Can a Harvard Law student become an investment banker?

April 19, 2008 – 4:03 pm

“How does the Harvard MBA view the Harvard Law Student who really wants a i-banking/analyst job at JP Morgan? Also, would you say that a business/corporate lawyer/law student has the necessary skills for competition in the investment arena? If you believe that they are capable of pulling this off, is there some kind of cut off of as per the quality (ranking) of law school for this kind of thing or not? What do you think of JD/MBAs?”

The Harvard MBA says:

It must be the time of year when people try to decide on college, grad school, and careers.  A lot of school-related questions this week! Fortunately for you, a JD from a top law school is rarely going to be viewed as a negative by any employer.  After all, you were probably a top undergrad three years ago; it’s not like your time at Harvard Law School has somehow destroyed your native intellect.

On the other hand, there are many employers for whom an HLS degree is only a minor positive.  For example, if you end up going to an investment bank, you’ll probably need to enter at the same level as the undergrads, rather than getting the full MBA treatment.  The reason is simple–the i-banks know that they can count on the MBAs understanding the basics of accounting, finance, financial modelling, and so on–they’ve just spent two years crunching numbers.  You’ll need all the same training as the undergrads, so you can’t be immediately productive.  You’ll still get more of the benefit of the doubt than the undergrads, especially if your manager wants a “legal guy” to check out an agreement, but (alas) you’d have been better off with two years at HBS.

If you can get a Harvard JD/MBA, I think you should.  The JD/MBA is a powerful combination–it shows that you can hack the rigors of law school, but have the business sense and managerial skills of an MBA.  One of my very good friends earned his BA, JD, and MBA from Stanford.  McKinsey was delighted to hire him despite his lack of work experience, and he later become one of the youngest people ever to make partner at McKinsey.

As for cutoff points, I think that the banks will look at your “most prestigious” degree when deciding whether or not to consider your candidacy.  For example, if you were a Harvard undergrad, and went to a second-tier law school, you might still make it.  Same holds true if you went to a second-tier undergrad program, but graduated from Harvard Law.

If you don’t have at least one degree from one of the Top 25 schools, it will make your life a lot harder.  For example, at D. E. Shaw, we had a written list of 25 schools we would recruit from.  If you didn’t go to one of those schools, you were out of luck.

One final word of caution–if you do get your i-banking job, there is a danger that your JD will pigeonhole you as “the legal guy”.  Make sure that your law degree doesn’t become a crutch.  Prove your value in non-legal ways, or you’ll find yourself typecast.

By admin | Posted in answer | Comments (8)

What’s the value of business school?

April 19, 2008 – 3:36 pm

“I’ve heard so much about the networking value of business school, and of course the visibility to corporate recruiters. I’ve heard very little about the value of what’s actually learned. How is the value of going to business school distributed between networking, recruiting, the extra three letters, and an increase in human capital? E.g. if I forgo business school for 4 years of work experience, what lessons will I have missed?”

The Harvard MBA says:

It is true that classroom learning is generally considered the least important aspect of business school.  After all, I doubt that business school would be nearly as popular if it didn’t put its students on track for hefty compensation packages and fast-track careers (often aided and abetted by the help of older alums).

On the other hand, the classroom learning is important, especially if you didn’t serve a stint as a management consultant prior to b-school.

Harvard Business School explicitly tries to provide a broad business education.  This includes teaching everything from functional skills (we have to learn accounting and finance, sales and marketing, and even how to most efficiently set up operations in a machine shop) to people skills, to business history.  I have two undergrad degrees, and worked for a famously intellectual employer (D. E. Shaw), and most of what I learned was completely new to me.

The nature of the education is also important.  HBS teaches using the case study method, where you have to extract relevant information from a relatively unstructured narrative.  While case studies are still much easier to parse than the real world, they teach you how to look for patterns and determine what is and isn’t important.

Many of my friends and the entrepreneurs that I advise have commented that I’m good at listening to their situation, then focusing on the one or two factors that matter.  This pattern-matching definitely owes something to the hundreds of different business cases I studied at HBS. (In all fairness, I’ve always been good at word problems in math, and often wondered why other students found them so difficult)

In the end, if you’re choosing between two years of business school and continuing to work, it really depends on your situation.

If you want to go into banking or consulting, or if you are trying to transition from the military or the non-profit world into business, b-school is an outstanding choice.  It will give you a broad business background, and recruiters will be lining up to hire you.

If you’re a former McKinsey consultant who wants to write a novel, b-school will be a fun albeit pricey 2-year vacation.

For me, I’d say that I got about 1/3 of the value of HBS from the actual classroom learning, 1/3 from networking, and 1/3 from the alumni network (I didn’t bother doing any recruiting, since I knew I wanted to be an entrepreneur, and didn’t want to waste my time interviewing for jobs I’d never accept).

For more on the value of an MBA, check out my older post, “MBAs are not BS“.

By admin | Posted in answer | Comments (4)

Should I ask my friends to set me up on dates?

April 12, 2008 – 4:28 pm

“I’ve been single for about a year now, after breaking up with my fiancé. In that time, I have not so much as let another man kiss me. I just haven’t met anyone I’m very interested in enough to date.

My therapist advised me to ask my friends to keep an eye out for guys they think I would like (based on their knowledge of me and make-or-break criteria I inform them of). The thought of this makes me cringe. Isn’t it reek of desperation? Won’t they think I’m lame? Will they think I’m too picky to set up with any guy they know?

What do you think? Any and all advice on meeting a good mate would be much appreciated!”

The Harvard MBA says:

Thanks to the Internet, the dating world has changed.  A lot.

It sounds like you’re worried about seeming desperate if you ask your friends to help you find someone.  I can assure you that on the continuum of desperation, which goes all the way to anonymous Craigslist ads and Star Trek dating sites, asking your friends to keep an eye out for you is the equivalent of joining a convent.

One friend, a handsome, athletic venture capitalist, met his wife (an attractive Stanford GSB grad) on Match.com.  (Funny story–when his profile came up on Match.com, her friends warned her, “Run a background check or something.  There’s no way a guy this perfect can still be available.  He’s probably a serial killer.”)

Nor does being picky carry much of a stigma these days.  Another friend, also a venture capitalist, decribed his criteria as follows: “Professional Asian woman, between 5′ and 5′4″, age 27-29.”  Yet another friend was only looking for Italian or Italian-American pilots between the ages of 30 and 35.

Of course, the crowning example might be the friend whose criteria for a woman were: “Regular user of Twitter and del.icio.us.  Must subscribe to the Atlantic Monthly.”

The point is, it’s hard enough to find true love in today’s world.  You might as well take advantage of every tool at your disposal.

By admin | Posted in answer, social skills | Comments (7)

What should I say when a job interviewer asks me to name my weaknesses?

April 7, 2008 – 12:15 am

“Constantly I am asked by the B-School interviews what my strengths and weaknesses are. And everyone tells me I am not supposed to be honest about my weaknesses. What is the point of asking this question? To see how creatively you lie??”

The Harvard MBA Says: I’m reminded of a Wall Street Journal article I read back in the 90s about the hyper-aggressive MBAs being churned out by business schools in China. When asked, “What are your weaknesses,” the student replies, “I am too ambitious and successful.”

Hint: That’s not the right answer to give.

I blame the educational system.  From a young age, we’re taught that everyone and everything can be evaluated on a simple linear scale.  A to F.  100 to 0.  As a result, people believe that the goal of a job interview is to be flawless, to score 100% and get the job.

Nothing could be further from the truth.  The truth is that hiring is less like an SAT and more like romantic matchmaking.  There is no such thing as the perfect girlfriend, only the perfect girlfriend (or boyfriend) for you*.

* The notable exception here is Jessica Alba, who is the perfect girlfriend for everyone.  Just kidding.

Everyone instinctively knows that there’s no single unified scale of romantic attractiveness–think of how many times you’ve heard someone say “she’s not my type” about a very attractive individual.  It’s exactly the same for hiring.

Both you and the interviewer should be trying to figure out if you are the company’s type, and if the company is your type.

That’s why it’s important that interviewers ask about weaknesses, and that you provide an honest and thoughtful answer.  If you abhor math, and the sight of Excel gives you hives, it’s probably not a good idea for Goldman Sachs to hire you.  Conversely, it’s probably not a good idea for you to apply for a job there.

When asked about your weaknesses, the right answer is to truthfully mention the things that will help the interviewer figure out whether or not there’s a fit.  Answers like, “I work too hard” simply don’t help.  On the other hand, answers like “I’m lazy and dishonest” don’t help either, since no employer would be willing to hire someone with those traits.**

** With the possible exception of Congress. (rim shot)

Here are a few possible answers for you to consider:

  • Mathematical aptitude
  • Desire to work with people (especially clients)
  • Extroversion/introversion
  • Preference for structure/flexibility

For a more in-depth look at some of these issues, I recommend reading the work of Marcus Buckingham.  Here is my outline of his book, “The One Thing You Need To Know“.

By admin | Posted in hiring, interviews, self-awareness | Comments (2)

Where can I find the best real estate bargains on single family homes?

April 6, 2008 – 11:52 pm

“Where are the best Real Estate bargains now for single family homes? Or what is the best way to research that answer as a lay person with little real estate knowledge?”

The Harvard MBA Says:

I’m hardly a real estate expert, but as the masthead says, you can ask me anything!

I have been following the housing bubble for years, and I do think that in the inevitable overcorrection, there will be some great bargains.  The trick, of course, is figuring out when things have bottomed out.  There’s an old investor’s expression that I think is quite apt: “Don’t try to catch a falling knife.”

Every housing bust follows the same script.  First, transaction volume dries up as buyers refuse to pay, and sellers refuse to drop their prices.  Eventually, prices decline while volume remains low (the phase we’re in now).  The bubble hasn’t truly ended until volume picks up again (the precursor to rising prices).

In addition, homes, like any other asset class, can be valued using objective criteria, allowing you to tell if they are over- or undervalued.  Here, there are two primary criteria to apply. 

The first is to look at the ratio of median home price to median income.  When the ratio is high by historical standards, homes are overvalued.  When the ratio is low, they are undervalued.  Homes in Silicon Valley have a median cost somewhere in the $1 million range.  Homes in the Houston area have a median cost somewhere in the $200K range.  Even if the median income in Silicon Valley is twice that of Houston, housing still looks overvalued.

The second is to look at the ratio between the cost of owning a home, versus the equivalent rent.  In an efficient market, the costs should be roughly equal.  The cost to rent my home in Palo Alto is around $2,600 per month.  The cost to buy it (assuming a 100% mortgage–not that I recommend such tactics, but it’s better for an apples-to-apples comparison) is almost $7,000 per month.  Even accounting for the mortgage interest deduction (which most people overestimate), it’s clear that Palo Alto housing is still overvalued.

Armed with these principles in mind, there’s a simple way to find housing markets that are truly bargains.  What you’ll need are historical data on housing prices, transaction volumes, median income, and median rent.  The ideal time to buy is when:

  • Transaction volumes are rising rapidly
  • The ratio of home prices to incomes is historically low
  • The ratio of home prices to rents is historically low

I don’t have time to find sources for all this information, but I suspect that you’ll be able to get most of this data from free sources on the Internet.

To these quantitative measures, I’ll also add one qualitative measure: If people say that real-estate investing is dead, start buying like crazy.  During a bubble, a sure sign of a market top is when people start saying the fateful words, “This time, it’s different.”  After a bubble, a sure sign of a market bottom is when people start saying the fateful words, “X investing is dead.”

Good luck!

By admin | Posted in answer, investing, realestate | Comments (4)

Should an aspiring entrepreneur take a part-time job?

April 6, 2008 – 11:17 pm

“i am from a small country in South East Asia and I am trying to start an online business from scratch.i quit my job and there were the usual fears about money and stuff since when I am spending time developing the website, i wont have money coming in. now my parents are considering retirement after a robbery incident (long story..)

the question is this,

i am now trying to take up part time jobs that pay well in proportion to the time spent on them. In fact, I already have one.

is that advisable? I guess the consultant answer for that is it depends right?

I need to feed myself and yet make sure my attempt at entrepreneurial venture fails due to over committing myself to other stuff.”

The Harvard MBA Says:

As you point out in your question, whether or not you should take a part-time job to pay the bills depends on your situation.

Would Larry Page and Sergey Brin have been better off had they sought part-time work when they were starting Google?  Probably not.

On the other hand, countless other entrepreneurs have been worse off because they lacked an income to support themselves and their families.  Not only can a part-time job put bread on the table, it can also give you the additional months you need to get your business off the ground.

One of my standard pieces of advice to entrepreneurs is to avoid quitting their day jobs until they have complete confidence in their startup.  Far too many entrepreneurs working on ideas in their spare time think, “If only I were working on this full-time!  I’d make so much more progress.”

Unfortunately, this kind of extrapolation isn’t very accurate.  It’s like taking the per-minute stats of an NBA benchwarmer and projecting the results across 40 minutes per game.

Furthermore, from my own experience as a partrepreneur, when you have both a startup and regular job, it’s very unlikely that you are truly spending 40 hours a week on your day job.  Instead, you’re constantly stealing a few minutes here and there to reply to emails, IM collaborators, think about how to improve your business plan, and so on.  As a result, quitting your job doesn’t give you an extra 8 hours per day.  It’s more like 5 or 6.

The danger in keeping your job, or taking a part-time job, is that you’ll end up neglecting your startup, but in my experience, an aspiring entrepreneur who can’t maintain his or her focus while working a part-time job probably doesn’t have the discipline it takes to be a successful entrepreneur.

Good luck with your venture, and best wishes to your parents for a happy an uneventful retirement!

By admin | Posted in Uncategorized, answer | Comments (3)

How do you give good answers to tough questions?

March 30, 2008 – 2:29 am

I was having lunch yesterday with some friends, when the subject turned to questions and answers. My friend had attended a conference panel, and complained that the panelists all failed to adequately answer her question.

(In defense of those panelists, the question was a difficult one without a clear right answer.)

I proceeded to answer the question, much to her satisfaction, and she asked me afterwards, “How do you give good answers to tough questions?”

1) Make sure you understand the question. When someone asks me a question, I listen carefully, both to the words, and to the unspoken assumptions. Two people might ask the exact same question in exactly the same words, but my answers to them would differ depending on tone, body language, and my history with that person.

2) Start your thinking broad, and narrow it down. As I listen to questions, my brain is constantly jumping ahead, thinking about the various possible paths the question (and my answer) might take. It’s a bit like watching a search box autocomplete, gradually narrowing down potential answers as I type. That way, rather than searching for a single right answer and not knowing where to start, I simply winnow my down to the truth.

3) Always directly answer the question, even if the answer is “I don’t know” or “I can’t tell you that.” I always give a direct response. Unless you’re really slick, it’s unlikely the questioner will forget what they actually asked, and your attempts at evasion will simply madden them and reduce their estimation of you.

4) Make your answer interactive. Just as I’m constantly making mental adjustments as I listen to the question, it’s wise to follow the same approach when answering. Give one part of your answer, and check for agreement. There’s no sense in erecting a massive rhetorical edifice if the listener disagrees with your basic assumptions.

5) Check afterwards to see if the questioner feels satisfied. You’re answering the question, so you don’t have to stop until you feel like it. Don’t let the desire to finish override the real goal, which is to convey understanding. If it takes a little more time, better a longer response than an unconvincing one.

By admin | Posted in conversation, social skills | Comments (0)