'm here to guide you on this path. Have questions or need advice? Feel free to reach out!

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5 Comments

  1. Thanks for writing this very detailed and well-informed article. My 14YO son is interested in software engineering, so this was a topic that was of great interest to me!

    I’d never considered combining an MBA with a career as an SE, and can now see the pros and cons of that. I honestly didn’t know very much about what an MBA education entailed, so your post was very enlightening for me!

    It sounds like a lot of useful, practical skills that could benefit many people in wide range of fields. It’s definitely something I’ll mention to my son when he’s older.

    Thanks again for the great info!

  2. I wonder if things are changing to the point that in the future neither a four year degree or MBA will be of much value? Targeted high intensity short duration boot camp style business immersion training may well be the future. Taking Western Civilization, Biology, Calculus and foreign languages offers very little to enhance someone’s value in most corporate settings. One year of focused training might well produce more capable future executives than our current system of 6 or 7 years of overpriced college and grad school. I actually chair the board of trustees at a college and I’m constantly warning my board that the future of brick and mortar colleges is very uncertain. The value of a four year degree is becoming questionable and adding two more years to that is even less of a sure thing.

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