Thursday, September 23, 1999
MBAs pass on big companies for tech start-ups
Drawn by appeal of Internet riches
BY RANDY TUCKER
The Cincinnati Enquirer
Robert Smith began fielding job offers from Fortune 500 companies long before the ink had dried on his MBA degree from Miami University.
The former design engineer and spring 1997 graduate of Miami's Richard T. Farmer School of Business received offers of $70,000 to $80,000 a year, signing bonuses of up to $5,000, full benefits and stock options.
Miami MBA student Michelle Hargis wants to work with an Internet-related venture because it's a 'revolution.'
(Dick Swaim photo)
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Mr. Smith's reply: Keep it.
The 29-year-old Fort Wayne, Ind., native is among an increasing number of pioneering MBAs who are passing up lucrative offers from big companies to pursue careers with risky Internet start-ups and high-tech firms.
Demand for employees with both business and technical skills has soared as more and more businesses venture online, creating a new world of possibilities for next-generation MBAs.
At the same time, however, the e-commerce gold rush has created new recruiting challenges for such corporate giants as Procter & Gamble, Chiquita, General Electric and Fifth Third Bank businesses with their headquarters or major operations in Cincinnati. Recruiters have been forced to be more creative, pitch their companies harder and, often, pay more to get top talent.
It used to be primarily corporate America vs. consulting and investment banking, said Doug Eker, associate director of U.S. recruiting for P&G. The dot-coms have come in and created another segment of
the market. We're certainly seeing an increase in the number of people who want to go into the e-commerce area.
Mr. Smith thumbed his nose at corporate America to take a job six months ago with Corecomm a small, Cleveland-based telecommunications company that offers telephone, paging and Internet service on one bill.
In his new job as senior business analyst, implementing financial-based software for Corecomm, Mr. Smith said he earns about $15,000 a year less than what he could be making at a bigger company.
In his view, the long-term benefits of getting in on the ground floor of what he described as the next Industrial Revolution are well worth the difference.
Money isn't my main concern right now, Mr. Smith said. I see this as an opportunity to get into an industry that's really getting ready to make a big change in the way we do things. It (e-commerce) has got the potential to explode.
It also has the potential to blow up in your face.
For every success story, there are hundreds of other Internet start-ups that fail.
But fear of failure has not deterred true Internet zealots, such as Mr. Smith and 23-year-old Michele Hargis, a student in Miami's accelerated MBA program.
You see failure in any market, said Ms. Hargis, who's from Fort Wright, Ky. You may decide to take a job with a blue-chip company and then find out your job has been downsized.
Ms. Hargis said she interviewed with several telecommunications companies that do business online during a recent job fair at Miami's Oxford campus.
She said she sees her future with a company that is aggressive and open to the many opportunities the Internet offers.
The Internet is a huge marketing tool or mechanism that can be used within different companies, Ms. Hargis said. It really is like a new revolution.
She's not alone in her thinking.
The prospect of becoming the next Michael Dell or Jeff Bezos founders of Dell Computer and Amazon.com, respectively has inspired students at many of the nation's top business schools to take the Silicon Valley exit on the road to Wall Street.
Dot-com fever has also spread to second-tier business schools like Miami's, where the number of MBA students enrolling in high-tech courses has skyrocketed, Ray Gorman, associate dean of curriculum at Miami's business school, said.
We can hardly hire enough people on staff to meet the demand for those courses, he said.
The trend isn't as pronounced at such colleges as the University of Cincinnati and Xavier University, where most students enrolled in MBA programs are working adults pursuing MBAs to advance more traditional careers.
But such revered corporate feeders as Harvard, Yale and Northwestern University's Kellogg School of Business have seen their MBA-to-CEO pipeline take a dramatic turn.
At Harvard, for example, nearly 20 percent of this year's MBAs opted for high-tech careers, compared with 8 percent four years ago, according to Kirsten Moss, director of MBA recruiting services at Harvard.
You normally don't see changes like that in just a few years, Ms. Moss said. Usually it takes decades to move a couple of percentage points.
To be sure, the vast majority of top business graduates still take jobs with traditional companies, she said.
But the recruiting game has changed as potential first-round draft picks have begun signing with expansion Internet teams.
Nancy Griffith, human resources manager for the data processing division at Fifth Third, said like P&G, the bank met all of its recruiting goals this past spring despite the increased competition for business graduates.
But Fifth Third had to reach deeper into its pockets to land top talent.
Some of the things that we've had to do over the last four years to stay competitive is really, really overhaul our compensation, making sure that we're very competitive dollar-wise and offer other incentives, Ms. Griffith said.
Those incentives include $3,000 sub sidies for new hires to buy personal computers, retention bonuses, a casual dress code and flex-time, she said.
So why would anyone turn down such steak-and-gravy offers to set out on their own in the turbulent, largely uncharted waters of e-commerce?
Money is certainly a factor.
Check Fortune magazine's list of the 40 wealthiest Americans under 40 in its Sept. 27 issue, and you'll find that the vast majority of the country's new super-rich owe it all to the Internet.
But perhaps even more important, many business-school graduates are rejecting the corporate come-on because they have become disenchanted with the top-down, buttoned-up, conformist image of the corporate world.
Jose DaCosta, who is beginning his first semester in an accelerated MBA program at Miami, said he got his fill of corporate America while working at a bank for six months when he was 18.
As a result, Mr. DaCosta said he now plans to start his own business when he graduates in about year, perhaps selling art or movies over the Internet, which he described as simply the future.
I reject the whole notion of working in the corporate world, said Mr. DaCosta, who came to the United States from Luxembourg because he believes there are more e-commerce opportuni ties in the U.S.
At big companies you have to fit into a hierarchy or some structure in which you don't have much power, he said. Only after establishing yourself for so many years are you able to make decisions that really matter in the whole business.
Not so, said P&G's Mr. Eker, although he acknowledged the prevalance of negative corporate stereotypes.
The presumption is that big means bureaucratic, and we're a very big company, he said. But we like to think of ourselves as not so much one big company, but more of a collection of smaller entrepreneurial companies, working on different brands.
In addition, Mr. Eker said, P&G has begun talking up its own e-commerce ventures during its recruiting trips to college campuses.
He said many business students don't have a full grasp of how the same technology that drives the Internet and e-commerce is also an integral part of P&G's business.
P&G is neither a newcomer nor a slouch in the Internet arena, having been named Interactive Marketer of the Year by the leading trade journal, Advertising Age magazine, and even starting its own Internet business.
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