As signs of the times go, this one was hard to miss. At Stanford's Graduate School of Business in California last week, nearly a third of the companies that had signed up to recruit graduating M.B.A.s at the annual Growth Company Career Forum didn't bother to show. A few dozen GSB students wandered around a half-empty room at the Charles Schwab Center, the M.B.A. dormitory, poking through the rubble of the Internet economy. There wasn't much left: an antihacking-software firm seeking product managers, an online publisher looking for a digital-content guru and one hardy dot-com, a Web site for expectant parents, with an opening for an experienced a software manager. Even the recruiting trinkets had a downsize flavor: there were Hershey's Kisses, glowing balls printed with one company's logo and souped-up paper clips. "It was depressing," says student David Maltz. "The one company that I was interested in wasn't even hiring."
What a difference a year--and a few hundred points on the Nasdaq--make. At last year's Growth Company fair, more than 50 start-ups flush with venture capital rushed to the academic cradle of the New Economy to lure M.B.A.s with dot-com riches and fame. But for the class of 2001, last year's trendy business models have taken on new definitions: B2B stands for "back to banking" and B2C means "back to consulting." The class of 2001 entered the M.B.A. program in 1999, at the height of Internet mania. Now everyone, it seems, knows someone who worked for a dot-com that flopped--or who left grad school midcourse for a fistful of stock options. A larger-than-usual proportion of this year's 360 graduates have sought safety by going the traditional route--and with good reason. Starting compensation for Stanford M.B.A.s at top investment banking and consulting firms averages $135,000 a year. For those determined to work on the next frontiers of business and technology, the path is riskier. "It definitely hit home that I will have to do some real searching," says Maltz, 33, who specializes in product design. "It is unlikely that a job is going to fall in my lap."
Similar sentiments can be heard at business schools around the world. In India, recruitment of M.B.A.s to Internet and IT companies fell 30 percent this year from last--56 percent at the top-notch Indian Institute of Management in Ahmedabad--according to a study by CoolAvenues.com, a Web site for business-school students. "Last year students were thinking only of IT," says Kanika Bhal, a faculty coordinator at Delhi's Indian Institute of Technology. "Now it's IT with marketing, or finance or strategy. They're keeping their options open." At France's INSEAD, infatuation with dot-com companies peaked in 1999 when the number of students pursuing consulting jobs fell 40 percent. Now there's a backlash, with half of this year's graduates becoming consultants, and another 25 percent pursuing careers in science. "There was a considerable drop in interest after the bubble burst," says H. Landis Gabel, dean of INSEAD's M.B.A. program. Curriculum choices reflect the shift: significantly fewer students are signing up for classes in subjects like Web branding, B2B and other New Economy electives.
No single technology has emerged to rival the Internet as the next "new thing," but it's clear that a successful business model today is likely to be based on hard science or technology. In Stanford Prof. Charles Holloway's class, a workshop called Evaluating Entrepreneurial Opportunities has student teams developing business plans they will audition before real-world venture capitalists at the end of the term. M.B.A.s used to team up with each other and present Internet-marketing schemes. Now students are encouraged to include team members from other disciplines such as medicine, engineering and law. The resulting plans range from a service company that links customers to low-cost offshore tech support to a medical informatics company that will help insurance companies detect fraud. "I call it 'back to reality'," says Prof. Irving Grousbeck, who also teaches entrepreneurship. "Students want more tangible opportunities."
Maltz, a student in Holloway's class, has decided to combine his M.B.A. with a master's in manufacturing-systems engineering. He hopes eventually to carve out a career in nanotechnology: assembling objects at the molecular, even atomic, level. Nanotechnology is likely to have revolutionary implications for medicine (imagine a "nanobot" no more than a few atoms in size, programmed to deliver chemotherapy drugs to a specific cell). There are also major implications for computing. But profitable business models based on tinkering with atoms and molecules could be more than a decade away. "Most nanotech companies that exist today are in the research-and-development phase," says Maltz. "They are 99 percent Ph.D.s and they aren't looking for anyone to do business development."
For now, Maltz plans to continue working as a product designer--before grad school he helped create everything from joysticks to handheld e-mail devices--perhaps in the automotive industry. He will stay an extra quarter at Stanford to complete his dual degree in engineering. He's mulling a job this summer with BMW in Munich, Germany, helping to develop BMW's information-personalization project, a new manufacturing process that lets companies customize products from clothes to cars.
Yoav Samet, a native of Israel, worked as a software engineer and then at a leading venture-capital firm in Tel Aviv before attending Stanford. He's used to evaluating business plans in wireless networking or broadband. "What excites me is to step beyond that," says Samet. A "geek at heart," Samet, 34, is fascinated by quantum computing, a still-emerging field that involves the behavior of subatomic particles in computing. "This is the real 'beam me up, Scotty' stuff," he says. "You can simultaneously affect particles that are light years away from each other." The resulting computers will process data millions--if not billions--of times faster than current ones, with radical applications for cryptography and data transfer. After graduating, Samet will work in the Silicon Valley office of Polaris, the Israeli venture firm where he worked before coming to Stanford. His dream, says Samet, is to "discover the next Intel," a quantum-computing start-up that would make today's internal processor obsolete.
For students with the right science background, biotechnology is this year's hot growth field. Ann Lee-Karlon, 33, earned a Ph.D. in bioengineering at the University of California, San Diego, before entering Stanford's M.B.A. program. Two months before graduation, she is swamped with job offers from companies eager to take advantage of her triple expertise in biology, engineering and finance. A large investment bank wanted to hire her as a biotech analyst. Venture capitalists called, asking Lee-Karlon to evaluate bioengineering business plans. After sifting her offers, Lee-Karlon accepted a position with e.Lilly, a new division of pharmaceutical maker Eli Lilly. She'll help the company streamline its drug development process. "It's not enough to know biology," says Lee-Karlon. "You have to know how to manage digital information. People with interdisciplinary skills will be in high demand."
That's especially true in genomics, where biotech companies are trying to make sense of the huge stack of information that has been generated by the human genome project. Greg Yap, 27, spent two years before business school working for Affymetrix, a Silicon Valley biotech company that makes DNA chips, a diagnostic tool that allows researchers to study the genetic origins of disease and develop better drugs. Last summer Yap, who studied molecular biology as an undergraduate, worked for Bay City Capital, a San Francisco venture firm specializing in life sciences and health care. He liked the venture world but decided to go back to a company. "I'd rather build stuff than give other people money to build stuff," he says.
Like Lee-Karlon, Yap has been pleasantly surprised to discover that biotech is suddenly the hot field for venture capital. "During the e-commerce bubble, we were the ugly ducklings of the industry," he says of his summer as a venture capitalist. "But as soon as the bubble burst, life-science investment came back. People were looking for the real business models." Yap was doubly impressed when Bill Joy, the chief scientist at Sun Microsystems who is widely regarded as a technology visionary, recently told an audience of GSB students that he expected biotech to create even more wealth than the Internet. "Even if it wasn't bigger than the Internet," says Yap, "I'd still find this an incredibly exciting field."
In some ways the Internet crash has freed this year's class from the go-go Silicon Valley myth that anyone with guts and venture capital could launch their own start-up and become an overnight billionaire. Faculty and administrators are quietly relieved that their kind of B2B--as in "back to basics"--is in vogue again. "We try to remind students that they are here to build skills that will last a lifetime," says admissions director Marie Mookini.
Some students like the new pace. "We watched last year's class discover that the dot-com lifestyle just wasn't sustainable," says Phyllis Ferrell, 28. "There's been a big shift in what people are looking for in jobs. They'll take less cash for a better quality of life." Many of these students are thinking about others as well. John Newsome, 28, a former congressional aide and a gay activist, recently signed on as a strategic consultant with a consulting firm for nonprofit organizations. He says several other classmates turned down lucrative positions with McKinsey, the premier corporate consulting firm, to do the same. "There's a place for people who know about the principles of business to focus on social responsibility," says Newsome.
In Stanford Prof. Rod Kramer's course, Power and Politics, a GSB favorite, students each year are asked to write their own obituaries. This year, of 131 students who did the exercise, only five defined their future lives in terms of business accomplishments; the rest described how they used their business skills to create social change--from starting foundations to teaching and volunteering. The bottom line may be as tough as ever, but the class of 2001 seems to be reaching for its own frontier.