Jack Welch Launches Online MBA – Snooze

The cover of the Wall Street Journal featured a story on Jack Welch and his involvement with a new online business school. Its clear to me that Welch is trying to cash in on one the few areas that have seen successful IPOS over the past few years — he has invested with an entrepreneur who was able to take online Golden Gate University public during the darkest days of the financial crisis. My favorite part of the story is the last line where Welch says, “I think its a real education.” What he doesn’t say is, “I think this is a great investment for me.””

My gripe here is not that Welch is trying to make money and partnering with successful educational entrepreneurs — its that the media is fascinated with him. I don’t get it? Am I alone? Am I the only one who doesn’t care about his management books and his ability to ‘manage’ quarterly earnings while running GE?

Its one of the reasons I have switched off CNBC and paid more attention to Bloomberg. Between Welch and Buffet, CNBC anchors are always up some old dude’s backside. Bully for writer Paul Glader, but why is this story on the front cover of the WSJ?

From the WSJ cover-story by Paul Glader:

Mr. Welch is paying more than $2 million for a 12% stake in Chancellor University System LLC, which is converting formerly bankrupt Myers University in Cleveland into Chancellor University. It plans to offer most courses online. Chancellor will name its Master of Business Administration program The Jack Welch Institute.

Chancellor’s leading investor is Michael Clifford, an entrepreneur who has launched two publicly traded companies in the past year: Grand Canyon Education Inc., which operates Grand Canyon University, and Bridgepoint Education Inc., which operates Ashford University and University of the Rockies.

Investor groups led by Mr. Clifford bought those three institutions out of troubled situations and converted them to primarily online universities.

Mr. Welch’s name may help add allure to for-profit, online education, which is growing rapidly despite nagging questions about quality.

A couple side notes — I believe Trump has some kind of online university. Also, according to a recent study out of East Carolina University (a bricks and mortar school) drop out rates among online students is dramatically higher than traditional students.

In fact, when it came to online business degrees — 43% dropped out vs. 11% in ‘real world’ programs. The sample is limited, but its worth looking into further. To Mr. Welch and wife: Any thoughts? Are you concerned that your Institute may see lots of drop outs? Or is this a more financial engineering to get an exit with an IPO? You can tell me, this is just a little blog — few people read this.

Harvard MBA Student: Nightmare on the Charles!

Elana Berkowitz, an MBA student at Harvard, has a piece in today’s WSJ describing life for 2nd year MBA students looking for jobs in the current downturn. Some describe ‘feeling like a punching bag,’ while others are  ‘mentally preparing for unemployment’ upon graduation. There are some interesting insights into the changing nature of the economy and the survival strategies that these once optimistic students are employing. From the article,

That’s quite a blow for these soon-to-be holders of M.B.A.s, who normally are among the world’s most courted future graduates. Many HBS students, who came to school with an average of three or four years work experience, have professionally experienced only healthy economic times. Much in the way that so many Americans bet on the equity in their homes appreciating eternally, some students assumed the good times would roll on and failed to fully appreciate the risk inherent with careers in, say, investment banking. Though most students are confident that by graduation they will have secured an offer, for now, many are deferring their great expectations.

Some, believing that government work is safe from the business cycle, and energized by the promise of a new president and a new New Deal, are looking toward public-sector jobs.

Others are warming to nonprofits. Through one business-school program, graduates can apply for one-year management positions at organizations like Teach for America, Lincoln Center and the Gates Foundation. Thirteen percent of the class of 2009 applied, representing a 39% increase in the number of applications since last year.

Though the credit crunch may create daunting hurdles for new businesses seeking financing, a number of HBS students are still planning to start businesses. Allison Floam, a former investment banker and current co-president of the Entrepreneurship Club, says there has been much more interest in the organization than in previous years. Ms. Floam, who intends to start her own tech- media venture, explains that “the current financial crisis has, in a way, made the decision to pursue your own business less risky now that the big enticing bonuses are no longer on the table.”

Is this downturn going increase the number of traditionally risk averse MBAs who choose entrepreneurship and social entrepreneurship as their career paths. Will this economic episode create a lifelong change in mindset among these fresh MBAs?

Besides the fact that there are far fewer lush jobs and some MBAs may become entrepreneurs by necessity, the way this has all played out has highlighted that in our ‘post-industrial’ economy, being an employee offers great risk with little control. Alternatively, entrepreneurship and social entrepreneurship offer much risk but also much control.

MBAs: Time to Look in the Entrepreneurial Mirror

While its normal for people to run to MBA programs (WSJ) during downturns (take cover for two years, increase knowledge, network, then get to interview with lots of companies in diverse positions and industries), what about the folks who are graduating this winter and next spring? Recruiting is bound to be tough as the dynamics for Wall Street and Corporate America have changed dramatically.

CBS Marketwatch has a piece by Whitney Jackson. From the article:

Turmoil in the stock market and decreased opportunities at big banks directly affect a lot of classic M.B.A. career paths, according to Steven Goodwin, an independent Washington-based education and career-strategy specialist.
He said he’s received a surge of phone calls from nervous workers who obtained degrees over the past few years. Many of these former students are forced to broaden their job search and lower their standards, a move labor economists say trickles down and strikes people at the lowest rung of the ladder.
In general, students who settle for a lower position during an economic downturn rarely make up the financial differences in the long term, according to Lisa Kahn, a Yale University economist who studies the intersection of employer practices and external labor market factors. M.B.A.s are a unique subset of these students because most of them worked for several years before going back to school.
While it’s too soon to tell how many people’s career hopes have been dampened by the Wall Street crisis, it’s likely that many M.B.A.s who wanted to work in the financial sector took jobs elsewhere — or don’t have a job at all. These individuals will have a lower financial trajectory over the course of their lifetimes, Kahn said.
I find the above comments scary and makes it clear to me that entrepreneurial actions are a necessity. If the state of the economy around the time of graduation is the main determinant of career earnings for those who enter the labor market upon graduation — then DO NOT enter the labor market. BECOME AN ENTREPRENEUR. Take control of your own financial trajectory. You won’t show up on the payroll data that Kahn uses when she does her research.
The path may seem more difficult — creating something out of nothing vs. taking a second choice job that pays the bills in the short term, but it will pay off in the long term.
So stop worrying about making your resume ‘standout’ to land those interviews you never would have considered 2 years ago and go start something. Check out Tim Berry’s new Plan-As-You-Go Business Planning Book. Good luck!

Student Run Venture Funds — Cornell, UMich, PSU

Business plan competitions have long been a must ‘participate’ activity for students wanting to launch their own ventures. But another group of students, those wanting to be venture capitalists, often enter competitions in order to learn about bplans, financial projections, and also to network with venture capitalists and other financiers/professional service providers that judge, sponsor, and attend competitions.

Another tool that schools are using in order to teach and support entrepreneurship are student run venture funds. Though less well known than competitions and obviously harder to offer (due to capital needs) they are interesting to look at as learning tools and also in order to see if these student VCs can perform better than the pros.

WSJ writer Christopher Zinsli offers a piece on some student run funds and the students who manage them.

A handful of business schools are experimenting with giving students free rein over how to invest millions of dollars. These programs function much like real-world venture firms, but they face unique obstacles and remain unproven ventures.

Student venture capitalists do nearly everything their professional counterparts do — sourcing and selecting deals, negotiating terms, counseling portfolio companies — with minimal interference from college administrators and advisers. Investment decisions, researched and recommended by committees of students based on their areas of study, are voted on by the full groups, which can consist of up to 30 students.

The article mentions funds at U of Michigan (Wolverine Venture Fund) , Cornell (Big Red Ventures), and Penn State U (Garber Venture Capital Fund).