A year ago, Mike Feinstein was calling the shots: The 26-year-old Cornell University graduate was director of business development for a hot e-commerce start-up that was going to give Amazon.com a run for its money.
But his San Francisco-based online textbook distributor folded in November, and Feinstein is now voluntarily unemployed after an extended vacation in Asia--but not without a plan: He's waiting to hear from admissions officers at Northwestern University and other schools where he wants to get his master of business administration degree.
"Last year, going back to school was the furthest thing from my mind. I even told people I didn't want to go to business school--ever," Feinstein said as he tooled around San Francisco in a taxi. "But a year later it's totally different. The jobs I had in the past few years don't really exist anymore. B-school is really the next logical step for me."
Feinstein is not alone. Burned-out, bummed-out, laid-off technology workers are turning to business schools in droves, looking for a resume-enhancing refuge where they can weather the economic downturn, contemplate a career shift and perhaps boost their salaries upon graduation.
The application period at most universities has not yet passed, so many admissions counselors refuse to release statistics until after the final application deadline. But at many universities that report statistics on a rolling basis, admissions officers are seeing an increase--sometimes a dramatic increase--in the number of people who are applying to full-time, two-year MBA programs.
At the Boston University School of Management, which Business Week recently added to its list of the top 50 business schools in the United States, applications are up 60 percent on a rolling basis, compared with the same time last year. Officers at Northwestern's Kellogg Graduate School of Management and the University of California's Haas School of Business also reported gains but would not give specifics until all applications were processed.
The number of people who are taking the Graduate Management Admission Test (GMAT), the b-school equivalent of the Scholastic Aptitude Test (SAT) and a requirement at most U.S. universities, is also on the rise. The number of people who took the GMAT since the beginning of the year is up 10 percent on a worldwide basis compared with the same period in 2000, according to the Graduate Management Admissions Council.
Although many universities are still counting applications and have not yet looked at specific candidates, some admissions counselors say they are seeing an influx of entrepreneurs and others with dot-com experience. By contrast, the stereotypical business school applicant hails from the consulting or banking industry.
Online message boards also provide anecdotal evidence that dot-commers are busy penning application essays and mulling whether to take out loans to pay for b-school.
"I think I've officially made the decision to go and get my MBA, now that my hot dot-com career is looking not-so-hot," one person wrote in an MBA-oriented message board on March 12. "So, any suggestions on where to start brushing up on my GMAT scores and researching schools?"
Career strategy expert John Challenger, founder of Chicago-based outplacement firm Challenger, Gray & Christmas, said business school seems like a rational landing pad for dot-com refugees in a shrinking job market. Business school is often perceived as a conduit to better jobs at Fortune 1000 companies--possibly a needed change of pace for those burned out by the long hours, chaotic management, high turnover and high business plan flux associated with start-ups.
"Many of these people have really been through hell," Challenger said of laid-off dot-commers. "They're saying, 'I've gone out and felt what the insecurities and loss were like, and now's the time to look elsewhere.' They're just staying out of the market and taking stock for two years."
Although business school may seem like a natural progression, the current surge in applicants is a stark contrast to the mid- to late 1990s, when many schools were scrambling to find interested students. Stanford University and Berkeley's Haas School--both near the epicenter of the Silicon Valley's dot-com gold rush--recorded some of the biggest drops in applications from 1997 to 1999, when Wall Street was rewarding nearby Internet companies with record stock gains.
Back then, many 20-something workers with two or three years of experience--the bulk of full-time b-school applicants--were taking advantage of the hot job market and getting high salaries normally doled out to MBAs. Postponing b-school seemed logical: Why bother getting a higher-education degree when it was so easy to get the salary, stock options and vice president-level title without spending thousands of dollars on tuition?
But the dramatic economic downturn has caused many workers to reconsider two-year MBA stints. As the economy worsens and the stock market takes a sharper slide, the number of applicants has spiked--especially in the past month or two.
For example, the number of people applying for admission to the fall 2001 MBA program at Massachusetts Institute of Technology's Sloan School of Management has increased 4 percent compared with the applicant pool for fall 2000. But the number of applicants who applied for admissions before the February 2001 deadline greatly eclipsed number applying for the December 2000 deadline.
The spike in the middle of the rolling application period surprised admissions officers at MIT, who are more accustomed to steady trends throughout the three-month period.
"Something happened between December and February," said Paul Denning, assistant director for communications at MIT's Sloan School, "and I have a feeling it's because of the downturn in the economy."
At the University of Texas McCombs School of Business, applications are down 10 percent from the same period last year on a rolling basis. But MBA program director Elissa Ellis said that she has received a disproportionate number of applications in recent weeks. Despite the earlier decline and the increasing average GMAT score for admitted students, she said, the number of applications may be equal to or even slightly higher than the number last year after the final deadline on April 15.
"Usually the number of applications is in reverse correlation to the state of the economy," Ellis said. "It might be that the downturn happened too late in the admissions cycle for us to see the trend in the first part of the cycle. Now we're wondering if we're going to get hit with a huge number of applicants in the first half of April."
The sour economy has even helped Stanford, which has been losing applicants for two years. The number of applicants to the Graduate School of Business (GSB) in 1999-2000 declined by 17.8 percent from the number in 1998-1999--one of the biggest drops for any b-school in the country. By contrast, the number of applicants in the first two rounds of the admissions period in 2000-2001 declined by only 6 percent.
"We are still down," a GSB representative said. "But the slide seems to have pretty much stopped."
Although applications are up and many dot-commers have high hopes for what their MBA can help them achieve, an MBA is no guarantee that dot-com refugees will find better employment prospects upon graduation. Top-tier schools usually charge roughly $50,000 per year in tuition and living expenses, for a total of nearly $100,000 for a two-year program--and that doesn't include the opportunity costs of two years without salary. The cost is not insignificant for many students, who spend a decade in debt to pay off their MBA.
And getting an MBA is especially risky for workers who hope to return to the technology sector upon graduation. Tech recruiters are renown for prizing speed, intelligence and creativity over degrees, experience and a polished resume, said Ilya Talman, president of Chicago-based technology recruitment firm Roy Talman & Associates.
"Tech employers don't value an MBA job very much--they just don't," said Talman, who holds an MBA from the highly selective business school at the University of Chicago. "At a tech company, it's much more about what you can do for me, as opposed to your pedigree. It's like sports: Can you throw the ball 95 mph? If so, I don't care what school you went to. Tech employers think the same way, except the question is not how fast you can throw the ball but how quickly you can build me a router."