From: allin
Recent data indicates a spike in unemployment among MBAs from top business schools, including Harvard, MIT, and Stanford [01:19:21].
Why the Shift?
Risk Aversion vs. Market Needs
One perspective is that individuals pursue an MBA to de-risk their careers, expecting high salaries and stable jobs, particularly from institutions like Harvard Business School (HBS) or Stanford [01:20:56] [01:21:02]. However, this risk-averse mindset is fundamentally at odds with the current economic landscape and the most interesting sectors, where such guaranteed opportunities have diminished [01:21:11] [01:21:19].
Many MBAs are not finding jobs that meet their high expectations for pay and opportunity [01:23:22]. This could potentially reduce demand for MBA programs if the perceived “risk-off” trade-off is no longer guaranteed [01:23:33] [01:23:40].
Impact of AI on Middle Management
The current job market analysis suggests that AI is increasingly disintermediating middle management, rather than roles like customer support, engineers, designers, or product managers [01:24:52] [01:25:13]. This is because middle managers often function as “cartilage” within an organization, overseeing clunky, older software systems [01:25:20] [01:26:01]. As new, next-generation businesses integrate AI-enabled systems that automate many decisions and replace this software, the need for these middle management layers diminishes [01:26:59] [01:27:07].
This trend means that companies are not hiring as many MBAs because the roles they traditionally filled are becoming obsolete [01:27:09]. This is seen as a warning sign against pursuing these degrees, as they may no longer offer the perceived career stability [01:27:19] [01:27:27].
Decline of Traditional MBA Pathways
Traditional paths for MBAs, such as going into large consulting firms like McKinsey or Boston Consulting Group, or seeking jobs at major tech companies like Meta or Google, are becoming less common [01:22:53] [01:23:02]. These companies are now focused on reducing middle management, thus decreasing available positions for MBAs [01:23:10] [01:23:17].
Additionally, the trend of MBAs raising money to buy small businesses (known as “search funds”) has also proven unprofitable for many, as these ventures often fail to generate returns [01:24:03] [01:24:11].
Re-evaluating Higher Education
Alternative Paths
Instead of traditional MBA programs, it is suggested that individuals should consider joining a founding team at a Y Combinator company as a business person [01:21:31]. Alternatively, a product management job is recommended, offering practical experience and the ability to earn a living wage [01:23:50] [01:23:57]. This approach leverages an “apprenticeship-type model” or “self-learning model” [01:29:14].
The Role of AI in Learning
The “collapse of the MBA program” could mark the beginning of the “unwinding of the higher education market” [01:27:39] [01:27:44]. AI and automation are making it easier for individuals to learn independently, acting as a personal tutor [01:29:17] [01:32:56].
The development of tools like Google’s Deep Research and Grok 2.0 can perform complex research tasks, generate reports, and update information automatically, traditionally done by consulting firms staffed by MBAs [01:30:12] [01:31:07]. These tools can complete tasks in minutes that might take a week for a person, at a massive server capacity cost [01:32:11] [01:32:15]. This shift suggests that the value of traditional higher education will erode, with the MBA market being an early indicator [01:33:31] [01:33:38]. The real world is becoming the “lab environment” where learning and capabilities are acquired in real-time, effectively creating a “college in your ear” [01:33:09] [01:33:24].