Stanford MBA grads going into this field earn $400K right off the bat

BY Sydney LakeOctober 05, 2021, 03:19 pm
A quiet morning at Stanford University, as seen in March 2020. (Photo by Philip Pacheco/Getty Images)

Stanford Graduate School of Business is one of the top-ranked MBA programs in the U.S., and it also produces some of the top paid graduates. In 2020, the average Stanford MBA grad earned $156,000 in base salary, plus a $35,000 performance bonus and $26,500 signing bonus. That’s more than $217,000 right out of the gate.

Despite the brief recession caused by the COVID-19 pandemic, Stanford MBA base salaries have been rising steadily during the past decade. Since 2010, the school has seen a 30% increase in base salaries among its graduates. The school hasn’t yet released its 2021 figures.

“Our graduates remained focused and determined, finding careers that allowed them to make a difference in the world around them despite the turmoil in the economy and global health crisis,” Jamie Schein, Stanford GSB’s assistant dean and director of the career management center, wrote in the school’s 2020 MBA employment report.

While the average Stanford MBA salary is nothing to sneeze at, some grads earned nearly double that amount immediately after graduation. The two most lucrative fields for Stanford MBA grads? Finance and technology.

Private equity firms need candidates with ‘acumen of a CEO’

Finance is the most popular industry among Stanford MBA grads, with 34% of the class pursuing a career in that field. The median base salary for grads is $175,000 with an expected bonus of $120,000 and a signing bonus of $34,500 for a grand total of $329,500.

Stanford MBA grads pursue different finance functions including investment banking, investment management, and venture capital, but 15% of Stanford GSB’s 2020 class went into private equity. Those graduates earned an average base salary of $195,000, with an expected bonus of $177,500 and signing bonus of $30,000. 

Immediately after earning a master’s degree, these Stanford GSB alumni are earning more than $400,000.

Why do Stanford MBA alums make such great candidates for these jobs? Part of it has to do with the fact that a job in private equity isn’t purely a finance role, says Sameer Kamat, founder of MBA Crystal Ball. Rather, these professionals “need to have the mind and acumen of a CEO,” he says.

“An MBA degree is probably the only degree that provides such a holistic overview of what it takes to run, and more importantly grow, a business,” Kamat tells Fortune. “It’s no wonder that [private equity] firms value the skills MBA grads bring into their firm.”

But still, why are Stanford grads who go into private equity making nearly double that of their classmates? A lot of it has to do with the high-stakes nature of the industry. 

“Among all the post-MBA careers, finance and strategy stand head and shoulders above the rest in terms of the impact they can have on the businesses they work with,” Kamat tells Fortune. “The cost of failure is even higher. A wrong investment can mean several million dollars down the drain.”

For that reason, top private equity firms need to hire the best people in business—so it’s no surprise that they look to hire from Stanford. The business school has about a 6% to 7% acceptance rate each year. 

“The other factor that gives an edge to MBA grads from [business schools] like Stanford GSB is the intense filtering process they’ve already gone through,” Kamat says. “Selective [private equity] funds don’t see compensation as a hurdle in getting the right talent onboard.”

Consumer and enterprise tech salaries aren’t too shabby, either

In 2020, Stanford MBA grads who went into consumer technology reported earning a $140,000 base salary with an expected bonus of $20,550 and a signing bonus of $35,000; graduates who went into enterprise tech earned a $145,000 base with a $24,750 expected bonus and $15,000 signing bonus. 

With the potential to earn nearly $200,000 right after graduation, technology is another fruitful field for Stanford GSB grads. Generally, tech salaries are about 20% to 25% higher for MBA grads as opposed to undergrad hires, Keith Feinberg, a director of permanent placement services with Robert Half, tells Fortune. 

MBA grads are particularly attractive to consumer and enterprise tech firms because “companies are looking for diversified skills,” Feinberg says. This could be a combination of accounting and finance, or data science, programming, and supply chain, he adds. 

Essentially, the MBA degree allows a tech professional to train in business concepts, Kamat adds. Many of these MBA grads end up in product management roles, which bridge the gap between the tech and business aspects of a business.

“While the market is oversaturated with tech professionals with highly specialized skills, very few are able to transform themselves for techno-functional roles,” Kamat adds. “The lower supply results in higher salaries.”

See how the schools you’re considering landed in Fortune’s rankings of the best executive, full-time, and online MBA programs.