Tuesday, January 20, 2009

MBAs in the Internet Industry Part 2

In the first post of this article Reasons for an MBA graduate to go into the Internet industry… Are there any? I discussed mainly the current difficulties and drawbacks that exist today for an MBA Graduate that chooses to go into the Internet Industry. There were many reasons against making this choice, the most relevant being: There is not an MBA culture in this industry, there’s no hiring expertise and programs for MBA’s, salaries are lower and there are very few positions available (big companies recruit very little and smaller companies don’t even consider it).

The question here is obvious for an MBA graduate considering this in this field:

  • Why would I choose an industry where there is no culture at all, my title isn’t recognized like in many other industries, there are much less positions available and on top of that, salaries are lower?

Although with this outlook the Internet industry might seem very unattractive, there’s always another side of things. Us (MBA’s) also have our advantages in this industry… and some are very powerful indeed…

When less (in the industry) means more (opportunities)

As mentioned at in the first part of this article, comparatively there are very few MBA’s in the internet industry. This was first seen as a bad thing, because being less means less people are able to recognize the value of an MBA Graduate, and also means lower salaries…. But it can also be seen as a good thing. Less MBA’s in the industry means there is less competition. There will be less people in the industry with the same set of skills that your MBA gave you, and that’s quite an advantage. It could be a drawback in the short run that turns into an advantage on the long run. Later in your career when it comes to Top Management positions, it doesn’t matter how good the leading technician was at programming, if you don’t have the skills to manage people or have direct P&L responsibility for example, you won’t get promoted. Guess who will be in a better position to get a promotion at that point…

A different angle on things

MBA’s have (or at least should have) the ability to see a business opportunity faster than average. The knowledge acquired during the MBA gives you the tools to look at one market/industry and study it, dissect it, analyze its competitive landscape and see things in a different perspective. These tools should be an advantage to spot business opportunities that currently people within the industry haven’t seen.

Fundraising… our biggest asset

Even great ideas need proper funding to get started. If you look at the greatest achievements in the Internet Industry (let’s say Amazon, Google, Yahoo and Microsoft for example) their founders were not only great programmers but also, and maybe even more important, great businessmen. Everyday millions of software developers, programmers and people in this industry come up with great ideas, brilliant ideas that never materialize because lack of proper business planning and access to capital. Being an MBA gives you the necessary knowledge in accounting, finance, HR and Marketing to create a strong and coherent business plan to be used for fundraising. MBA’s have also the required tools to discuss head to head ROI’s, Marketing Ideas, cash flows and competitive strategies with Private Equity Firms, Business angels, banks and the like. In a young industry like this one, where most of innovations come from small start-ups with little capital, this is a skill that can be very valuable. If you can partner with a programmer who has a prototype, an engineer that has a great idea and you’re able to get funds for the project… he/she will love you the rest of your life !!

Marketing… a very valuable skill to have in this industry

On the early days of Internet most of the biggest success stories (Napster, Google, eBay, etc) didn’t have to rely on traditional marketing strategies to be successful. Most built their initial success on word of mouth and viral marketing because the innovation they brought to the market was so significant that almost nothing else was needed. Nowadays, most of the marketing for companies related to the Internet industry is still online marketing (SEM, SEO, Social Networking, Blogging, etc), and still dominated by webmasters and programmers. Nevertheless, in my opinion this is changing and at a fast pace. Online marketing is still marketing at the end of the day and should be managed by someone with the right marketing mindset, not a programmer or a webmaster. Increasing competition in this area means more professional management will be needed. MBA’s that enter the industry now, will have in some years the necessary experience when this change materializes. The days where you can have an amazing new idea and it builds itself into a multimillion company just trough word of mouth are over (or very close to be over, there are still “Facebook’s” and “Myspace’s” kind of companies that arise every now and then). Now, new Internet companies need more professional marketing strategies, they need to include offline advertising, branding, alliances with offline companies, etc and here is where the Online Marketing Gurus can’t help them. MBA’s are in a privileged position to take leadership in these kind of roles.

Entrepreneurship… You can really be an entrepreneur in this industry

If your idea of a job is to work for a salary your whole life and your only goal is to get promoted to have a bigger check, then this is not the industry for you. On the other hand, if you are an entrepreneur this industry is probably much better to be in than other ones. Imagine starting a new business from scratch in the… FMCG/Retailing Industry? …. In the Steel Industry ? … In the Banking Industry ? … Probably not a feasible idea unless you’re a millionaire. The internet industry does provide an environment where you can start your own business (tipically with much less money than other industries), get the appropriate funds and work on your own. As mentioned before, the MBA does give you some competitive advantages than many other people in the industry don’t have, like in fundraising and marketing.

Finally and most important… choose what you like

Finally, just as a disclaimer, the idea of this article wasn’t to put the Internet Industry above others, but just to give it the place it deserves. Every industry has its advantages and disadvantages. If you choose the consulting industry you know you’ll earn a lot of money in salary and bonuses but you’ll have to work long hours and travel a lot. If you choose to work in a public/state owned institution you know salary won’t be great, but you’ll have a pretty stable and predictable career path. If you choose the Internet Industry, I hope now you know more or less what to expect. After finishing your MBA you can pretty much go to any industry you could think of in almost any country so… Why not choose something you really like?... And if it happens that you like the Internet industry after the MBA… Why not go for it?

Tuesday, January 13, 2009

How the age of your and other people's websites affects your rankings

High rankings on all major search engines are influenced by the number of web pages that link to a web page and by the quality of the web pages that link to a page.

Links from popular and trusted web pages have a bigger impact on the search engine rankings of a web page than links from less popular and trusted pages.

A new patent application with the name "Ranking Domains Using Domain Maturity" indicates that there is another factor that helps search engines to determine the quality of a web page.

How the new method can be used to detect high quality links

Here's the abstract of the new patent application:

  • "Ranking domains for search engines is provided herein. To rank a domain, contributing domains associated with the domain are identified. Additionally, the maturity of each of the contributing domains is determined. A rank for the domain is then determined based at least in part on the maturity of each of the contributing domains. The domain rankings may then be used to order results for search queries."

The patent applications indicates that newer domains are more likely to be spam or part of a link system that tries to game search engine algorithms.

Web pages that have links from older domains may be ranked higher than other domains in the search results.

Why do search engines think that new domains are likely to be spam?

Domain names are cheap and some domain name registrars even offer free domain registration and trial periods.

Spammers can easily take advantage of these offers to build a network of websites that link to each other (a so-called link farm).

The new patent describes how search engines can use the age of websites to specify the value of their links. For example, links from websites that are several years old could have a high effect on the search engine positions of the ranked sites while links from newly created websites might not have any effect at all.

The age of the websites that link to a web page is not the only factor that influences the position of your website in the search result pages.

Actually, that are several dozen factors that decide whether your website will get top positions on Google or not. Having them all in place makes the difference between a successful website and a website that no one visits.

"Copyright by Axandra.com. Web site promotion software."

MBA Internet Marketing Manager

Friday, January 2, 2009

Reasons for an MBA to go to the Internet industry…. Are there any?

By Pedro Neira, IESE MBA 2006

IMPORTANT: Through the whole article and part 2 of this article when I use the acronym “MBA” I’m referring to “Full time MBA” programs from a Top Tier Business School in Europe and the US (see updated rankings here: BusinessWeek or Finantial Times). When I mention and MBA here I’m not referring to any of the following: online MBA’s, Part Time MBA’s, Executive MBA’s, Masters of other kind nor MBA’s from schools that are not consistently listed within the top ten mentioned rankings.

Career choice after MBA Graduation: one of the most important decisions in your professional life

Doing an MBA is a dream come true for lots of professionals. The reasons for doing it are as diverse as the backgrounds of the people who are finally accepted: industry change, higher salaries, get access to top multinational companies, increase opportunities of future promotion, work in a different country, exponential increase of your professional network, etc and… of course … to learn about Business Administration in the process. Nevertheless, one thing is true for everybody: it’s probably the only time in your professional life where, if you really want it, you could work pretty much in any company in the world. In most cases, you don’t even have to actively apply because most companies go to recruit YOU on campus. Depending on the economic cycle and your background, is not rare to see yourself in a position where you have more than one offer and you have to choose the one you like the most. Can you think of any other point of your professional life (in the past or yet to come) where you actually have two or three amazing job offers at the same time? If you can, you’re a really lucky person. For the rest, this is a once in a life time opportunity and you have to choose wisely.

There are lots of things to consider when making your career choice after the MBA, but I won’t get into detail here; this would be material for another article. The only thing I think It’s worth mentioning here is that for me the most important factor is that you really like what you’ll be doing. It’s my personal view that if you get into an industry or a job that you really like, you’ll end up being very good at it, and probably making more money in the long run than your peers that chose with a different criteria (high starting salary for example) as their most important factor.

Having said that, if what you like to do or what you’re passionate about is the Internet/Technology/Media industry, the rest of this article might give you some tips to decide and help you evaluate some pros and cons of getting into this particular sector where MBA’s are not so common. The goal here is to give you reasons in favor and against taking a job in this industry (by someone who made this choice a couple of years ago) so you can take a better informed decision.

The internet Industry for an MBA

At a first glance, it might seem that there are not too many reasons for an MBA graduate to get into the Internet/Media Industry. The opportunity cost is just too high: You know you will earn less money (than your consulting/Banking peers), your title has much less value (in an “engeneering/technology” driven industry) and it will be much more difficult to find a Job. So… why would an MBA from a top tier school should consider the Internet Industry?

First let’s take a look at some of the drawbacks…

“MBA Culture”??... Non existent

It’s no secret that this industry is ruled by technicians, engineers and programmers. This is reasonable given that most of the early innovations in the industry have been driven people in the “technical” side more than the “business” side of the industry. Just look at some of biggest names in the industry of the last 20 years: Sergey Brin and Larry Page (Google creators), Bill Gates (Microsoft), Pierre Omidyar (eBay), etc, all of them where programmers or mathematicians (maybe the only exception here could be Jeff Bezos, Amazon). These companies, with Microsoft and Google at the top of the list have created corporate cultures where the programmer is the king, having all other functions as regarded as secondary. Many smaller start-ups have followed the market leaders developing similar corporate cultures of their own creating an entire industry where Business People (meaning Marketing, Finance, Sales and other functions) are secondary. In this setting MBA’s are no exception. There is no tradition for hiring MBA’s (the industry is still too young), there are no resources specially dedicated for these kind of professionals, there are very few MBA’s working already in the industry and in general I could sum it up saying that that there is not an “MBA Culture” in the Internet Industry.

MBA Hiring Expertise … Not there yet

The Internet industry is new compared with other MBA demanding industries like banking or consulting. These industries have worked with MBA’s in the past and know the value they can obtain from them so they have specific hiring programs for MBA’s, HR staff specially trained to hire MBA’s, internship programs, rotational programs for MBA’s, etc. This means that they have a lot of experience hiring MBA’s over the years and also that there are lots of MBA’s already working in these companies. Usually big consulting firms (Bain, McKinsey, BCG, Booz Allen, AT Kerney, etc) and investment banks (or what’s left of them) are the first to come to campus to recruit, even 2-3 months before any other company. Big salaries and the opportunity to eliminate the uncertainty of getting a job early on drive many people, usually many bright people, to these industries. But this is how it works for the Consulting/Banking industry … on the other side the spectrum there is the Internet Industry…

As mentioned before, this is an industry clearly led by engineers/programmers, in which Business People tend to be a necessary, but not vital part of the company. Starting from here, is natural that most of the recruiting resources and efforts are directed to hire the best programmers and the brightest engineers right out of college. As a former MBA student, this is something you could clearly see while still looking for a job during the second year. Just to put an example on the “big three” names on Internet and their hiring processes while I was still on campus 2005-2006.

- Yahoo: Didn’t come to any Career Recruitment events, didn’t post any Internship or jobs but at the end hired one person for an Internship. This is one of the different types of mistakes when recruiting on campus: Not posting publicly available jobs/internships. If you want to get the best candidate, the usual path is to post it through the Career Services Department so the position is available to all the students. This creates more applications, more competition and the possibility for the company to choose the best candidate from several different applicants.

- eBay: This company did have some former MBA students in their staff but during the two years of my MBA they didn’t post any job or internship so there’s not much I can say about their recruitment process. Maybe in their case it was just a matter of demand and supply: They already had the necessary share of MBA’s they needed for their current structure.

- Google: Google was the funniest case of the three. They just didn’t want to show up at our career fairs or company presentations but somehow, our Career Services Staff managed to convince them. They came, made a company presentation and brought nine people in, the most of any company that year (usually companies bring the head recruiter and one or two alumni). At the end they didn’t have any internship programs to offer, there were not MBA type of positions and nothing was really clear. They ended up hiring nobody from our school that year… which judging by the resources invested, was not a good strategy.

As you can see, In general these companies don’t have well organized process for hiring MBA’s. Up to a certain point this is understandable because the industry is still very young (more or less 15 years old). My hope is that this will change in the near future. As new blood comes to the Head positions of Recruiting Departments from other industries, special internship programs for MBA’s will be designed and more resources will be devoted to hire MBA’s on a regular basis. For now, we can only hope that the few MBA’s that managed to get into these companies do well with their careers, climb high in the ranks of their organizations and can prove their value to an industry that is still skeptic with MBA’s.

Value of an “MBA” to the Internet Industry

Is well known that the MBA title has a different perceived value across different industries. As mentioned before, the experience and knowledge that a top tier MBA programs can bring you are most valued in industries like consulting, banking, private equity and other financial organizations. Lower perceived value means lower starting salaries after graduation and this is another of the drawbacks of choosing to work in this industry.

If you’re not in USA you’re not really in the Internet Industry

This drawback only applies to European MBA’s (like mine for example). Just like many other industries, the internet industry has also a geographical concentration. Like banking (London), Luxury Goods (Paris), the Internet Industry is highly concentrated in the US, and specially around the area of Palo Alto/Silicon Valley. This is bad news for European MBA Students. Also, when US Internet firms go to recruit MBA’s, most of the recruiting will be done inside the US, not in Europe or somewhere else, leaving few opportunities for European MBA Students.

The question here is obvious for an MBA graduate considering going for the Internet Industry: Why would I choose an industry where there is no MBA culture at all, my title isn’t recognized like in many other industries, there are much less positions available and on top of that, salaries are lower?

Seems hard to overcome all of these issues, but there are also some very strong reasons in favor that I will explain in the next part of this article: Reasons for an MBA graduate to go into the Internet industry…. Are there any? (Part 2)

Copyright MBA Internet Marketing Manager