Friday, November 20, 2015

Ya gotta spend money to make money

Last year, at a family wedding, the bride was toasted by one of her bridesmaids, a classmate of hers from Harvard Business School. Her speech was larded with you-have-to-have-been-there references to trips they’d been on together while at HBS. Stranded by a canceled flight at Mumbai Airport. A ghastly headache while visiting Dubai.

An awful lot of time during business school was spent in places other than Harvard’s pristine campus on the banks of the river Charles. (Pristine is not even the word for it. I’ve been to a couple of functions there in the last couple of years. The grounds are so manicured, I nearly gave in to the temptation to toss a kleenex on one of the velvety green lawns, just because. The janitors’ closets all seem to be made of hand-rubbed cherry wood. In the “cafeteria” they use china plates. No wonder these folks end up acting like they own the universe: they do.)

In fact, spending on the extras – travel, entertainment, travel and entertainment – has become a reasonably big chunk of the budget for students at elite business schools.

When I was in business school, at MIT-Sloan, way back in the last century, there were no such expenses.

This was, of course, before the concept of networking was invented.

We went to class, bitched with each other between classes, worked on projects together, graduated, got jobs. Socializing – which was what, I guess, would be today’s networking -  meant going out to some dumpy eatery in Kendall Square (which was all there was then), having a beer at the week-ending Consumption Function - (Consumption Function! Get it? Haha. You know, Keynes and the relationship between income and consumption. Only we had no income and our consumption was a beer…), or going to a party at someone’s not-so-great apartment.

But my talking about being in business school back in the day is like my parents telling Depression stories. That was then, this is now. Yawn…

Today’s elite b-schoolers have better things to do than sit around bitching or quaffing a glass of Bud at the weekly Consumption Function. (Yawn.)

They’ve got places to go, people to see – and that means money to spend.

If you’re at Harvard, on top of the annual $98K it will set you back for tuition, fees, books, room and board, you best be prepared to keep an extra $16K for extras.  (MIT, on the other hand, has more modest requirements. Never the high-livers like our brethren at HBS, the median extra spending for Sloanies is a relatively meager $10K.)

bschool extras

Sloan, of course, has always attracted more geeks than high flyers, so this is not exactly a surprise.

Columbia students who join the wine club or the gourmet club go to the priciest New York City eateries, said [Columbia MBA student Victor] Eng. Professional clubs, of which Eng is a member of five, offer valuable networking opportunities with companies and typically charge a few hundred dollars in annual membership fees, plus the price of ticketed events, he said. (Source: Bloomberg)

And then there are the “study” tours to spots like Mumbai and Dubai, or networking “treks” where you never know what might happen (or who you might meet). These are opportunities where you get to take a break from the rigors of the wine club and the gourmet club to “travel the world.”

It’s worth it, however. Business schools where the students require the most walking around money are also the B-schools where the graduates demand the highest starting salaries. (Could there be a correlation? Such a Sloan question to ask…)

At the University of Chicago, where, on average, students spend $12K over-and-above each year, Austin Fang maintains that the spending is purposeful, not frivolous:

"There are definitely a lot of people who come from finance backgrounds and from affluent families, but no one's going out every night and buying bottle service," said Fang. "It seems that everyone is cognizant that we're not making money right now."

I for one am relieved that today’s B-school students aren’t going out every night buying bottle service.

And I’d also like to go on record as saying that, one of the great pleasures of getting older is comparing the relative rigors, wisdom, and practicalities of our youth with what’s going on with today’s young whippersnappers.

Ah, imagine what we would have said at a Consumption Function – when we were most likely talking about the problem set for Operations Research – if someone had told us that we should be spending an additional $10K+ per year on the wine club and treks.

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