When Chris Jarvis graduates this month from the Anderson School at UCLA, MBA degree in hand, he will not join an investment bank or international consulting firm, like many of his classmates.
Rather, the 28-year-old Jarvis will be working full time at a book and audio-tape publisher, Guardian Publishing LLC, and TriArc Advisors, a risk-management and asset-planning company two businesses he co-founded earlier this year.
“I actually came back (to school) to be a consultant,” Jarvis said. “I thought maybe I’d work for an Andersen Consulting, somebody big like that. But I went back to Boston and interviewed with about 20 consultants who graduated from Anderson, and I’d say about 90 percent were miserable, hated their careers, and were doing it for the money. I thought, ‘Maybe this wasn’t the right thing to do.’ ”
Jarvis is not alone. Even though management consulting firms, investment banks and accounting firms are offering ever-larger signing bonuses as well as other financial incentives, such as paying off a new hire’s student loans a large number of local business-school graduates are opting to join start-ups or start their own businesses.
At the Anderson School, an estimated 15 percent to 20 percent of MBA graduates this year are not taking jobs with large companies, but are instead taking the entrepreneurial route.
Kathryn Van Ness, associate dean of the Anderson School and director of its MBA Career Center, said she is seeing an increasing number of graduates turn down offers from firms like Deloitte & Touche and Ernst & Young LLP, and instead strike out on their own.
“In this healthy economy, I think it is easier for students to hold out and take the risk,” she said. “They say, ‘If in a year or two my company doesn’t succeed, I’ll just take a job with a big company.’ Five or six years ago the question might have been, ‘Will I ever work again?’ ”
Statistics compiled by the Economic Development Corp. of L.A. County confirm that a greater number of local workers have been striking out on their own in recent years.
In 1990, about 111,000 of the 4.24 million people employed in L.A. County, or 2.6 percent, were self-employed, unincorporated workers. As of 1997, that number had soared to 317,000, or 7.6 percent of the county’s total workforce.
While L.A.’s entrepreneurial zeal is growing, the nation’s appetite for self-employment has actually waned in recent years.
At self-employment’s height in 1994, there were 10.6 million self-employed workers nationwide, representing 8.7 percent of the workforce, according to the Bureau of Labor Statistics. But in 1997, the number of self-employed workers had dipped to 10.5 million, or 8.1 percent of the workforce.
Scott Shane, director of recruiting for Southern California for Arthur Andersen LLP, said an increasing number of MBA grads who accept jobs at Andersen are leaving after a year or two to start their own businesses or join start-ups.
Shane said the largest number are in Irvine and the Silicon Valley two hotbeds of the computer industry but the trend is beginning to hit L.A. as well.
“I would anticipate that we would see that shift,” he said. “We’re starting to see those trends in Los Angeles County.”
There’s no shortage of reasons cited for taking the entrepreneurial route.
“It’s not even really the money,” said Joe Locke, 28, who after graduating from the Anderson School next month plans to start an index fund for Chinese companies whose stocks are traded domestically. “It’s the ability to do something on my own, to have control, to make my own decisions. That’s the part I like. I enjoy the risk.”
Of course, money is a consideration. While many MBA graduates will make first-year salaries of $75,000 or more plus signing bonuses of around $25,000, and loan forgiveness that could be worth another $25,000 owning a successful business could bring rewards in the millions.
“It’s a big risk,” said Justin Santinover, 26, who got his MBA from Pepperdine University’s George L. Graziadio School of Business and Management a year ago, and who now runs a placement service for orthodontists, oral surgeons and other dental specialists. “If this thing works out, my payoff is great in comparison to some of my colleagues.”
But for now, those “colleagues” have the financial edge, he concedes.
“Let’s put it this way: When I go out to lunch or go out to dinner, I still have to check the prices on the menu, and I hate to do that,” he said. “All of my peers are making two or three times as much as me, so when I go out with them I have to be careful what I spend money on.”
Tom O’Malia, director of the Lloyd Greif Center for Entrepreneurial Studies at USC’s Marshall School, said he typically encourages only his older students those who have been in the workforce for several years and returned to school to get their MBAs to start their own businesses.
For those with little or no experience, he recommends working at a large company for several years before striking out on their own.
“Most entrepreneur schools will tell students the wine needs to mature,” O’Malia said. “We tell them to become bankable in an industry. You have to get inside to see a niche.”
Tom Kozicki, director of the MBA Career Resource Center at the Marshall School, said that even graduates who want to start their own businesses often feel it’s not feasible in the near term.
“A majority of MBAs have in the back of their minds that they would like to own their own businesses some day,” he said. “But I think when you look at the cost of the MBA program, and the debt load they are coming out with, they take a job with a large company, pay down their debt load and make their connections, which allows them to go to their start-up venture some years down the road.”
At the Marshall School, L.A. County’s largest MBA program, about 30 percent of graduates join consulting firms, another 30 percent go into finance, and 16 percent to 20 percent go into marketing. Only about 5 percent start their own businesses, while another 5 percent join start-ups owned by others.
Dianna Sadlouskos, director of career development and student recruitment at the Graziadio School, said that while an increasing number of graduates are starting a business or joining a start-up, most are still joining large firms. The main factors drawing them there are immediate financial rewards and the prestige of being part of well-known firm.
“There still is a great interest in going the traditional route,” she said.