Why business schools charge so much and pay their teachers so little

College diploma with rip-off seal

by Brooke Allen

You and I know why business schools charge so much for an MBA.

Because they can.

But why do they pay so little to everyone except their superstars?

It’s not just because they can. I think the real reason is much more sinister than that.

Once upon a time—before starting my MBA at NYU in the early 1980s—I thought that there was something wrong with extracting the most from someone while giving the least in return. That was back before my first finance professor said, “The sole objective of the professional manager is to maximize the net present value of the wealth of the owners.”

I had an ethics class where the explicit message was, “Crime doesn’t pay.” But the implicit message was, “It isn’t a crime if it is merely immoral and not strictly against the law.”

At no time during my MBA did I learn how to make a product—any product. But that was OK. I was already a pretty good programmer and I didn’t need NYU to teach me how to make things. However, I was only a part-time student and freelanced full time to pay for school. I needed to learn how to get clients. Continue reading “Why business schools charge so much and pay their teachers so little”

The Problem with Talking About Intellectual Virtues

Thinker at Columbia University

By: Brooke Allen

This piece is a response to Colleges Should Teach Intellectual Virtues by Barry Schwartz and Kenneth Sharpe.

The problem with talking about Intellectual Virtues is that it can give intellectuals the feeling they are virtuous when they are just talking.

Colleges might not think of themselves as being in the business of teaching virtues (like honesty, integrity, courage, fairness, wisdom, and love of the truth) but the fact is they can reinforce or squash good instincts. For example, a student I know wrote a college admissions essay that began with a graphic description of the earth under attack by aliens when he, as super-hero, arrived to save the day. His essay concluded by saying he wanted to go to college to save the world.

Three years into college I introduced the student to the Heroic Imagination Project (www.HeroicImagination.org). Its founder, Dr. Phillip Zimbardo, wrote to the student asking how they might work together to change the world. The student wrote to me, “I’d rather not change the course of history than risk changing it for the worse.” I cannot tell you how imagined courage become timidity but I can tell you when and where it happened.

Question: How can the people at colleges do a better job teaching courage? Continue reading “The Problem with Talking About Intellectual Virtues”

To save Wall Street, start with better parenting.

Boy in amazement holding money on white background
by Brooke Allen 

This past February, I retired from finance. Although I intend to continue to study the markets and write about them, I have no intention of ever working in the securities industry again. This makes it easy for me to talk to you about what I think is going on and what needs to be done.

I worked at Merrill Lynch as a computer consultant in the mid-1980s, and from 1986 through 1992 I was an employee—first doing research and later creating and running trading desks in New York and Japan. After a brief stint at Credit Suisse First Boston in Tokyo, I returned to the US in 1993 to work as a consultant to a couple of large Wall Street firms. In 1995, I built and ran a statistical arbitragetrading desk for the US branch of a medium-sized Canadian securities firm.

This February, at the age of 61, I retired from that job of 18 years. I can honestly say my time at that Canadian firm was the best of my entire working career and unlike anything I experienced at any other Wall Street firm. At first I could not put my finger on the difference, but at a Christmas party an elderly co-worker from South America I’ll call Eduardo told me he’d been wondering about the same thing. “I have figured it out,” he said, “The word is ‘decent’ and my theory is that in Canada they raise their children to believe that it is more important to be decent than to be rich.”

Although I’m US born-and-bred, both of our sons went to college at McGill in Montreal. That gave me an opportunity to meet plenty of Canadian young people, and if I suggest Eduardo’s theory to their parents, a typical response would be, “Of course I want my children to be decent; who wouldn’t?”

Real engineers understand ethics in a way financial engineers do not

Andrew Lo was the keynote speaker at the 2010 annual meeting of the International Association of Financial Engineers. Lo heads theLaboratory for Financial Engineering at MIT and his talk was titled: “WARNING: Physics Envy May Be Hazardous to Your Wealth!” He explained that a mistaken belief that financial markets can be treated the way physicists treat the natural world leads economists and financial engineers to a false sense of precision that can have disastrous consequences. You will find a very watchable version of his talk here, and if you love equations then you will find plenty in his 71-page paper here.

I came ready to ambush Lo, and after his talk I held up a slide rule and said, “Despite the fact that I brought my slide rule and my pocket full of pens, and that I’ve been using math in this industry for three decades, I know I’m not an engineer. And I know people who are engineers–some of my best friends are engineers–and I don’t think there are any engineers in the world of financial engineering.” I said the distinction between us and real engineers is that we don’t take responsibility for our actions and hold ourselves to the same ethical standards. I asked, “How come the other engineers don’t say, ‘What are you doing to our name?’?”

Continue reading “To save Wall Street, start with better parenting.”

How to give me a negative reference on LinkedIn


By: Brooke Allen (you will find my LinkedIn profile here.)

Be aware that on LinkedIn you cannot give me a negative reference unless I approve it.

This is bad news because if it is impossible for you to say something negative, then the positive things I might allow you to say must be taken with a grain of salt.

I want you to give me a fair and balanced reference so others can have an accurate picture of who I am, and I want you to let me know what I’m doing wrong and how I can improve.

But before you give me a negative reference let us establish a few ground rules. Let’s begin with:

Motivation – Why do you want to say what you do? Why do I want to hear it?

Familiarity – How well do you know me and my work?

Rationality – Are you basing your statements on facts and valid reasoning?

Let’s analyze each in more detail…

Continue reading “How to give me a negative reference on LinkedIn”

Give us your tired, your poor, your overly-automated.


Deborah Branscum just wrote an article in Medium Backchannel: Our Hiring Process is Broken. Can a Hackathon Fix It? It talks about her experience of a new approach to hiring that my partner, Noah Goldman, and I are pioneering that we’re calling Staffup Weekend. You can see a photo of the attendees, a report on the event, and a video of Deborah here.

This story appears to be a hit because my inbox is flooded.

People writing appear to fall into a few categories that we list below (along with the response you should expect as soon as we can get to it):

  • I have an opinion. (Noted.)
  • I have a complaint. (Noted.)
  • I want you to help me get a job. (Give us time to work on a story offering advice for the masses and then if that doesn’t do the trick then please write again. In the meantime, please: Read my advice for job seekers on my website, follow me on twitter, check out our company (BetterWorkWorld.com), and go to Staffup Weekend where you can sign up for our newsletter and learn about future events.)
  • I want you to help us hire better. (Let’s schedule a call ASAP.)
  • I want to make money doing what you do. Can you help me be a competitor? (Absolutely. If enough people do what we do then we don’t have to do it. Tell us more about yourself.)
  • I want you to look at our software that makes everything easier so people don’t have to get involved. (Maybe later. Please read our response to one such a software developer below.)

Hope this helps. More later.



Here is my response to a reader who wrote: “I invite you to visit our website and get a general feel for what we are about.  Essentially, we offer a software solution backed by solid Industrial Organizational Psychology and vast experiences working with high performance clients.”

Thank you for writing. 

I have copied Noah, my partner in Staffup Weekend. He might have time to evaluate your software. Right now, because I am the only one of us mentioned in the article, I’m busy fielding requests from people who want us to help them hire rather than help them develop product in competition with us. Continue reading “Give us your tired, your poor, your overly-automated.”

Passion requires that something makes you angry


Whenever I speak at colleges I begin by asking, “Why are you here?”

This catches the students off guard and after batting the question around for a bit someone says, “To find my passion.” The rest agree and they imagine they are done with the topic.

But I am not done with them.

I ask them to define “passion” because if you cannot say what a word means then you are shooting the shit rather than answering a question.

So they discuss that for a while longer and eventually settle on some variant of, “I don’t know what passion is but I’ll know when I have passion for my work because I won’t have to motivate myself to do it.”

“Really?” I say, “Where I come from we have a word for that, and it is ‘like’ as in ‘I like my job.’ But I know I am passionate when I do something even though I hate every second.”

“Why would anyone do a job they hate?” someone asks.

I want to say, “It might be because you have bills to pay and you don’t want to live off your parents or the state.”

But, instead I say, “I don’t know. Why did my dad lie about his age so he could enlist a year earlier than allowed by law to become a paratrooper and jump out of airplanes while the Japanese shot at him? That was something he hated to do, but he did it anyway, and he did it because of something called passion.”

At this point the class looks flummoxed but intrigued. Continue reading “Passion requires that something makes you angry”

How to hire good people instead of nice people


Usually, employers rapidly scan the resume of each job applicant looking for relevant education, skills, and work experience. They select 10 candidates for telephone calls, invite three in for interviews, and hire the one they like the best.

This is a bad way to hire because at best it gets you nice people.

You don’t need nice people.

You need good people.

Good and nice are not the same thing. The opposite of good is bad. The opposite of nice is unlikeable.

Nice people care if you like them; good people care about you. Nice people stretch the truth; good people don’t. If you tell a nice person to do something evil, they might do it because they do not want to upset you; a good person will refuse to do it.

You might think you are a good person, but you are fallible, so if you want to avoid inadvertently doing something evil you must surround yourself with good people, not nice people.

How do you separate the good from the nice? If you do what I do, it will be a piece of cake. Continue reading “How to hire good people instead of nice people”