Tuck B-School’s take on what next-gen MBAs want
The Center for Private Equity and Venture Capital at Tuck School of Business at Dartmouth College helps forge learning opportunities and career pathways for students interested in private equity and venture capital. We spoke to the Center’s Director Mark Hardie and second-year MBA Dan Nulton, who co-chairs the student-run Private Equity and Venture Capital Club. Careers in PE and VC are thriving as tech advances at a rapid pace, bringing the need for experienced operators who can maximize the firms’ investments.
Archie: Tell us how the Center for Private Equity and Venture Capital operates within Tuck School of Business.
Dan: The Center engages with the whole Tuck ecosystem—students, faculty, alumni, other centers, other schools to an extent—and then there’s the PEVC Club, which is managed by Tuck students for the benefit of Tuck students. The PEVC Conference is our marquee event and an example of close collaboration. We work closely with the Center to do alumni outreach, student volunteer logistics, and more. In my role, I help set up educational sessions, facilitate networking, run speaker events, and other activities that boost student interest in the private markets and provide avenues for further engagement.
Archie: How has the MBA and business school experience evolved from the early 2000s?
Mark: Probably every 20 years you see a sea change. Business school in the 1980s was very academic, in a lot of ways an entry to senior management at a handful of companies, certainly financial services, but now biz school has become, since the 2000s, sort of a life passage, something you did if you were advancing your career somewhat quicker than in organic ways.
What was once a standard academic experience for business school has changed. It was study in the classroom, use the case method, know how to solve problems quickly, find out what’s wrong and fix it, and then head off into what was arguably a management career track that could be fostered by a company that has a leadership development program and somewhere down the line you’ll be on to path to an executive VP role.
Now, students are coming in for the training to go into the Googles, or into the revamping of Apple from a PC manufacturer to a lifestyle company and then the entertainment industry to wreaking havoc in the telco industry. So, these tectonic plate movements in tech have dramatically impacted what any student thinks an MBA should deliver. As a result, they are demanding: ‘You sure as should better train me to run those companies rather than expect I’m going to come in and head off to traditional industry and take my seat for 30 years.’
Mark: VC and PE have changed with the resources they bring to bear. You have professionals leaving the McKinsey’s of the world and moving into PE to do within PE something that is very surgical, point-focused. It positions these professionals for executive leadership or just leveraging the strength of skill and knowledge they had in a partner management role at a consulting firm.
Archie: Sounds like you’re seeing time spent in big tech as the training ground for graduates?
Mark: No one goes through a company for 20-odd years now. It’s three to five years, and then they move, another three to five years and then they move, which requires you being skilled at managing your career and managing that move. In the last decade, the move to tech is really almost like a stepping stone after business school: Putting your training to practice, and then after your stint at Amazon or Google or Wayfair, you go take an executive role at something smaller but with venture backing that’s destined to grow next-generation, so you see MBAs all over these tech companies. They’re all over Snapchat, they’re all over TikTok, they’re all over Google’s media businesses, all over the Wayfairs of this world, or these fast-growth traditional companies, and increasingly they’re all over the Albertsons of the world that are quickly shifting to analytics models. Albertsons was just in the news for how they sell their data of how consumers are shopping and I guarantee you that behind that is probably a cohort of MBAs and some data scientists that are just giddy over the kind of point-of-sale insights that you can sell in a world where information of consumers is for sale, as businesses are built literally upon that insight.
Archie: So the MBA career path almost mimics the short tech cycle now.
Mark: You want to be trained and ready to run those companies in these cycles where jobs are two, three, four or five year stints, because that’s the cycle time for tech to regenerate or respond with something new. What’s exciting about getting a business degree is getting ‘right’ what’s next in the industry versus going to work where their dad would.
Dan: If I stayed in industry, I might be a VP somewhere, in a part of an industry that is not going to last in 15 years. I pressed the pause button and said, ‘oh shoot—this world is very different from the one I thought I was in.’ There’s a benefit of having talked to everyone here around their own experiences and being in this formative environment and kind of taking it all in and exploring as much as you can, essentially living vicariously through your peers.
Archie: How has PE and VC evolved on their own and in natural crossover with other areas of finance?
Dan: It seems that everyone has a ‘venture’… venture is Uber, venture is Facebook, it’s tech in a garage. But now it’s a platform, an ecosystem, a management best practice, not just having code and an app and the parameters of what people thought Series A stage looked like. It’s still partially that, but it’s far more than that especially as companies become increasingly professionalized at an earlier point in their operating existence.
On the other side of that, with private equity a lot of people come in here without a financial background, and to them private equity is exclusively the big players: PE is KKR, Carlyle, and Apollo. Again, some parts of PE are still that, but not exclusively that. Our job is to communicate that there’s more to the broad category of private equity. Today in PE you’re doing operational focused things. You take a business, understand what makes it good, try to maximize what makes it good, and avoid the things that make it bad. There’s a misconception that PE is just using financial leverage. Lots of students and even some practitioners haven’t heard of operating leverage. We are introducing people to the concept at the granular level.
Mark: And Dan is next-generation, so whatever we know about PE now, in all likelihood over the next decade will evolve dramatically, and MBAs like Dan are going to be the ones evolving it. You see dramatic growth in opportunities in venture and private equity. Now private equity is a competitor to the public markets. PE is looking a lot more like VC. VCs have become platforms, there’s a methodology to it. There are ecosystems, you try to use venture to grow quickly rather than just get started. All that capital on the side means that you’ve got this crazy innovation and entrepreneurship focus, which means you’re not having to build a company on a shoestring or bootstrap and survive on cash flows for literally a generation or two.
I like to look at the furniture store example that we have here in New England with two businesses, Jordan’s Furniture and Bob’s Discount Furniture. These founders are 80 years old and set to retire, but it took them a lifetime to build a furniture business that Wayfair built in about six or seven years.
Archie: VCs and PEs are becoming closer partners to the companies they invest in. Does that change the types of roles MBAs will be expected to take on?
Mark: VCs tend to think of themselves more now as platforms and describe themselves as that, not just a pool of capital that an entrepreneur might benefit from. This stems more from the resources put to the success of their portfolio companies, and to achieve this there is a stepped-up interest in operating professionals, an appetite for the resources available to the investor firm that they can then bring to their portfolio companies.
So I’m class of ‘93 out of [MIT Sloan] business school. Back then it was a pool of money that you got from an investor, and they came around about once a quarter to ask you how you were doing. Now you see investors with a bit more focus on, ‘what else can we do besides capital and strategic guidance?’ or on bringing new talent in place.
Top-tier PE firms want a roster, want a bench full of talented executives, and talented professionals are literally at the ready. And I think as a professional this changes the dynamic of getting into PE: How you get in, when you get in and what’s available at different stages of your career. In this era of shorter time horizons you’re not going to spend two decades or 30 years in investment banking before ramping into PE. Dan can probably map a way to get into PE really soon because of the current background and the opportunities that are available now.
Dan: It’s kind of redefining what investment is. Decades prior it was pick the right company, pick the right garage this time. Now, it’s, ‘how do we change and improve managerial best practices at this company?’ It’s becoming a partner to the team or to the management organization that’s running this platform. It’s ‘what can I do for this?’ rather than ‘what can they do for me as an investor?’ in private equity now. It’s ‘let’s do roll-ups’ or ‘let’s do acquisitions’ to drive organic growth.
Archie: In your opinion, what’s the value proposition of B-school right now?
Mark: So, that’s why a certain crop of individuals take a break at the beginning of their professional life and choose to go to business school, because you can spend a lifetime doing something or you can go get some pretty significant training and accelerate your effort and really get right to the fun stuff.
Dan: And to play off that point, I think the benefit of being in B-school right now revolves around how I think it helps inform a student’s perspectives on innovation. Being a student here, prior to December if someone said, ‘what do you think about ChatGPT?’ we would have said, ‘what’s that?’ Now you can’t escape the AI super cycle. Is it going to be as earth-shattering as they make it out to be? I don’t know, but it’s something you can feel. You can touch, you can play with and understand the implications for disruption. But what else is out there? It’s living through this mindset saying, ‘I can get disrupted really easily.’ If my skill was communication and being a prolific writer, having good prose, well, right now this machine can put out three pages.
Archie: What are some potential challenges for MBAs because of the rapid changes you’re seeing in the industry?
Mark: While this constant innovation is really cool, a lot of these trends are happening at breakneck pace. I would argue that the pace they are happening leaves a lot of people behind. For some in the professional world, you get dropped really quick and then all of a sudden, you can’t catch up. It becomes a little bit more challenging in your career to miss a trend, a quick movement in an industry, because then there’s a group of people who are really good at it. For example, now there’s a real roster of talent in ETA search funds that is a tight group. There are others who know about it but the core of talent and investors know where they can find that type of talent really fast in certain programs.
Archie: Do you think impact investing, ESG and climate issues are influencing student’s career paths in a meaningful way?
Dan: More than a career that says, ‘I made a lot of money because I’m smart,’ I think we’ve gotten to a place where more students as part of their criteria for what they want in their career is not just, ‘I’m going to rise to the upper echelons of some company’ but it’s actually who they work for and what they do and how that impacts the world they live in. This is increasingly in the criteria conversation for students. A big area of focus on venture tends to be towards climate technology, ESG or sustainability. A lot of that wasn’t the focal point five years ago. It was present, but it wasn’t a case of people going to business school saying, ‘I want to do impact investing.’
Mark: We have done a handful of speaker series here, one of whom is a dedicated ESG investor, and he talked about his experience from 20 years ago when he left Dartmouth Thayer School of Engineering to being a dedicated sustainability investor today, and how that landscape has changed. It resonates with people in the room; it’s not just what people believe today because it’s being told by the academia. Kids are coming in here and looking to do it. And it’s been an adaptation and warm receptivity from both the venture and private equity ecosystem. And what we try to do from the center is a lot of education into what those pathways look like.