The Best Lessons From my $60,000 MBA — Condensed to One Page

The lessons I learned while studying at night. 

(Note added by the blogger: I was not able to transcribe some of the figures in this article. However missing these figures subtracts little from the content. You can always go to the original source to see them https://www.cnbc.com/2021/10/14/an-mba-graduate-shares-the-best-lessons-from-his-60000-business-degree.html?&qsearchterm=sean%20kernan  )

Sean Kernan

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Aug 17 · 5 min read

Editorial Rights via iStock Photos

An MBA teaches you enough to be dangerous in any aspect of running a business. It improves your decision-making and tends to result in a higher income.

I spent two years, $60,000, and long hours chiseling away at my mine, all while working full-time in finance.

The experience shaved a year or two off my life, but it enabled a solid raise and a few fascinating lessons. These are my favorite takeaways.

When contracts don’t matter

In 2011, Joe Pesci gained 30 lbs while preparing for his role as Angelo Ruggiero in the film Gotti. But at the last moment, producers said they were hiring someone else.

Joe didn’t have a contract. But he sued and still won (settled out of court). This is Promissory Estoppel. The big idea is that if someone promises you something in clear terms, and then reneges on it, they are still liable (the producers had definitively offered him the role).

The trick? Keep a trail of your communication. You still need contracts. But people can’t just say whatever they want without consequences.

Words matter, so mind them very carefully.

The trick to persuasion

The incomparable Aristotles isolated three key components of persuasion that are taught to this day.

Be more nuanced than these three examples:

Logos (logic) — “We can’t approve driver's licenses for six-year-olds. They can’t even see over the steering wheel.”

·         Cite evidence, statistics, analogies, hypothetical scenarios.

Ethos (Credibility) — “As a professor of infectious disease, I strongly recommend the vaccine. Listen to me or choose to listen to your Uncle Bo Schmo.”

·         Cite experience, education, profession, track record, or the lack thereof in counterarguments.

Pathos (emotional appeal) —This is every news headline you’ve seen. “Bloodthirsty Taliban Take Over Afghanistan.”

·         Know how someone feels about something and play to it. Logos and Ethos are better than Pathos.

Big macs measure currency value

The Big Mac Index is a way of measuring how well US dollars do when traveling abroad (purchasing power parity). It’s not a perfect measure, but it gives you an idea of what you are working with.

via The Economist

If you work remote and don’t mind a change of scenery, your dollars will go very far in these countries:

Big Mac Index 2021 via The Economist

One caveat: avoid very large cities, especially capitals. Living in Russia might be cheap, but you can easily blow all your money in Moscow.

Having options can be bad

More than once, I’ve gone into a store, looked at rows of the same product, in varying colors, brands, and sizes. Everything looked great.

But I felt paralyzed and couldn’t decide. This is the Paradox of Choice: too many choices cause people not to choose any.

Companies often manipulate your choices, offering you just a handful, with one product being a decoy they never expect you to buy. Apple famously listed a highly overpriced version of an iPhone right next to their main product, to make it look better. It worked.

You still overpaid.

Time in the market beats timing the market

I see so many of these crazy pump-and-dump schemes now due to the user promotions on Reddit and Twitter. People team up and retweet their #ShitCointotheMoon.

Amateur investors lose their shirts.

In business school, we reviewed an all-powerful research study with a simple insight that replays every time I make an investment decision: investors who buy and hold perform significantly better than those who traded often (penny stock investors suffer the worst losses).

Our professor cited the validity of Warren Buffett’s quote, “Investing is a tool that shifts money from the impatient to the patient.”

Inflation is super high right now: your dollars are losing value by the day. Need somewhere to store it?

I will put my name on this investment tip: buy the S&P 500 index fund. It’s a bucket of stocks that tracks the market. It’s only experienced losses in 10 of the past 47 years.

No, it isn’t sexy. You’ll never have a +4000% year. But you’ll likely outperform the vast, vast majority of investors in the world just by buying and holding. Since its creation in the 1920s, it’s averaged 10–11% annual returns.

Negotiations trick

Negotiations was one of the hardest classes I took because it pitted us (students) against each other and the outcomes affected our grades.

In one case, I represented Canadian zoos and wanted to borrow pandas from Chinese zoos. It caused a long standoff between me and the other person in working out the cost and duration of the panda visits (China owns all pandas).

Statistically, the first person to make an offer in a negotiation tends to do better (they “anchor” their number first). But if you get too greedy, it could embitter the other party and hurt you.

If you are going to an extremely important negotiation that could affect your livelihood, do scenario planning beforehand. List out possible things that might happen and how you’ll react. Know your walkaway terms and goal.

Before going, list out things that’ll benefit the other person. Decide what you can easily give them. Try to roll it all into your deal as a negotiation: “I can’t offer that salary but I can let you work from home if you’d like.”

Show concern and care for what they want.

The ideal position is for both parties to walk away and feel like they got the deal of the century. It might sound impossible but it really isn’t.

Maximize dollars per headache

No, I’m not talking to Tylenol executives. Everything in business is about optimization and you should approach your career the same way.

Some job titles are nothing short of torture, many of them being middle management. You should look through your career with a cold lens of a pain-to-payoff ratio.

There were days in finance when I dearly missed making $9 an hour in retail. I didn’t lose sleep and worry so much. But ultimately, I liked having money and being able to do things. So I went finance until I couldn’t take it anymore.

Always begin with the end in mind: what you’ll do if a job is or isn’t going well, and how you plan to eventually retire.

There are so many bad jobs out there and a frightening number of people are complacent to endure and sell themselves short. Stay restless until it’s right.

This completes your training. You owe me $60,000. But if you don’t have the money you can pay me in fist bumps.