You brought up a great point about the average age. If you're entering a school where the average age is low, I would say that it's not as useful unless you know that your classmates are young high-fliers who actually have solid experience.
Of course, that's silly. There's still a MBA premium. Even if you assume $50k, you're talking 12 years to break even. That's simple math: you could take into account the time value of money or the fact that salary increases also impact future salary increases.
We're still talking at least a decade, we're assuming the premium is real, and we're assuming that if you're at the far end of the curve (high earners, successful entrepreneurs, etc.), you're not going to be successful anyway.
My friend's point was compounded by this fact: he could spend $500k more effectively elsewhere.
It seems like he did the math (annual salary pre-tax * years in school + tuition + living expenses) and arrived at $500k.
That ignores the fact that you have living expenses whether you do the MBA or not. It ignores the fact that that the difference to your net worth between making $150k a year in pre-tax salary and $0 a year in salary is not $150k. You have to incorporate taxes.
Maybe, but there are lots of ways to calculate opportunity costs.
The OP said his friend was making more than $150k/yr. So if he estimated his potential net worth in thirty years staying course versus his estimated net worth in thirty years with an MBA, then discounted it to present value, a difference of $500k is somewhat reasonable.
There are plenty of other, equally valid ways for a person to calculate opportunity costs. It depends on what that person values. For example, lost wages that would have paid for vacations would not necessarily show up in a comparison of net worth, but it is certainly an opportunity cost for some people. Or having to put off starting a family, or many other milestones in a person's life.
Any half-decent MBA program will have coursework on how to evaluate problems that seem "hard to calculate".
Nobody needs an MBA, or a CompSci degree, or any Univesity degree for that matter. But that's not to say that there aren't many skills that the programs will teach you. Is it stuff you can learn on your own? Sure, just like anything else. But there's no replacement for class-time and actual discussion and interaction.
I've spent quite a few years on these boards; there seems to be many people who mock MBAs, but conversely I'd say the financial (and sales and marketing) literacy is no better here than average, even though this place is chock-full of entrepreneurs.
But agreed, the high premium is a pretty big burden if you don't succeed. Potentially crippling your future.
While a Stanford MBA might help you get funding, investing $100k + 2 years in your business and networking might get you just as far.
Just a thought...
You're not wrong, but if you're the kind of person who's going to be a CEO, a MBA credential might not move the needle that much. (I know lots of CEOs without advanced degrees.)
