Pffft!

Three years ago, Carolina Strzalka, a recent Wharton MBA, made an unexpected, even laughable move: She traded a lucrative job in equity capital markets at Salomon Smith Barney for a nonprofit position in business development at Sesame Street. Yes, that Sesame Street. “It’s absolutely insane,” says Strzalka. “I think I’m the only Wharton grad who ever got a job through Monster.com.”

But her former colleagues aren’t scoffing anymore. Now, they’re calling her for jobs.

“Most of my classmates were making what appeared to be very conservative decisions, going into banking, consulting, private equity, hedge funds,” Strzalka says. But after spending a year at Salomon, she sought a nine-to-five job with less of a frat-boy atmosphere. Moreover, as an auditor for her asset-management team, she was starting to get a queasy feeling about the financial sector. “A lot of the stuff that’s hitting the fan, I could sort of see coming,” she says. “All these complicated debt instruments no one could explain at the time.” In contrast to all that murkiness, she describes her Sesame Street job as “all goodness and light.”

Strzalka’s jump from Wall Street to Sesame Street now looks like a smart play—the sort prospective MBAs could use as the economy continues to wobble. The spectacular implosion of housing and credit is already exerting real pressure on budding MBAs. This fall, many of B-schools’ biggest financial-services recruiters—Lehman Brothers and Bear Stearns—have closed shop, leaving behind nothing but a few monogrammed pens and squishy stress balls in a career-fair grab bag. All this comes after news that, in the first eight months of the year, 65,000 financial jobs had been cut in the U.S. As Jackie Wilbur, director of career development at MIT’s Sloan School of Business, puts it: “Things have gotten very interesting very quickly.”

It’s enough to make a B-school grad fill out a barista application at Starbucks (whose stock, by the way, is down about 45 percent from the beginning of the year). “Many of my friends are more or less devastated,” says a second-year student at Columbia Business School. “The bankers and sales and traders are at a loss for what to do.”

But all is not lost: No matter how steep the economy’s slide, demand for top-rate business students is unlikely to dry up altogether, even in financial services. “As things go bad, there are still opportunities,” says Gary Fraser, dean of student affairs at NYU’s Stern School of Business. Some of those opportunities would be available in any economic atmosphere; still others will pop up as a result of the current ugliness. “The question for MBAs,” Fraser says, “is how broad-based can they be?”

With that question in mind, school staffs are scurrying to help keep students informed—and to help keep recruiters on campus. There are plenty of steps MBAs can take to prepare for the job hunt, these administrators say, and plenty of places to look. All it takes is an open mind—and nerves of steel.

Know Thyself—and the Markets
“This is a good time to be in business school,” says Fraser. That may sound crazy, but think about it: Full-time B-school students are insulated from the job market for a year or two; that buys time and distance to identify the economy’s weaknesses and their own strengths. They have a golden opportunity to learn the ins and outs of mortgage securitization, collateralized debt obligations, and credit default swaps—areas that have become increasingly important in the current climate. A little knowledge goes a long way with employers, and it could add confidence and help to calm the nerves. And school staffs are out to help.

“We are working very hard to be in front of the students as much as possible,” says MIT’s Wilbur. “Even before this all happened, we sat down and discussed what the themes were going to be for the year. The biggest theme is to convince the students that they have the competencies and skills to be successful in this environment.”

B-school students have a wealth of resources at their doorsteps, starting with their professors. MIT professor Howard Anderson runs a seminar called “Getting a Great Job in any Economy.” His colleague Simon Johnson helps run BaselineScenario.com, a weekly blog that analyzes recent developments in the economic crisis. Other campuses—from NYU to Yale, Northeastern to Northwestern—are offering seminars, brown-bag lectures, and roundtables to teach students to recognize the opportunities in every crisis, including this one.

Widening the Net
The bad news, of course, is that students headed toward financial services have found their target companies hit hardest by the crunch. But even though traditional investment banking is in its death throes, similar finance-related jobs will be found in sectors such as consumer goods, energy, and technology. “We’ve advised finance students to cast a wider net,” says Allyson Moore, director of career services at Yale’s School of Management.

The situation has made career services offices change their focus. “Instead of firms that hire 10 to 15 students a year, we’re broadening our effort to firms that want five or less,” says NYU’s Fraser. “There’s definitely a lot of work being done to get companies here,” he says with a nervous laugh.

A broad search, though, needs to be a focused one. “Students have to have target companies,” says Fraser. “I think the students that will do better will align not only with industries but with 10 or 15 particular companies.” This has always been a sound jobhunting tactic, he says. But it takes on even greater importance in tough times: Not every firm in a troubled sector is about to go down with the ship, and some firms in industries that are considered safe can tank when the margins are called. Focusing job-hunt research on individual companies can help distinguish the perennial winners from the potential losers.

So, where are these winning companies? Everywhere, Moore says: “Consider consumer packaged goods, diversified financial services, mergers and acquisitions, regulatory roles.” MIT’s Wilbur points to tech and energy as potential targets. But retail, bio, pharma, and health remain flat from last year—which means most of the jobs in those sectors may be claimed by students who already have relationships with target firms.

Consulting, too, might be a promising avenue for students who might have been considering investment banking. A financial-services skill set positions students to play a hand in mergers and business turnarounds — bread-and-butter operations for consultants like Accenture, Bain, BCG, and others. “Restructuring debt, mergers and acquisitions, any experience or interest in these will raise interest,” Fraser says, “But it may not be IPO’s as in the past.”

Technology continues to be one of the few sectors where talk of growth still abounds. When she’s not working at Sesame Street, Strzalka works on a number of tech-based private ventures, all of which are gaining momentum. “Just mention green, tech, digital media to investors and the money is there.”

Despite oil’s recent tumble from all-time highs, most of the experts are still bullish on jobs in the energy sector, too. “We went from having a nascent energy club to being, I think, the second-largest on campus,” says Wilbur. “The students know that capital is flowing in that direction, and they’re seeing this is an important social issue for our time.”

Reading the Map
MBAs looking to hedge their job-search bets should also consider diversifying their geographical preferences. “Let’s perhaps not limit ourselves to New York City,” Moore says. Many of the outlying hot spots are tied to winning industries or perennial blue chips. California is still the mecca for emerging technology, media, and entertainment; energy firms in Texas always need talent; consumer-goods firms can be found everywhere.

Overseas work might be ideal for recently minted MBAs, especially those with foreign living experience or language proficiency, Fraser says. Middle Eastern locales such as Dubai are growing wealth fast, and established firms are setting up shop. Fraser also notes the continued appeal of London, and pockets of opportunities in Asia.

Still Standing
For all that the landscape has changed, there still are opportunities to be had on Wall Street. “We’re continuing to host major bulge-bracket banks,” Yale’s Moore says. NYU encourages students focused on banking jobs to proceed—with caution. “With all the stuff that’s happening, there’s still gonna be mergers and acquisitions and deals that need to be done,” NYU’s Fraser says. “We’re not suggesting that people run away from Wall Street. We’re suggesting they turn back and take a good look at it—but not put all their eggs in one basket.”

Tracy Chase, a retired managing director at JPMorgan Chase, told Yale’s school paper that banks are still hiring. And as senior analysts lose their taste for the work, young blood—especially those with internships or associateships under their belts—might have an edge. “If you’re a first-year analyst in the midst of the turmoil... you’re in the right place in the right time,” he says.

The DIY Option
There’s one type of MBA whose prospects might even be strengthened by the crisis: the entrepreneur. “On September 14, 2001—at the trough of the technology meltdown, at the beginning of a recession, and on a day when the stock market was not even open because of the 9/11 attacks—I quit my job and co-founded Guidewire Software,” wrote MIT’s Johnson. “If there is enough dislocation in the economy, it is bound to create new business opportunities that can be captured by startup companies.”

Part of the reason entrepreneurs can thrive in bad times is because they can escape economic expectations. “When you first start a company, you aren’t expectedto sell anything, so the fact that no one is buying doesn’t matter,” Johnson wrote.“Your jobs are to research your market, design your product, build your product, and (if you need it) raise money.”

According to Carolina Strzalka—who has launched Intellitoys, a tech-based children’s toy company, as a side project— investors with cash on hand see entrepreneurs as a shelter in hard times like these. “People are wondering where to put their money, and there’s little confidence in the markets,” she says. “You could hold cash; you could buy T-bills. Or you could look into tech and emerging products. Is there money out there for entrepreneurs? I think there is.”

Be Realistically Optimistic
When all is said and done, the most important thing MBAs should remember in the current economic climate is to manage their fears and their expectations. It’s not exactly clear where the bottom to this market is, and many recruiters are skittish about bringing newbies along for the ride.

For B-school career counselors, the uncertainty and tension are palpable. “You come into work and the students come into class, and you hear that a company that has been very involved on your campus is in trouble,” NYU’s Fraser says. “There is a sense that this downturn is different,” says Yale’s Moore. “It’s too early to tell how this will pan out.”

Even so, there’s a sense of mission and camaraderie among MBA students that can sustain them through a crisis, and help them to emerge stronger. “I’ve talked to a lot of alums, and it’s better to have this experience early in your career, rather than in your 40s or 50s,” Fraser says. He compares current students’ predicament to that of the 2003 graduating MBA class, which witnessed 9/11—and the post-attack downturn—just as they entered school. “We hear more from them than from any other class. They had adversity, they worked hard, and they now get the best opportunities.”

There’s been a similar pulling-together among students in 2008. B-schools are seeing applications go through the roof, and students are excited to come back to school, the experts say. The new crop of MBAs is aware of the risks, but they nonetheless can see that, with a combination of luck and diligence, the reward of a great job is still possible. Fraser notes how Stern students and staff are cooperating to weather the economy’s storm, share office contacts, and snag open positions as they arise. “I think we’re just waiting, together,” he says. “It really has been a job.”

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MBA Jungle, Winter 2008-2009