This article is intended for military personnel who is: 1) Thinking about applying to business school or 2) Just got in to business school and is intended to help understand some of the drastic but subtle changes you are about to experience.
A top tier MBA drastically changes one’s perspective on life in many ways, especially if that person comes from a military background and is new to the business world. Every military person knows that a post-MBA career means that you will wear different clothes to work, live in a different place, have a different job, get paid more, and associate with very different kinds of people. Those are the obvious things, but an MBA trajectory changes more than just the basic building blocks of one’s life, it also completely changes one’s perspective and how one interacts with society. Before thinking that I am getting too philosophical, let me get specific…
When a typical pre-MBA military applicant visits his new school for the first or second time, he will typically stay in the most economical hotel he can find. He will book the cheapest flight he can, and not think twice about a layover. He will walk a mile or two to get to campus if necessary, vice taking a taxi. He will also balk at the student loans he will accumulate, and most likely not take any extravagant or expensive trips prior to matriculation. These are all the responsible things to do… for somebody coming from the military.
One makes more money after business school; that’s not extremely insightful you may say. However, the lifestyle implications have to be thought of again. At, or immediately following business school, you begin to take the shortest flight (vice least expensive), you stay at the hotels closest to your destination (vice most economical), choose a taxi for the last mile, and take costly vacations when presented with a week of free time. This is not because you have become a rich snob, but because the value of your time has drastically changed, and you are willing to spend more in exchange for precious minutes of quality time. Before going further, let’s decompose this a bit further and discuss two factors:
Factor 1: What is your own time worth?
Ask yourself… what is your time worth? Most military pre-MBAs have no idea, since the concept of time value is irrelevant to their careers. You get paid the same no matter how you perform, what value you create for your unit, and there is no connection between your day to day activities with your paycheck. Furthermore, your raises are known in advance, and you can easily look up in a table what you will make in 5, 10, or 15 years. The concept of “value of time” is completely moot – you simply make what Uncle Sam dictates you make. So what is your time worth pre-MBA?
Let’s do a quick thought experiment to get you started. Let’s pretend you just finished your day at work, and you are heading home. I tell you though that I’ve left you an envelope with cash one hour in the opposite direction of your house, but it’s yours if you want it. All you have to do is drive to it and pick it up, and you can continue to go home afterwards. It’s therefore an hour out of your way, both ways, so it will add two hours to your commute home. You can stop along the way for dinner, or do anything else you like. The question is, what is the minimum amount of money that must be in that envelop for you to make make the detour to pick it up? For example, if there was 50 cents in there, I’m guessing you wouldn’t bother. If there was $50,000, everyone would say yes. Your personal number is somewhere in between… and what is it? Divide that number by two (since it’s two hours), and that is how much an hour of your free time is worth TODAY. Business school completely warps that number, which is half the equation.
Factor 2: How much does society value your time?
Another variable to take into account in this equation is how much society values your time? Some may take this harshly, but as a proxy, society values your time by how much your employer pays you. You may not like that society values LeBron James time 10000x more than the person who runs a small business helping those in need, but the reality is that it does. That’s why people pay more for an NBA ticket, or a LeBron jersey than they do in support of their local businesses. Similarly, if society valued military professional’s time more, then it would petition congress to pay the military more. In general, people are paid similarly to how society values them. It doesn’t mean it’s right, ethical, or moral, but it’s reality. Hedge fund managers get paid more because investors pay them so, as opposed to putting their money elsewhere.
An MBA drastically changes both the above factors in your life, so let’s try to see this visually:
Note: $/hr are obviously only approximate and will vary for everyone. The graphs are only meant to convey general directional trends.
Prior to business school, you generally got paid more than you would have paid to gain an extra hour of quality free time. In other words, when you’re 18 years old, you can probably make at least minimum wage (~$8/hour), but few 18 years old would spend over $8/hour to gain an extra hour a day. Similarly, an O-1 may make the equivalent of $20/hr, but few O-1s will pay over $20 out of pocket in order to gain an extra hour of free time every evening. That is why they will walk a mile instead of taking a cab… they will trade 15 minutes of their time in order to save $5 (a rate of $20/hr).
After a top business school, somebody may expect to make $150-$200k/year, but also work 60-80 hours a week. Let’s say that means society places around $60/hr on the value of your time. That’s likely more than twice your previous hourly wage before you got to business school, plus you know that your increase in income will dwarf your military pay raise schedule, so you also expect to make a lot more in the future.
Just as importantly, you are also working many more hours, so you have much less free time, and that also drives up your demand for quality free time. You all of a sudden have a lot more money (making perhaps $15,000 a month pre-tax), but a lot less time to relax and enjoy yourself. Supply and demand works everywhere, and the consequences here should now be apparent.
Prior to business school, you generally valued money more than time. After business school, you will generally value quality free time over money:
This will help explain some of the seemingly crazy behavior of your new business school classmates. It’s why they will fly to Europe or South America for a 3 day weekend… because they are willing to trade in all that extra future income to have 24 hours of fun somewhere. It’s why, for example, very few HBS students stay in Boston on the weekend… they are jet setting all around the country and the world… business school is finally an opportunity to enjoy their free time, because they know they won’t have it later.
- Why rent a car from the airport for $30 total when you can take 4x $40 cab rides and not wait in line?
- Why spend an extra two hours in a layover when a direct flight is only $100 more?
- Why drive down to the grocery store when you can pay a service to deliver it to you?
- Why drive across town for the cheaper gym when you can pay more for the one near your home?
- Why mow your own yard for half an hour when you can pay somebody $20 to do it? Your time is worth $60/hr, remember? And since you more work than you want to, you are actually willing to pay $75/hr to recoup precious extra minutes every night.
The above examples seem mundane, but here are some others you may not have considered:
- People will spend an extra $1000/month on rent or mortgage in order to be 30 minutes closer to work. That saves an hour a day, and given 22 business days a month, people will gladly trade $45 for an extra hour with their family every night.
- When people have their own families, they will spend many thousands of dollars on fancy vacations with their families… whereas when they were younger they would probably just go hang out together. Why? Because in reality the main value in an expensive and secluded vacation is the isolation from work and the ability to focus those hours on your family. $7,000 for a 5 day trip for your family? That’s a steal when you’re making $100/hour and only see your family for 20 hours a week (including weekends).
We all know the cliche that money doesn’t buy happiness, and this article is not about whether that is true or not, but money does buy time for people, and when quality time is in more demand than money is in supply, life looks very different.
Rarely is there somebody in high school, college, or early in their military career when they wish they could “buy more time.” Rather, they would trade time for money by working after school or during their summer, etc. That’s why I was happy mowing lawns for $5/hour when I was 15 years old, but would later pay somebody else $40/hour to do it instead. It’s not because I am lazy or don’t enjoy being outdoors – it’s because I can generate more value to society by doing what I do best – and that is not mowing lawns. Furthermore, I would rather spend that precious time with my family.
As professionals get older their “value to society” increases assuming they are increasing their expertise and have a successful business career. Also increasing is their desire for quality free time when their lives are locked in long work hours and they begin to see their family grow without them. Early in life, the society-to-personal free time gap leads to time being on your side, and I would argue most people are happier in their college days and early adulthood because of it. In college I used to walk an extra 10 minutes with my friends just to buy a cheaper slice of pizza, and I couldn’t be happier. Most MBAs I know would blow a fuse if they had to waste that kind of time today.
When the time/money gap is on your side, life is relatively carefree… you don’t make much money, if any at all, but those are some of the best times of one’s life. Later we make a lot more money, but the imbalance is the other way around. We pay to recoup time… and we do so by living closer to work, taking expensive vacations, and spending money on things that buy us time that we would never had done before. This imbalance would not sustain itself, if it were not for the intangible forces working to maintain it; the sense of growing influence and importance in the world, and the legacy one is building over his life. Those feelings of accomplishment, whether warranted or not, counteract a state that would otherwise self-correct.
While my analysis here may be more methodical than necessary, I hope it helps convey the point. Business school does more than just change your occupation, it changes your lifestyle, because it fundamentally changes your interaction with society. It doesn’t make you any better or worse in and by itself, but its consequences reach deeply into the most mundane of decisions, the sum of which significantly changes your overall behavior and lifestyle.
I make no judgment whether this is good, bad, or indifferent. It is but a mere observation. Being self-aware of this change allows everyone to better understand their actions and themselves, and hopefully to lead a life of appropriate balance – whatever that means to you.