School Is Cool Again

After walking away from a coveted spot at UCLA’s graduate business school twice in the last three years for jobs at venture capital and Internet firms, Russell Benaroya is headed to class this fall.

Like many bright and ambitious high-tech disciples, the 27-year-old newlywed believes the economy has slowed enough that he can drop out for two years to get an MBA degree without missing much.

“A couple of years ago, stepping out of the job market seemed like a real opportunity cost,” said Benaroya, who quit his job at GoTo.com Inc. in July. “If I was going to take two years off and step out of the job market, the next two years might be an ideal time to do that. It was absolutely a matter of timing.”

After losing students for the last three years to jobs in a hot economy, two-thirds of the nation’s graduate business schools saw increases in applications for admission this fall. At UCLA’s Anderson School, which has one of the latest deadlines, applications surged as the March 31 cutoff approached, many of them from the dot-com sector.

“When the economy gets soft, people think this is a good place to go for a couple of years,” said Karla Lacey, a vice president at the Virginia-based Graduate Management Admission Council who returned to business school during the recession of 1982. “People think, ‘Maybe when it’s over, the economy will be better.’ ”

Although they may have lost jobs, watched waves of colleagues get laid off or had stock options plummet in value, many of today’s MBA students say they would like to return to the high-tech sector--but with the business school know-how they lacked the first time.

“Having come out of the Internet space, I was humbled,” Benaroya said. “I realized the breadth of management expertise that I would need if I wanted to step back into a technology role in the future.”

Benaroya’s desire to return to the economy’s cutting edge is shared by many of his colleagues, said Linda Baldwin, Anderson’s admissions director.

“They still have a love, a real enthusiasm for technology and for those industries,” she said. “They see those industries as driving forces in our economy and in the future. They learned a lot by being in these quasi-entrepreneurial environments. But they feel they need to come back to MBA school to get a better grasp of the theoretical underpinnings so they don’t have to rely on intuition when it comes to managerial decisions.”

Todd Litinsky is starting Anderson’s program Oct. 1 after spending a year at a Culver City software start-up. With graduate school on the back burner, he said many people under age 30 had little to lose by joining start-ups at the height of the boom.

“People went in with the attitude, ‘Maybe I can get rich, but if I don’t, I can always go to grad school,’ ” said Litinsky, 26. “That was not me. But it was a safety net for a lot of people. It was a gamble with a safety net. We weren’t 45-year-old executives from AT&T; joining a start-up. We had an escape, and everyone knew that.”

He said he is looking forward to swapping stories with other students about experiences from the start-up boom.

“In business school now, people are a little bit older and want to reevaluate where they are,” Litinsky said. Students are coming in “open-minded, which is where I am, and look at what’s out there. But I am definitely keeping my eye on technology companies.”

In contrast to the dot-com heyday, when experience was everything, the MBA degree is enjoying newfound cachet, and that is stoking the competition to get into graduate business schools.

The number of Graduate Management Admission Tests, or GMATs, administered this year is up 14%. And enrollment in Kaplan Inc.’s GMAT prep classes is up 20% nationwide and up 60% in high-tech hubs, including Los Angeles.

“If you’ve worked for three failed companies, it doesn’t instill a lot of confidence in your next employer,” said Trent Anderson, vice president of Kaplan’s graduate test prep division. “An MBA can signify to somebody that you have the skills necessary to make a real business run, not just spend investors’ money.”

Tom Kozicki, director of the career resource center at USC’s Marshall School of Business, said he expects it to get tougher to get into MBA programs for several years.

“We always have an inverse relationship with the economy,” he said. “When the economy gets bad, we boom. When it’s good, it’s more challenging to get good people.”

GMAT scores are expected to rise as layoff victims devote themselves to prepping for the $200 admissions test.

“Before they were working 70 hours a week and working [the GMAT test] in,” said Jennifer Belk, a Kaplan instructor for eight years. “Now more of my students tend to be unemployed, so they are able to work full time on their GMATs.”

Valarie Williams was rejected by UCLA’s Anderson this year and is trying again. This time Williams is taking a GMAT prep course and plans to have applications into several schools by Christmas. With the anticipated increase in applications, she knows the competition is heating up.

“You know there are many other people out there just like you trying do the same thing,” said Williams, 30. “At any other time, it would have been a completely different situation. Given the situation, I might not get into a top school.

“That’s frustrating,” she said, “because as a recruiter, I know the value that a degree from a top school has. It’s a door opener. It’s instant credibility.”

Williams decided to apply to business school last spring after quitting her job as a recruiter for IdeaLab, a Pasadena-based start-up incubator, amid the company’s second round of layoffs and the implosion of some of its progeny.

Trying to place executives in enterprises the firm had helped start was a “soul-burning” experience after the sector had begun to collapse, Williams said. “Every day I came in, I wouldn’t know what companies would be around anymore.”

By the time she decided to apply to business schools, it was too late to get into most of them. Williams crammed for the GMAT, submitted her package to Anderson on the day it was due but did not get in.

“I did terrible on the GMAT,” she said. “It was rushed.”

Williams’ package was part of a last-minute surge at Anderson. Applications from dot-com workers for the school’s full-time, two-year MBA program were 8% higher than the year before.

“That’s when people knew what they wanted to do,” said Baldwin, the admissions director. “Dot-commers said, ‘OK, I’ve sat around for a couple of months and realized things aren’t bouncing back.’ ”

But many dot-commers with options-heavy pay packages couldn’t afford to jump right into graduate business school, which can cost as much as $26,000 a year at private universities, Baldwin said.

As a result, Baldwin believes the impact on graduate schools from the collapse of Internet-related businesses has only just begun.

“In ‘91, you had a real heavy engineering recession,” Baldwin said. “These were people with homes and savings who could rebound into management school. Right away we saw the bounce.

“This one is different,” she said. “Many [laid-off dot-com workers] were living pretty high on the expectation that things would get good. Those who have been shaken out will be applying once they get on better grounding. Their families will take a look at their situations and provide some support for them to continue their educations.”