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(WTF?!) Is The MBA Dead?

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Well, well, well, what do we have here.

So according to a (totally non-biased) press release from the Graduate Management Admission Council (GMAC) earlier this year, MBA grads are making more money than ever.

(Just for clarity, the GMAC is a “global association of leading graduate business schools.”)

Apparently, US employers plan to offer new MBA hires a starting salary of $115,000, the highest ever recorded in the US when adjusted for inflation.

Key words: PLAN. TO.

In spite of these lofty, non-scientific projections, the number of MBA applications—as a whole—is on the downslide. Here’s a chart from the otherwise very optimistic GMAC.

(Yes, the entire WealthLAB crew is MBAs, too. Jury’s still out whether that makes us marks or smart. 🙄)

And according to Forbes, this makes it the best time ever to pursue an Ivy League MBA.

So what does this all mean? Let’s unpack it for a second.

Top 10 programs are letting everyone in…

According to the various reports, some programs across the country have seen double-digit drops, with the top 10 business schools seeing serious declines. 

At the highly selective Yale University, the acceptance rate jumped by nearly 44%. Dartmouth College’s Tuck School of Business, another Top 10 program, admitted more than one in three of its applicants, a 48% increase in a single year.

Meanwhile its applications dropped by 22.5%.

“The joke among deans is that ‘flat is the new up,'” Andrew Ainslie, the dean of the University of Rochester’s Simon School of Business. “If we can just hold our numbers, that is an incredible achievement.”

Other Ivy League schools have dropped also, with Harvard measuring a fall of 4.5%. Meanwhile, big names like Stanford saw a bit more at 4.6% and UC-Berkeley Haas at a shaking 7.5%.

And outside the Top 10?

When these numbers are narrowed down to individual schools, like University of Michigan Ross School of Business, the picture gets worse. This university saw the biggest reduction, noting an 8.5% decline with just over 3,000 candidates applying. 

There are only a few reported exceptions to this overall decline, but the biggest business schools in the nation agree that there is a serious reduction in MBA interest. 

Ainslie says up to 20% of the top 100 MBA programs in the country are likely to close in the next few years. 

But why?

Uncertainty over work visas for international students, the strong US economy with decreasing job loss, and the rising costs of degrees are all noted as potential causes. 

The positive side to the story, as Ainslie pointed out, is that it’s going to spark new development in the design of existing MBA programs. One particular program has been built around entrepreneurship.

In addition, the prestigious post-MBA job paths—think investment banking and management consulting—have been replaced by jobs in the tech world and Silicon Valley.

Is entrepreneurship the new MBA?

“Tech has displaced consulting and finance as the preferred career path for top-tier college students,” says David Minnick, founder and CEO of Camino Data, and former president of beverage company, Purity Organic.

“When I started Princeton in 2003, it was still a big deal to get a MBA or JD/MBA after college,” he tells Forbes. “That was the thing to do.

“Four years later, when I graduated, we wanted to be more entrepreneurial. We saw people who had started successful tech businesses. We saw there were low barriers to entry, and that it was okay to fail.”

Image: Dunk The sum total of all human knowledge via @James_Kpatrick/ Flickr

Student debt vs. MVP?

There’s also the whole cost thing. Business school can run you $200,000, making it a cringe option for 20-somethings already riddled with debt. For founders, this is money better spent building an MVP.

(No, not Most Valuable Player. Minimum Viable Product.)

Not to mention the experience it brings.

“When I interviewed people with an MBA, or experience at a big beverage company like Coke or Pepsi,” says Minnick, :I was concerned that their personality type wouldn’t be the right fit for a young and growing company like ours.”

In his view, hustle, skills and culture fit are far better predictors of performance than a degree.

Ivy League MBA fire sale…🗑

Apparently this all means that IF you are one who’s always dreamed of an MBA from a prestigious school, there’s no better time than now.

“With an unprecedented decline in MBA application volume at many business schools – including iconic, top-tier programs – there’s definitely a ‘perfect storm’ happening for prospective applicants,” Alex Min, CEO of The MBA Exchange, a top admissions consulting firm, says.

“Deans and admissions committees are feeling strong pressure to fill available seats with qualified candidates, even if some of these individuals might not have been admitted in previous years when application volume was growing.”

Business

5 Things You Need To Know About WeWork’s New (Real Estate) CEO

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WeWork just hired a very well-known real estate executive to run its ship, even more indication that “the world’s most hyped startup” is done pretending to be a tech operation.

Hiring Sandeep Mathrani, a long-time real estate veteran with billions of dollars under management, is a clear indication of that.

Ever since the failed IPO that led to the departure of founder Adam Neumann, the constant verbiage—internally, externally, publicly—is that WeWork is “focusing on their core business.”

In other words, doubling down on their real estate strategy, meaning the monetization of square footage, whether through lease arbitrage or simply leasing out buildings they’ve bought through their $3B fund.

On a different, but related note, this vehicle was led by Wendy Silverstein—another well-known real estate executive-who’s since left on the heels of the failed IPO.

OK, back to the new CEO. Mathrani.

Who is he? Why did WeWork hire him? And what does it all mean? Hard to know for sure. But here are five things we DO know—and five things you should know, too.

1) He was just Vice Chairman of Brookfield Properties, a $17B REIT.

Mathrani spent the last 1.5 years as the CEO of Chicago-based Brookfield Properties’ retail group and vice chairman of Brookfield Properties.

2) Before that, he was CEO of General Growth Properties, a Chicago-based mall giant.

Mathrani spent eight years as CEO of GGP, one of the largest mall operators in the US. That is until Brookfield acquired it for $15B in 2018, $9.25B of it in cool cash.

3) He took GGP from bankruptcy in 2010 to a $15B sale.

When Mathrani landed at GGP, the mall operator was just recovering from a brutal bankruptcy. Less than a decade later, he’d turned the business around, eventually leading it to a $15B exit.

4) And before THAT, he was Executive Vice President at Vornado—a $12.5B REIT.

Before his eight-year GGP run, Mathrani spent eight years as executive vice president with Vornado Realty Trust, a public REIT with a $12.5B market cap.

5) He will be reporting to SoftBank’s COO…

Even though he’s CEO, Mathrani will be reporting to SoftBank Marcelo Claure, the SoftBank COO, who was appointed executive chairman of WeWork in October. That move was done to help salvage SoftBank’s $18.5B bet on WeWork.

 

Money, Profit, Finance, Business, Return, Yield

What’s next?

According to the WSJ, SoftBank has a five-year plan that expects Mathrani to bring the company to profitability inside that period. And allow it to be cash-flow positive by some time next year.
In real estate, the business model is simple: revenue comes from rent. Profits comes from savings. And part of that five-year plan included mass layoffs.
WeWork cut 2,400 employees in late November, shortly before the Thanksgiving holiday. Silverstein resigned. In addition, they’ve been selling off “non-core assets” acquired under Neumann.

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This Mogul Became America’s 1st Black Billion-Dollar Businesswoman

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Sheila Johnson.

Where to start?

She’s the first black billion-dollar businesswoman. Before Oprah Winfrey.

She started as a TV executive, founding Black Entertainment Television (BET), the first TV network targeting African Americans. She then became a real estate mogul.

Oh, she also owns a stake in three major sports franchises, the NBA Wizards, NHL Capitals and the WNBA Mystics, the African American, period, to boast that claim.

In honor of Black History Month, let’s dive into her remarkable career.

FAST FACTS:

  • Born Sheila Crump in McKeesport, Pennsylvania, Johnson co-founded BET in 1979 with then-husband Robert Johnson. The couple sold it to Viacom in 2000 for $2.9B
  • Sheila Crump Johnson became the first African American woman on the Forbes’ Billionaire list in 2000—beating Oprah Winfrey to the distinction.
  • Per Forbes, Johnson has an $820M net worth as of 2019

 GIPHY

Foray into real estate…

After closing the sale to Viacom, Robert and Sheila pocketed around $1.5B each. Johnson used that windfall as seed money to build a hospitality real estate empire in 2005.

“There’s a disparity in paychecks between whites and blacks,” she told the Wall Street Journal. “I will never forget that.”

As CEO of Salamander Hotels and Resorts, Sheila controls a spectacular portfolio of six luxury hotels in Florida, Virginia and South Carolina. And she’s built it from the ground up—literally—in her own spirit.

“I’ve been to many hotels, not only in the US, but all over the world,” she told Forbes last year. “And I wanted to find something that was going to really make Salamander stand out beyond all of these hotels.”

So what does that mean?

“You have to understand, there are a lot of people, investment companies, with very deep pockets,” she says. “They can do it, but they don’t have the experiences that we’re able to bring. I am constantly trying to find a way to help Salamander Resort & Spa stand out head over heels above any other hotel — not only in the area, but in the nation.

“I want them to leave that resort wanting to come back and not just say, ‘I’ll be back in six months.’ I want them to come back all the time.”

And so far it’s worked. In fact, on Forbes Travel Guide’s 61st list of Star-Rated hotels, Johnson’s Salamander Resort & Spa outside of Washington, DC earned a Five-Star distinction.

Image Credit: Salamander Resort & Spa

Forbes: “Everything [she] touches turns to gold.”

That’s a real quote. From Forbes. Last year. It’s also true.

BET? Billion-dollar exit. Washington Capitals? Stanley Cup.

And Roma. Won 10 Oscars. Who showed it before a single soul started caring? Johnson’s Middleburg Film Festival. (Which, by the way, has 32 films and counting in Academy Award contention.)

Remember her golf resort at Innisbrook? Oh, yeah. Hosts the Valspar Championship, one of the PGA calendar’s most-anticipated tournaments.

Becoming a billionaire comes with a new level of clout as well. “When you don’t have money, you’re not invited to special events; you really don’t matter,” she told WSJ. “It’s a society thing.”

So instead, she’s turned to giving back. Her Sheila Johnson Fellowship’s paid for more then 40 scholarships at Harvard University for students who otherwise wouldn’t afford to attend.

Image result for sheila johnson"

Breaking glass ceilings. 

There’s an alarming statistic in business and diversity—especially as it pertains to women. According to research by investor Richard Kerby, 18% of all VCs are women—and only 3% are black. In addition, less than 50 black women ever have raised $1M in funding.

“When I got started,” Johnson says, “I couldn’t get a loan. I had to use my own money to get Salamander Resort and Spa.”

She explained to WSJ last year that men can go to any bank with a bank proposal. And no matter how “wacky” the idea is, she said, “they’re going to get the financing. Women do not have that ability.”

Johnson’s taken it upon herself to do something about that, becoming one of the founding partners of WE Capital, an investment firm that invests in female entrepreneurs.

“I started out in a very unique position where I had my own capital to be able to get started,” she says. “But there have got to be banks and investors that believe in helping women who want to be entrepreneurs in the hospitality business.

“And it’s just really, really important that they really take a look at this.”

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Business

Bloomberg: Inside The Epic Rise And Fall Of WeWork

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The darling of the venture capital world, they were called the most hyped startup in the world , with a $45B valuation, along with an impending, historic IPO.

Except…it was never to be.

In less than a year, the ambitious co-working giant went from $45B to needing a $8B bail-out from backer Softbank to avoid running out of money.

Here’s Bloomberg’s breakdown on founder Adam Neuman, the WeWork gamble, Softbank’s risky investment, culminating in a failed IPO.

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