GeekMBA360

Dear GeekMBA360,

I’m 32 year old. I’m currently first-year student at a top MBA program. I got a 750 on GMAT. I’ve founded a non-profit organization.  I was promoted twice at work before I went back to school. I’m currently the president of a student club.

But, I’m really depressed.

As  you know, it’s really competitive to get a summer internship now. My dream is to become a McKinsey management consultant. It’s simply the most prestigious job in the world. I have wanted to work for McKinsey since I was five years old.

But, McKinsey’s job application asked me for SAT and my undergraduate GPA in addition to my GMAT score and graduate GPA. It’s too late for me to do anything with my undergraduate GPA, but I was thinking about re-taking the SAT since I had a mediocre score when I was in high school. But, it would take quite a bit of time for me to prepare for SAT, probably signed up a Kaplan class. Would you recommend me to re-take the SAT? Please advise. "

Thanks in advance,

Jerry

Okay. Let me confess first. I made up this letter. But, I can guarantee you that the content of this letter was absolutely based on actual conversations I had with people.

I attended business school during the last recession. Internship recruiting in Fall, 2002 was incredibly difficult. People were looking for every edge they could possible have to improve their chance to get an internship offer from their dream employers.

Several people told me that they were really concerned about their qualifications because they had low SAT scores. They were thinking about re-taking it. They wanted to do everything in their control to improve their chance with employers such as McKinsey, Bain, Boston Consulting, etc.

When we had mock-up interview practices, we were told that we needed to demonstrate passion. People were taking the "passion advice" very seriously. The investment banking and equity research wannabes were starting saying to interviewers that they had a calling for stock market since they were five years old. Just like Warren Buffet, they started picking stocks when they were in elementary schools.

The consulting wannabes were talking about how much they loved problem solving, and how they conducted their thinking the McKinsey way. That’s how their minds were wired by mother nature. They were born to work for McKinsey.

My examples might be exaggerating a little bit, but not much. After talking to many investment banking and management consulting wannabes, I can tell you that most of them didn’t get into banking or consulting because they had a true passion for these two professions.

They got into these two lines of work because 1) they could potentially make a lot of money 2) they would have the flexibility to make lateral moves to other career paths down the road 3) they didn’t like what they did professionally before business school. They wanted to do something different.

I also don’t understand why employers such as McKinsey and Google cares so much about candidates historical academic record.

San Francisco Chronicle recently ran a very interesting article: Google Talent Search: Error 502? Google has come out to dispute some of the statements in the article, which was included in the "Update" section of the article. I encouraged you to read this article and form your own opinion.

This reminds of an excellent talk given by Tom Siebel at Kellogg School of Management. Here is my favorite quote from his talk:

"You graduate from one of the best business schools on the planet.

Once you get out of here, it wouldn’t make any difference at all.

There is no correlation between business success and grades, test scores, or the schools you graduated. None. "

Here is the entire video recording of Tom Siebel’s talk. (You can hear the aforementioned quotes at about 9 minute 30 seconds mark.)

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Excellent resources:

• How to get a job at amazon.com: A definitive Guide
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I had an interesting conversation with a friend this weekend.

John has been working at a technology company for eight years. He absolutely hates his job now. In fact, he wanted to leave immediately. But, because of stock vesting schedule, he has to wait for a few months. This company’s stock has been performing well. But, it’s also known for being a sweat shop, treating employees very badly. Eight years is a long time. John couldn’t leave during the eight years because he was waiting for his green card application to go through. He finally got his green card recently. He has been planning for the next chapter of his career.

Given his skill set and experience, he could easily get a job at another company. But, he just couldn’t get excited about working for any company. He felt that he had tolerated enough office politics. He has no interest to climb the corporate ladder. He wants to start his own company.

But, John also has to face realities on the personal front. He is in his early 30s, married with kids, and a mortgage. He is also the sole bread earner in his family; his wife is a stay-home mom.

His plan is to

1. rent out his house
2. move the family to his native country in Southeast Asia
3. set up a outsourced software development shop to generate short term revenue while developing a product (he has been working on the idea for a while.)
4. return to the United States to run his business once the product is developed and his development shop is profitable.

The living expenses in this particular Southeast Asia country is pretty low. For example, his monthly rent would be about $200.

Most of his family and friends don’t understand why he wants to do this. They think he is crazy: he has a good job at a well known, high-growth company whose stock is doing great. He lives in the beautiful Pacific Northwest. He has a very nice house and a very nice family. Why take the risk to move the whole family back to a developing country and start a business?

In fact, I’m the ONLY person who told him to "go for it!".

Let me explain my rationale:

• John is only 32 years old. He is still young enough to take major risks. If he is in his forties or fifties, it’d be much harder and risky to take the risk he has in mind.
• John’s wife has told him that she would give him one year to try out his "start-up experiment". Assume they stay in the Southeast Asia country for one year, their totally living expenses is probably going to be less than $15,000. He would also need to spend some money to set up shop. But, he has already had two small outsource projects to work on.  I think the financial risk is manageable — let’s say everything fails. John will not be broke and he will not put his family in any financial danger.
• The opportunity cost will be one-year’s salary. But, the cost of living is also much higher in the United States. So, the opportunity cost of "one-year net income" will be pretty small for John.
• He has always wanted his kids to learn his native language. There is no better place to learn a language than the native country! I asked him about health care cost. Apparently, quality health care is much cheaper there than the United States. Getting quality health care for his family will not be a problem.

Most importantly, it’s John’s dream to start his own business. I’m a big believer that everyone deserves a chance to take a risk once during life time to pursue what he or she is really interested in. A lot of people don’t have the courage or the resource to give themselves a chance. John might lose some money, but he has the rest of his life to earn the money back and more. What’s more precious is the experience of doing something he really wants and cares.

I told John that he might fail, but I’m pretty sure he will not regret.

Do you agree with me? What would you do?

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Excellent resources:

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I heard this poem last night. I couldn’t wait to get home and search for the text online. It really resonated with me. I hope you like it, too.

"I wish you enough sun to keep your attitude bright no matter how gray the day may appear.

I wish you enough rain to appreciate the sun even more.

I wish you enough happiness to keep your spirit alive and everlasting.

I wish you enough pain so that even the smallest of joys in life may appear bigger.

I wish you enough gain to satisfy your wanting.

I wish you enough loss to appreciate all that you possess.

I wish you enough hellos to get you through the final good- bye."

Blue Cross of Minnesota:

“About 1 month after 100 were laid off in the Membership and Billing IT area, 90 were given their pink slips in the Claims IT area.   Blue Cross has decided to outsource the work to Cognizant and IBM who will offshore the work to India. The layoffs took place in the Twin City area.”

Hallmark Cards of Kansas City:

“There has been about 1,000 + layoffs in the past year at Hallmark cards.

They have always been very quiet about layoffs. Their business has been drastically affected by the economy and sales are plummeting.

To protect what little profits they have (for the big guys), they consistently go after the senior workers with bigger benefits/vacation time/bigger salaries.

But they do it so other workers don’t notice so much. About 4-5 yrs. ago, they radically changed all their HR policy: No more seniority, except in manufacturing type jobs. Now they will hire and fire based on ‘performance’, and qualities determined by whatever the current management deems desirable.

Also, you can’t sue them if you accept a severance agreement, or so they claim. Then, they did a bunch of layoffs about 2-3  years ago, mostly older people too.

They got a LOT of bad press locally, in the paper called the ‘Pitch’. So they have changed tactics now. Like, offering 2 weeks of pay per year of service, but eliminating your position.

Since the beginning of the year, they’ve moved slowly around the co. laying off small groups of individuals, 10-20-30 at a time.

What gets me is, they also changed their benefits to phase out their old "retirement" plan called "cash balance", which they matched & added a certain amount each year based on your salary. These were very modest accts., because, they said, your profit-sharing was really your main ‘retirement"

(even though profit sharing has been very puny the whole time I was there). And to me, it seems, the older folks, who had ‘cash balance" retirement accts., are the ones they are going after! Also, anyone who has had a lot of medical claims or time off.”

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The recent rising U.S. stock market does NOT make sense to me.

Amazon.com stock is trading at $130.15/share this afternoon. Its P/E ratio is 76.74. Google’s P/E ratio is 36.56. Apple’s P/E ratio is 32.28. Given Amazon’s thin margin, its current stock price is absurd. It’s the kind of number we saw during the last great Internet bubble.

The national unemployment rate is 10.2%. And the broader measure of unemployment rate stands at 17.5%. In the past 30 days, we have seen layoffs from Electronic Art (3,000), United Online (71+), Microsoft (800), RealNetworks (70), Sun (3,000), etc. I’m getting busy again to update GeekMBA360.com Great Depression 2.0 Layoff Tracker. Job creation is absolutely crucial for economic recovery. It’s not getting better at all.

Nouriel Roubini, an economist and NYU professor who correctly predicted the current economic crisis, warned that Mother of Carry Trades Faces an Inevitable Bust. Roubini recently said:

"Eventually there’s going to be an end to this carry trade. When that snapback of the dollar is going occur it’s not going to be 2 percent or 3 percent, it’s going to be more like 25 or 20 percent. And then everybody will have to close their shorts on the dollar, they’ll have to sell these risky assets across the world and you could have this huge asset bubble going into an asset bust." 

Golden Sachs is looking to buy millions of dollars of tax credits from government controlled mortgage giant Fannie Mae. Warren Buffet is joining Goldman in bid for Fannie Mae Tax Credits. So, the taxpayer bailed out the banks. Now, banks are trying to save more money by "bailing out" Fannie Mae, which is controlled by the government. Who is at short end of all of these? Taxpayers.

I don’t want to sound like a pessimist. But, I’m a realist. Our own employment, security, personal finance and family well-being have a lot to do with the overall economic environment.

I want to share with you my concerns. The economic crisis is far from over. It’s not time to relax. Save. Diversify your income. Hold onto your job even if you don’t like it. Prepare for a rainy day.

I wish I’m wrong. But, until then, I’m working my tail off.

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Excellent resources:

• The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means
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