ENTREPRENEUR

Image from Rambis (Flickr)

The true costs

Since I first decided to go to business school more than 2 years ago, I decided to keep track of any and all expenses related to the experience.  All of the books and articles that I read had claimed that the cost would be upwards of $150,000, but I always suspected that number was too low.

So, as the months and years went on, I recorded all of my costs – tuition, housing, books, travel, nights out, everything, as long as it had some connection to business school.

Today, I present the final number.

My total net cost of attending a full-time business school program was approximately 

$299,654.57

For those of you that have been following my posts, you’ll notice that the total cost actually went down since the last time I posted.  That’s not to say that this isn’t a huge number, but you may be asking why it would have dropped.  Well, it’s simple, the majority of this cost is lost wages, but up until now, I wasn’t factoring in taxes, Social Security, 401(k)s, and Medicare.

The truth of the matter is, I would never have even seen any of the money that I would have had to pay to any of those accounts, so it’s not fair for me to add them in to the total calculation.  However, if you’re interested in seeing the total gross cost of business school, you can always check out my online spreadsheet where I tracked my expenses.  The link is below:

https://spreadsheets0.google.com/ccc?key=tUCdEcQ2OgZNYWguoMJT1Hw&hl=en#gid=0

Heres’ a quick breakdown of some of the major costs:

• Lost wages: $138,960.62

  By far the largest cost, lost wages represents almost half of the total cost of attending a fulltime business school program.  This number does include an adjustment for taxes, retirement, Social Security, and Medicare, as mentioned above.  Granted, this was never money actually spent, but it was foregone income that I would have had, had I not gone to business school fulltime, and thus it constitutes an opportunity cost, a very real cost of business school.

• Tuition and academics: $93,752.78

  The majority of this number is tuition, at around $25,000 a semester.  I was also fortunate enough to have received a small scholarship, which helped bring the cost of tuition under $100,000 total.

• School-related travel and studying abroad: $34,708.19

  Traveling is a huge component of business school, and though you can argue that I could have foregone all of the trips and the study abroad experience, that would have completely defeated one of my main purposes of attending business school.

Comments and notes

You may have noticed that I did not include the cost of interest expense on student loans.  I also did not include the lost gains from new investments that I would have made from my salary.  As much of an approximation as this whole list is, the numbers are based on reality, whereas I just do not have enough information to estimate capital gains, and I was fortunate enough to not have to worry about loans.  However, it’s my belief that capital gains would have offset interest income, so hopefully my lack of including those two numbers will not make a huge impact on the total amount.

This number represents my true, finalized cost of attending business school.  I assumed lost wages until the end of July, as most of my classmates are starting to work in August.  I did my best to record all of my expenses as accurately as possible, but there’s no doubt I missed a few things here or there.

In keeping track of the total cost of business school, I wanted to provide an accurate, realistic number for any future b-schoolers.  My hope is that a more realistic number will help them make their decision on whether or not to go to business school.

For now, I’m closing my books.  I may make an update at some point in the future outlining the financial gains I’ve experienced as a result of going to b-school, but because I chose to go the startup route, that may not happen for some time.  My guess is that those of my classmates that are going into consulting and finance will be able to recoup their costs after 5 to 6 years, after which they’ll start realizing large returns from this significant investment.  So, unless I need to make a significant change to any of these numbers, this will be my last post on the topic.

Departing words

I’ve said it before, but it’s worth saying again – when you’re deciding on business school, you cannot merely look at the financial costs. Two years in a fulltime b-school program will change the way you think, the way you look at the world, possibly the city in which you live, and will definitely make a huge impact on your life as a whole. There’s no doubt that it represents a huge cost, but you can’t measure the impact of that cost in money alone. My life has been completely and unequivocally altered by business school. I’ll even go as far as to say that these were the two best years of my life. In the long run, how do you do a DCF valuation on that?

Let’s start from the end

A couple of days ago, one of my really good friends came to pick up the last of her things.  I was storing them in my apartment while she was in India, getting ready for her upcoming wedding.  When she collected the last of her clothes, jumping in her rental car on her way to DC where she would be moving, it hit me.  Business school was over.

Indeed, it’s all done.  The apartment that I’ve lived in for two years, primarily because of its proximity to school, will soon have new tenants.  I’ll be moving to midtown, ironically enough with one of my friends from DC – in fact, he used to live two streets down from me when we were in Arlington.

I’ve gone from seeing around a quarter of the class every week to no more than 5% every month.  I built some pretty incredible relationships throughout my two years at Stern.  There’s no question that almost everyone in the entire class was smart, sociable, and really fun to be around.  It is sad knowing I won’t see many of them again.  But I’m fortunate in that I’ve been in many, many situations in my life where I’ve developed some strong relationships and then had to say goodbye to many of the people that I got to know so well (in fact, my study abroad experience in Italy is the quintessential manifestation of that).  I’ve learned that most relationships won’t last forever, and I’ve been able to transition into a mindset where, even with that knowledge, I’m able to fully enjoy the experience while it’s happening, yet I’m still able to move forward without too much trouble when it’s over.  That’s not to say that I’m okay with losing touch with all of the people I’ve come to know so well.  On the contrary – I plan on staying in touch with my closest friends on a very frequent basis.  But these days, I’m okay knowing that the great times will be transforming into the next big thing.  This is a night-and-day difference from how I used to be.

The last two years have been the best of my life, but now it’s time to move on.

What I got from it all

I’ve talked many times about my decision to go to business school, so I won’t go over that here.  I will say, though, that I got everything out of this experience that I was searching for, and then some.  There’s no way I can describe just how much of an impact these past two years have made on me.  In fact, I have such a different way of looking at the world now that I’m almost a different person than I was before I came to business school.

No one can truly know how much of a crazy roller coaster (full time) business school is until they’ve lived the experience.  For me to try and explain it here would be futile, but suffice it to say, it was a life changing, personality changing, mind changing, outlook changing experience.

In the past, I’ve written about the “true” cost of business school.  Soon I’ll be posting a final number – the total amount of money that has left (or never entered) my bank account due to business school.  Financially speaking, it’s hard to say right now whether it was worth it or not.  My belief is that it was, especially if the stuff that I’m working on now starts to take off.

But there’s no doubt in my mind that it was worth it in terms of life experience.  If anyone’s debating whether or not to go to business school, I would suggest looking at your current situation and asking yourself if you’re ready for a jarring, life changing experience.  If so, then do it, you won’t look back.

Departing words

My parting words of wisdom from business school:

• Put in the effort to get to know new people, you’ll be glad you did
• Make every effort to go to parties, social gatherings, get togethers, random dinners, late night karaokes, around the world trips, industry conferences, and any other place where you can spend time with other people
• You’ll always have work, you won’t always be able to spend time with the people that matter to you
• Figure out what you’re passionate about and make no excuses about going after it
• TAKE RISKS, lots of them, continuously

A look back at some of the greatest times

(Click to see the larger image)

Business school provides an incredible opportunity to see the world.  Now that my career as an MBA student has reached its end (more reflections in a later article), I can look back at all of the awesome places that I’ve been able to visit.  Here’s a quick review of the amazing places that Stern opened up to me:

At the start of 2011, I got to go out to the heart of Silicon Valley and talk to some of the most successful, exciting startups in business today.  It was a great opportunity to see what’s happening in the industry.  Unfortunately, I didn’t get to see as much of the city as I would have liked to, but I did have some awesome food and a good time.

I actually went to Miami twice – the first time was with the oGolf crew to test out our app, and the second time was a weekend trip with Zain and CaroNgu.  Beautiful city, beautiful people, beautiful everything.  It has definitely become one of my top five favorite cities in the US.

As a result of our Japan spring break trek getting canceled due to the earthquake, I was able to revisit Thailand.  This is probably my favorite country in the world to visit – the beaches of Krabi were stunning, and Bangkok was a huge city that still managed to maintain its Asian look and feel.  Absolutely stunning country.

By extending my spring break trip for a week (hey, I was able to catch up with classes fairly easily), I was also able to see the temples of Cambodia.  I finally got to see Angkor Wat, Angor Thom, and all the others.  It was a really cool experience, and the temples were interesting.

My trip to Dubai was completely accidental.  My flight back to the States from Thailand/Cambodia was delayed, causing me to miss my connection in Dubai, and the next flight was a day later.  This was actually a blessing in disguise, since the airline gave me a hotel voucher, which let me explore the city with a cousin of mine that happened to live there.

I was able to see the Burj al Khalifa, the Burj al Dubai, the Atlantis, the islands, and the city as a whole.  On top of that, my cuz took me out to the desert to do some dune bashing, which was a blast.  Truly a great day.

Stern offers its students the ability to take a short course, for credit, in some of the top business schools around the world.  These courses, known as “DBis” (Doing Business in…) allow students to learn about the local business environment from the country’s best professors.

I chose to go to China, and had a blast.  The classes I took were incredible, and it was truly enlightening to learn what China’s like straight from the horse’s mouth, and not from the Western media.  There are a lot of intricacies there that most people would never know about if they have never gone to the country.  On top of that, I was able to do a lot of touring, and went to most of the sites in Shanghai and Beijing.

One of the greatest experiences that I had in business school was my time studying abroad at Bocconi University, in Milan.  I spent several months both in Milan, and traveling around Europe as a whole.  In Italy, I obviously saw Milan, but also had the opportunity to visit Cinque Terre (a gorgeous town that’s composed of five villages, each built on top of a cliff that overlooks the sea), Asti and Alba (small villages with great food and drinks), and Rome.

During one of my weekends in Europe, a few of the exchange crew decided to go to the South of France, including Nice, Cannes, St. Paul du Vance, and Monaco.  It was a fun weekend of sightseeing (St. Paul is a gorgeous town on a cliff, very old walled city, no cars allowed), great, great food (sorry Italians, the French have you beat), and good fun.

One of the most fun weekends in recent memory was when the exchange crew went off to Munich for Oktoberfest.  Incredible time.  Unfortunately, I didn’t get to see as much of Munich as I would have liked, but Oktoberfest was awesome.  The whole place is built like a carnival, they have rides, and the various beer companies put up tents where they serve drinks, food, and sing German songs the whole day.  I would definitely recommend going if you haven’t been.  The picture is of a few of the exchange girls in our tent.

On our way back from Munich, a bunch of us decided to make a quick stop in Innsbruck, Austria (long-running, inside joke among the exchange crew).  Nothing special, but hey, I got to see Austria.

My most expensive side trip in Europe was my weekend in Stockholm.  I’ll be honest, I hated this place.  It was freezing (during the end of summer), way, way too expensive, overly sterile, there wasn’t much to do, all of the guys had haircuts straight out of Rick Astley’s “Never Gonna Give You Up” music video, and my friends and I had a strong feeling that the people manning the entrances to anywhere cool to go, were a bit racist.  The coolest thing to see there was a place named “Skansen,” which was a recreation of life in Sweden a long time ago – the most interesting thing there was a zoo.  I will say, though, that the people you come across in every day life were very nice, and the stereotype is true, everyone is tall, and all the girls are (fake) blondes.

For the end of our exchange, a few of the Bocconi exchange crew took a week-long trip to Morocco.  It was a blast.  We started off in Marrakech, where we stayed in the Medina (old school city).  We saw old Arabian markets, donkeys and chickens roaming the streets, chaotic bazaars, and all sorts of homages to Arabian life.  We then took a tour through the Atlas mountains and the desert, where we rode camels and camped out overnight, and then we finished off in Fes and Casablanca.  The Hasan II mosque in Casablanca was a truly incredible sight.

After Morcco, a few of us headed off to Spain, where we hung out in Madrid and Barcelona.  Madrid was a big city and reminded me of New York, so I liked it quite a bit, even though there’s not a whole lot to do there (Retiro Park is really cool, though).  After Madrid, I went to Barcelona for a couple of days.  The food was awesome, and the sangria was great.

The main thing I remember about Poland was that it was freezing.  Of course, my friends and I are some of the only ones to go to Eastern Europe during the winter.  Krakow was pretty interesting – in fact, the salt mines were some of the most impressive sites I’ve seen.  Warsaw was also cool to see – but it all would have been much more enjoyable had it been somewhat warmer.

Australia was one of the best trips of my life.  I went to Sydney, Port Douglas (the Great Barrier Reef), Cairns, and Melbourne, randomly meeting up with different groups of Sternies, and for the end of the trip, even my good friend Leo.  I had a blast everywhere I went, and saw some truly amazing things.  The only downside was that it was unbelievably pricey.

New Zealand is by far the most beautiful country I’ve ever been to.  I tacked on a week and a half in New Zealand after my visit to Australia, and it was incredible.  I flew over glaciers, went jetboating, and saw some of the most incredible sites I’ve ever seen.  Highly, highly recommended.

For my very last official trip as a business school student, I had the great fortune of being able to visit Tanzania.  The Stern Social Enterprise Association (SEA) hosted a trip to this Eastern African country in March of 2012.  Along the way, I climbed part of Kilimanjaro, went on a three day safari which was an absolutely incredible experience, and visited Zanzibar – with a quick stop in Amsterdam on the way back.  Truly an incredible trip.

My last semester started on January 30th – 2 weeks ago, to the day.  I’m considering this the “real” start of my second year, since my time at Bocconi was, in all effects, an entirely different academic and social experience, incongruent with Stern.  So far, things have been different.

The social scene has chilled out a bit.  There aren’t as many events as there were last year.  Granted, it’s the dead of winter, but it still feels like things are very low key.  I don’t run into as many people as I used to.  People are definitely focused on new things.

The academic scene is a bit different too.  Most people either have jobs or are looking for jobs – this is the same as last year, but more pronounced.  I rarely go to the main study lounge anymore, and when I do, I don’t see any second years.  It’s packed with first years, though.  They actually care about their schoolwork.  We, well we’re more prone to coasting.

And I can see why.  I don’t care as much about classes now.  My focus is on how I’m going to survive after graduation, and setting myself up to transition onto the newest priorities – building out oGolf, developing better trading strategies, doing some trading consultations, possibly moving to a new apartment in a few weeks.  I’m still interested in the stuff that school has to offer, and I’m even considering taking one class a semester at Stern after I graduate, but in all honesty, I wouldn’t mind if all my classes end today.  I have very little interest in doing the work, and judging from the population in the study lounge, my fellow second years feel the same way.

Maybe the transition has begun.

Or maybe it’s just too cold out to focus on having fun and getting things done.  We shall soon see.

I volunteered to create a quick summary document for my school’s International Programs department outlining what I’ve learned about Bocconi and the city during my time here and am sharing it here.  Feel free to take a look if you’re interested: Bocconi Study Abroad.pdf

The awesome exchange crew - stolen from Steph

“… cuz in this moment I just feel so alive.”

So this is my “official” end.  I’m leaving Barcelona tomorrow, which means that, as of this posting, I no longer have any set plans to see anyone else from the exchange crew again.  Most people have already left Europe, and those that are still here are traveling around.  There are a few people left in Milan, and I’ll probably hang out with them, but really, there’s no saying what’s going to happen.

So like I said, it’s the end.

I’ve had a blast.  The people I met were incredibly fun and really cool people.  Without them, this exchange would have probably been miserable, since I can’t say for sure that I would have survived Italy if not for their social support .  Through all of the ups and downs of living in a new country, going to a new school, and essentially, starting a new life in only a few months, I never stopped having an amazing time.  I’ve learned a lot about myself, about others, about life in general.  If I could have this sort of experience for the rest of my life, I would never have a reason to complain.

As I start to transition back into the world of a second year MBA student at Stern, I can’t help but look back at the whole experience, and as I do, I know that I got everything that I set out to get from it.  At the same time, I can’t help but wonder what it’ll be like when I get back.  A whole new class of first years, meeting up with people I haven’t seen in more than half a year, reconnecting with the oGolf crew, worrying about post-graduation life.  It will be close to starting all over again.

Before closing out this chapter, I have to give thanks to a small handful of people that made the most effort to connect with me – you truly made this exchange unforgettable (everyone should know that I had a blast with them, these guys were the ones that just ended up tolerating me the most ):

• Priji – I said it at Just Cavali and I’ll say it here.  I’m unbelievably glad you were on this trip and that I met you.  You were by far the most influential person on this trip for me, and, I’m guessing, for others as well.  Always a good attitude, always upbeat and energetic, and always down to earth.  Not many like you, stay just the way you are.
• JoJo – You rock.  Plain and simple.  One of the coolest chicks I’ve ever met – awesome attitude, always fun-loving, incredibly smart, ambitious, just all around super cool.
• Patelathon – Oh how I’ll miss the crazy sayings and exaggerated expressions.  You are one chill dude.  Loved hanging out with you.
• Shuperman – You made me think.  And you made me remember that life isn’t only about just having fun. And you also taught me a lot.  This exchange would have been a lot more dull without you.  You’re a super smart guy in business and academics.  No doubt in my mind that you’ll have an awesome career.
• Steph – Incredible attitude, incredibly social, and incredibly down to earth.  Hanging out with you was a blast, you’re one of the warmest, most welcoming people I’ve met.
• Gus – Glad that our “Please don’t go, Gus” group worked .  You’re a blast, man.  Super glad you stuck around and that we got to travel together as much as we did.  You made things so much fun.  Stop being so sketch.

Best wishes and best of luck to everyone in the future.  You know how to get in touch with me when you’re in NYC (the greatest city in the world!), you better do so.

Last year I wrote an article for my school’s newspaper on the tradeoff between getting an MBA and jumping straight into entrepreneurship. I didn’t want to post the article so close to when it was published in the paper, but it has been some time now, and I felt like it would be a good time to put it up. Below is the original text of my op ed for all my fellow entrepreneurially-minded colleagues.

Rapid Prototyping vs. Synergizing
Is An MBA Worth It For Entrepreneurs?

Shanif Dhanani – MBA1, Aspiring Entrepreneur

If you take a walk through the untamed jungle of a large, well-known business school, you’ll find many interesting species. You’ll undoubtedly come across the consultants. These students can be found in large numbers and in all areas, though they’ll frequently be grouped in pairs, practicing market sizing or calculating profit margins. You may also come across a large drove of students in black suits and shoes so shiny you may need to avert your eyes. These are the financiers, and can be easily identified by their discussions of yield curves and their love of circular arrangements. You’ll also encounter students engrossed in high-level discussions of segmentation, social media, and targeting. Feel free to say hello, they are the marketers, a very friendly bunch.

If you wander around long enough, you may come across a small group of students isolated in a corner, huddled over their computers in faded jeans and graphic tees, talking excitedly and gesturing wildly. If that’s the case, don’t be alarmed. You’ve just unearthed a group of rare business school students. These are the entrepreneurs.

If you observe this group long enough, you’ll quickly start to notice some oddities. Instead of trying to find a job for the summer, they’ll be figuring out how to raise “seed funding”. They don’t do mock interviews, they do pitches and prototypes. Their polished loafers are actually scuffed sneakers and their padfolios are all white and have a picture of an apple with a bite taken out of it. Who are these strange creatures, and why are they here? Believe me, they’ve all asked themselves that very same thing.

When people think of entrepreneurship, particularly technology entrepreneurship, images of pizza boxes, long lines of code, and Red Bull may come to mind. School and homework, though, are generally nowhere to be found. But for an entrepreneur, getting an MBA may make a world of difference.

Entrepreneurs, VCs, and others in the industry are generally split on whether or not an MBA makes sense for an aspiring entrepreneur. Everyone has their own opinions based on their own experiences. Nobody ever agrees, but that’s actually a good thing. Everyone’s situation is different and there will never be a precise formula for how to become a successful entrepreneur. Getting an MBA can be hugely beneficial for some, and a waste of time for others.

Going back to school for an MBA has a lot of upside. Without even considering the thriving social scene and great personal, getting an MBA provides an incredible network of valuable business contacts. Business schools have a myriad of talented people, all working in close proximity. This is extremely helpful for the budding entrepreneur who needs a couple of co-founders to help launch a new business idea, or advice from professors that have been successful in their own ventures. In addition, aspiring entrepreneurs can gain access to classmates from a variety of different backgrounds, knowledgeable mentors, lawyers, counselors, and venture capitalists. Contacts like these are crucial for making a business successful, and one could easily argue that the value gained from them alone makes it worthwhile.

Another benefit of the MBA lies in the formalized education and experience gained from attending business school. It’s always possible to learn about finance and marketing while working through issues on your own startup, but inherently, you’ll encounter a lot of setbacks and major obstacles. At school, you learn the best strategies and tactics for what works before you even bring anything to market.

On top of the formalized education process, business school provides aspiring entrepreneurs a low-risk, safe environment to try their hands at the entrepreneurial lifestyle. A lot of schools have business plan competitions and startup consulting programs, in addition to providing access to more intense programs like InSITE. With these resources, it’s much more feasible to plan a business or gain experience without having to risk all of your money. Business school also does a great job of taking entrepreneurs out of the “build it and they will come” mindset while providing them with a structured way of taking an idea from concept to implementation to sales to growth.

Ultimately, business school can do a lot of great things for the aspiring entrepreneur. But these things all come at a cost – a big cost. Time and money are precious, and going to school devours both. Getting an MBA is expensive and takes two years to complete. That’s more than $100,000 and a significant amount of time that could have been spent developing an innovative product or service and selling it to customers eager to shell out some cash. There’s always the risk that you might miss the boat on your brilliant idea. Also, if you have to take out a loan to cover the cost of school, paying it back as an entrepreneur could be completely infeasible during the first few years after graduation.

Then there are the time management issues. If you’re trying to build a business while in school, you’re going to have to manage your entrepreneurial work with your school obligations. When you combine that with the risk that what you learn in class may not work in the real world, or with the chance that you could get caught up in the chaos of recruiting, you really begin to wonder whether business school is a good idea.

So is an MBA worth it for entrepreneurs? It depends. The astute consultants out there will realize that I’ve just done a very crude cost-benefit analysis, something that all entrepreneurs need to do before making the decision to come back to school. My take on it is if you’re incredibly focused, have a strong management team, and a highly promising idea, you may be better off going straight into the startup lifestyle. But if you’re still looking to refine your idea, want some time to build up your skillset, or want a safe, low-risk environment to nurture your concept, you can’t go wrong with an MBA. In the end, if you’re a high-performer with a great work ethic, it doesn’t matter. You’ll succeed no matter what you do. At that point, the MBA just becomes something that might accelerate your timeline or simply slow you down for a bit.

In his teachings, Confucius proclaimed the virtues of the five main human relationships: ruler to ruled, father to son, husband to wife, elder brother to younger brother, and friend to friend.  It’s easy to see that structured relationships form a key part of Chinese culture.  These structures are the source of one of the most important concepts in Chinese culture – that of hierarchy.

During my nearly three weeks in China, I found a large number of instances in which the Chinese proclivity for defined hierarchy came to the forefront of discussion.  One of the most interesting of these instances was in how the Chinese rank their cities in “tiers.”  Particularly in class, discussion around the Chinese economy was often specified in terms of the first and second tier cities in China.

No one gave a definition of what constitues a first-tier or second-tier city, but somehow, everyone knows.  Beijing, Shanghai, and Guangzho are clearly first-tier cities.  Second-tier cities are those that still have some growing to do.  Third-tier cities are likely those in the western part of the country and encompasses those that have seen relatively low economic development and widespread poverty.

For me, it was very interesting to see the Chinese classify their cities into “tiers,” as if some were better than others.  They could have easily differentiated their cities based on economic development, or population size, or a variety of other factors.  But the fact that they choose to distinguish between the different “tiers” of cities in their country is a tribute to the great need for general, over-arching hierarchy in Chinese culture.

In the same way that the Chinese classify cities into tiers, they similarly differentiate between the different ranks of universities, politicians, companies, and everything else in Chinese culture using a “tiered” or ranking system.  One of the interesting consequences of this ranking lies in the educational system in China.  Recently, China Central Television (the government-controlled news program) aired an interview with the Richard Levin, the president of Yale University, on the topic of improving education in China.  During the interview, they asked him how China can improve its educational system.  His response was very interesting.

He commented that the Chinese need to begin encouraging their students to think more critically in class, rather than take everything that their professors say as dogma.  He noted how universities in the US are much more comfortable with students actively questioning their professors and taking part in classrom discussions than their Chinese counterparts.  He noted that this practice can be traced back to the traditional practice of “respect for one’s superiors.”  Much as the ruled should respect their ruler, and a son should respect his father, students should respect their professors by not questioning what they say.  Thus, the hierarchy that I talked about earlier in this post eminates itself in the classroom.

Unfortunately, this may stifle Chinese learning.  One of the biggest advantages that students in western universities have is their ability to think critically, to take a hypothesis and analyze its underlying assumptions and the arguments in favor and against its validity.  This ability to think critically leads to innovation, invention, and the ability to develop creative solutions to problems.  The Chinese, on the other hand, lack this skill.  They are very good at taking instructions and executing them effectively, but when it comes to true innovation, they need to “think outside the box.”  This truly starts in the schools and universities that mold the minds of the younger generation.  As China progresses, there is no doubt that this practice will slowly become more prevalent in class, yet, whether or not it permeates into the larger culture remains to be seen.

One particular fall evening, many hundreds of years ago, an emperor of China was walking through his palacial gardens with one of his most trusted ministers.  In fact, this particular minister had even been employed by this emperor’s father, making him one of the longest standing members of the royal court.  During the course of the walk, the emperor took out a fan with the minister’s name written on it and handed it to the minister.  The minister accepted the fan, examined it, and the two continued their walk silently forward.

The next day, the minister stood up in front of the entire court and emphatically announced, “emperor, I feel I have served this court well and to the best of my abilities.  I served your father, and I served you.  Now I am getting old, and I ask your permission to retire so that I may spend the last of my days with my family in my home town.”  The emperor immediately agreed, allowing the minister to retire in peace.

As a Westerner, one could read this story and wonder what the heck is going on.  The emperor gave a thoughtful gift to his oldest confidant and mentor and the very next day he retires?  It doesn’t make sense.

Here, as in all of China, the devil is in the details.  The key thing to note is that the emperor gave his minister a fan, with the minister’s name on it, in the fall.  The weather was cool, and a fan was unnecessary.  Because the fan had the minister’s name on it, the emperor was implying that, like the fan, the minister was also unnecessary.  But instead of firing him flat out, the emperor gave the minister a chance to “save face”, a very important aspect of Chinese culture, by allowing him to retire.

This anecdote actually illustrates many of the key nuances of Chinese culture that I’ve been exposed to during my time here in China.  Over the past two weeks, I’ve been taking part in lectures, classes, presentations, corporate visits, and, of course, the requisite tourism, all as part of Stern’s “Doing Business In China” program.

Over the course of the next few weeks, I hope to write several posts on a variety of topics that I’ve learned about while on this trip.  This first one corresponds to the first lecture I received on Chinese culture.  It was given by professor Li Ma, who is part of the Department of Organizational Management at Peking University, China’s premier educational institution.

During the course of his lecture, he discussed the value systems and incentive structures that Chinese workers, and the Chinese population as a whole, live by.  One of the key concepts was that of saving face, which relates to the more general concept of living in a harmonious, de-individualized, respect-based culture.  The Chinese are very group-oriented.  They thrive on having high social status within their immediate social, professional, and familial lives.  They value having close relationships and value relationships within their immediate circle, almost at the expense of relationships with those that are farther away.

For example, the Chinese will do almost anything for close friends, and usually consider them honorary family members.  However, they’ll readily bump, shove, and push their way past other Chinese people that they see on the street.  Similarly, they’re more favorable to giving jobs, favors, and money to those that they’re close to at the expense of strangers.  This reliance on close relationships is known as “guanxi”, and is a common force in everyday business in China.

Many businesses here will leverage their guanxi with government and private sector officials to increase their customer base, find new clients, develop exclusive sales contracts, and hire employees.  In fact, at some points, it begins to border on what Westerners would call corruption and bribery.  But to the Chinese, guanxi is anything but.  It’s a way of life.  It is the epiphone of what Chinese culture is all about – extremely strong close relationships and much weaker relationships with those outside of one’s “circle of trust.”

This leads to a very interesting way of life in Chinese culture.  Oftentimes, Chinese people will do anything to maintain harmony, even when this could lead to potential problems down the road.  For insance, one of the examples that professor Li gave us was that a spoken “yes” by a Chinese person can mean “yes”, “maybe”, “I don’t know”, “if you say so”, or “I hope I have said this unenthusiastically enough for you to understand that I mean no.”

As you can guess, this leads to a culture that is very high context, where details matter, and where what’s spoken is hardly what’s meant.  When it comes to business, this still plays a role, but is slowly changing.  Chinese workers will usually do what their boss tells them with no hesitation.  Managers will often exert significant influence over those below them, but will usually not provide any push back to their own bosses.  They’ll often seek to please others at their own expense, and at the expense of productivity and, possibly, good business.  Interpersonal relationships, perceptions of fairness, and social standing all play a huge part in Chinese business.

This is slowly changing, as new Chinese employees are much more materialistic than previous generations.  They’ll usually spend more than their parents, and they work hard to one up their friends and colleagues with the newest products.  With that said, they’re still Chinese, and the concepts of harmony and social order are still important to them.

In general, the average Chinese person will work very hard to please others around them.  They’ll bend over backwards to make life easier for their friends, family, and guests, often to the point of inefficiency and inconvenience for the very same people they try to please.  Understanding this, and being respectful of it, is the first step in doing business in Chinese culture.  So the next time you’re in China, trying to close a multi-million dollar deal, and your hosts spend all of their time trying to wine and dine you and none of their time in the meeting room, take it as a good sign.  You’re building guanxi with them, and once you start negotiating, it will be a much more smooth operation.

Image from Rambis (Flickr)

Total as of 6/2/2011: $203,223.38

In the past, I’ve periodically written articles detailing the true costs of business school from my point of view as a current business school student.

Whenever I incur a cost that is related to school (and yes, I realize that assessing whether a cost is related to school is subjective), I record it in a spreadsheet that keeps a running tally of what I’ve spent.  Eventually, I’ll add in the positive cash flows that have resulted from my attendance at school, but seeing as how I don’t have any of those yet, we’ll just ignore them for now.

This post is not only a follow on to the series of posts I mentioned above, but it’s also a special post because of a significant milestone that I just reached.  As of June 2, 2011, just 11 days shy of the two year anniversary of my first b-school-related expense, I’ve broken the $200,000 mark.  First off, I have to say that I can’t believe 2 years have already gone by since I started planning this whole experience.  Has it been worth it?  For me, yes.  I’m a completely different person now than I was when I started this journey.  I’ve experienced so much.  On the one hand, it’s hard to imagine that two whole years have passed.  Time has flown.  Everything I’ve seen and done has kept me so active and busy that I never had the chance to see how much time was going by.  I still very distinctly remember the process I went through in deciding to apply to school (I also very clearly remember the series of events that led up to it).  It seems like that time was so recent, nowhere near two years ago.

At the same time, I can barely remember all of the little details and daily activities of life two years ago.  My life now is in New York, doing what I really love, around people that consistently motivate me and teach me new things, in a city where I feel like anything is possible.  And in that environment, those two years actually represent a lifetime.

With respect to the costs, I have to reiterate that the total amount I listed above includes the opportunity cost of not working.  In fact, that cost represents more than half of the total cost that I listed.  So no, I didn’t actually pay $200,000 out of my pocket, but if you were to take a look at my true net worth had I not gone to business school, that’s the number that would represent the difference (more or less).

Obviously, this isn’t entirely accurate.  There are a lot of subjective costs I choose to include or leave out, and had I not gone to business school, I know for a fact that I would have ended up doing something different than what I was doing at the time.  But in recording these costs, I’m not trying to partake in an exercise of complete accuracy.  I’m trying to find out the true magnitude of what it costs to attend business school.  But feel free to judge my numbers as you wish.  I’ve shared my spreadsheet for everyone to see, and if you want to take a look, just click the link below.

https://spreadsheets0.google.com/ccc?key=tUCdEcQ2OgZNYWguoMJT1Hw&hl=en#gid=0