Is Executive Education Worth It?

I attended a short course at the NYU Stern business school last week. Taking place over the course of four days, Finance and Accounting for Non-Finance Executives is taught by two great professors: Anthony Marciano, Clinical Professor in Finance; and Eli Bartov, Professor in Accounting and who for several years served as the Director of the Accounting Doctoral Program for NYU. The class was structured in a format alternating between finance and accounting; Monday and Wednesday were finance, Tuesday and Thursday, accounting.

Was it worth it? Yes! (with one caveat). You should definitely get your employer to pay for it for you. As of Sep 2019, the tuition at NYU for the four day program was $7,200.

We started the class off discussing the ‘four pillars of finance’:

1. A dollar today is worth more than tomorrow (the PV, or present value approach to discounting)
2. A guaranteed dollar is worth more than an uncertain one (risk premia in rate for discounting)
3. People take actions that are in their self-interest
4. Some people have information that others don’t have, and thus will read any signals they can from potential investments in an attempt to get that information.

We studied the discounted cash flow (DCF) and multiples-based methods for valuation of companies. We learned about NPV (Net Present Value). We learned how to read a balance sheet, income statement and cash flow statement, how to query the SEC EDGAR database to read SEC filings (10-k, 10-q, S1, etc) and to pay attention to the footnotes!

We broke into small groups (class had 13 students total) and reviewed seminal cases in M&A and accounting: The Gulf acquisition in 1983 (T. Boone Pickens), the Paramount deal (Viacom, QVC), and the ‘AOL write-off of epic proportions’ in 1996. We were able to review together in small group settings and try to determine if we thought the deals were good ones or not, and in so doing, learned to separate the three stages of M&A:

1. Is this a good deal?
2. How much should I pay?
3. How should I finance this? (equity, debt, etc)

I highly enjoyed the class. I found it intellectually stimulating, and found the pace to be brisk but manageable. A few days during the week I found myself behind the prof by lunchtime, but had caught back up by the end of the day.

If you are taking a class like this for the first time, a few thoughts:

• Prepare yourself to do nothing but the class during the four day stretch. It is mentally draining to be in a classroom from 9am to 5pm with only a few short breaks for lunch and coffee. Remember: you are taking in months of information in four days.
• Turn off your phone! It’s hard enough to learn what’s in front of you, much less double time an immersion class with phone calls/emails.
• Bring water and snacks, so you can keep your blood sugar level to keep your mental stamina going.
• If you fall behind, don’t despair, you can still catch up. Just keep taking notes, ask a question or two (either during class or in a break) and realize that your fellow students feel the same way!

I had attended the class to make sure I understood capital vs. operating expenses, as that comes into play often in technology leadership. I will share with you, dear reader, what I learned in this regard. However, please note that I am not your CFO and you should double check this with yours instead of taking this as gospel. :-)

That being said, what I learned: the key to capitalizing the cost of building an app is to determine when the app will produce ‘immediate benefits’ i.e. helping add value to the company. This is generally when the app becomes available to the public.

Using that formula, all costs for building an app are expenses UNTIL the app is ‘technically feasible and economically viable’, i.e., when it is GA. Afterwards, bug fixing is a maintenance activity (opex). If you are developing a new version of the app, all new feature building is immediately capitalizable since the app has already passed the ‘feasible and viable’ state.

If you have a contract/commitment to a service that produces immediate benefits, those costs are capitalizable. If, on the other hand, you pay month to month without a larger commitment, those become opex costs.

If the above interests you and you want to learn more, I would suggest you tell your employer to sponsor you for an upcoming class. In NYC, Columbia also offers courses like these, and I’m sure you can find equivalents worldwide.

Look Mom, I finally graduated from NYU after all these years. ;-)

Hope you enjoyed this brief journey into executive education. I’m thinking about dedicating my next post to the topic of internal corporate communication. It’s a topic near and dear to my heart and one where I think many are uninformed. See you next time!