(FORTUNE Magazine) – For new MBAs at Harvard Business School, an offer from a top consulting firm used to be as good as it gets: a six-figure starting salary, a $30,000 signing bonus, a pledge to pay some or all of their B-school tuition--which amounts to more than $50,000. But this spring Patrick Mullane said no to all that. He turned down Andersen Consulting and spurned several other blue-chip offers. One month away from his Harvard graduation--with a wife and 3-year-old at home and a second child imminent--the closest thing he had to a job was a possibility of hooking up with some buddies to start a company with no funding.

"Everything around me was shifting," says Mullane, 31. All his courses seemed linked to the revolutionary changes ushered in by the Internet. Entrepreneurs and recent B-school graduates paraded through, electrifying students with speeches about their companies. Michael Dell packed the room. So did the guys from Web startup PlanetAll. Tony Tjan, a year out of Harvard and already a legend for founding Zefer, a consulting firm that advises FORTUNE 500 companies on Internet strategies, returned to judge a B-school competition. For Mullane, the atmosphere conjured up the opening scene from Patton, the one in which the larger-than-life general rallies his troops by saying, in effect: Thirty years from now, when your grandson asks where you were for the Big One, you won't have to say, Well, I was shoveling shit in Louisiana. "That's how I felt," says Mullane. "I didn't want to miss the Big One. I didn't want to miss the next Industrial Revolution. I didn't want to have any regrets." Last month he began his e-commerce career as director of marketing for the startup SupplierMarket.com.

On the campuses of many of the best business schools this past semester there was something funny in the air. It wasn't spring fever. It was Web fever. An unprecedented number of students who had been happily headed to careers on Wall Street or at the FORTUNE 100 suddenly changed course. Graduates who had gotten head-spinning offers for sure-thing careers from Boston Consulting Group or McKinsey or Goldman Sachs said thanks, but no thanks. Then they signed on with companies you know--Amazon.com, AOL, Microsoft--and companies you've never heard of: Campus Pipeline, SupplierMarket.com, UBUBU.com. All were prospecting for a different kind of gold. "God, to not do the Internet now would be such a huge mistake," says Josh Keller, a Harvard Business School grad. He's speaking from a pay phone at a Comfort Inn in Lexington, Ky., on the first leg of his trip to a startup in San Francisco. "This is not filling in the bubbles. It is not multiple choice. This is creating something from scratch."

One might expect this kind of lunacy at Stanford, which basically gave birth to Silicon Valley. But at Harvard, whose ivy grows wild on Wall Street? Nearly 30% of this year's MBAs choose careers in high tech or venture capital, vs. just 12% four years ago. "The profile of our student interest has not changed this dramatically in at least a couple of decades," says Kirsten Moss, director of MBA recruiting services at Harvard. At Northwestern's Kellogg School, historically a reliable supplier of marketing talent to brand companies in the nation's heartland, assistant dean Roxanne Hori talks about Internet frenzy. "Many of our students truly believe this is the next Industrial Revolution," she says. "They are absolutely passionate about it."

The infection has spread--to Penn's Wharton, Dartmouth's Tuck, and Berkeley's Haas. Dan Nagy, assistant dean of the Fuqua School at Duke, says: "We could see it coming, but even then, boy, did we get surprised! We traditionally put a lot of students into the mainstream of the FORTUNE 500. But this year there was a big shift in career focus to anything with a dot.com. We had people putting McKinsey on hold to stand in line to interview for one job at Red Hat software." A headline writer would say it this way: MBAS TO CORPORATE AMERICA: DROP DEAD!

Indeed, what's good for the dot.coms, while it's good for America, is not so good for General Motors, Coca-Cola, General Electric, Procter & Gamble, Exxon, consulting firms, investment banks--for any company, in short, that is seen as big, slow, bureaucratic, or set in its ways. Today's best and brightest B-school graduates are not your father's MBAs--those bloodless organization men who went to business school on a calculated journey to three-martini lunches on Wall Street or rung-skipping climbs to the top of the FORTUNE 100. These are not the stiffs lesser colleagues love to loathe, the suits who live comfortably in the hierarchy to make comfortable money. The new MBAs are a little like Jesuits who decide not to become priests: steeped in the religion but rebellious at heart. They're risk takers, mercenaries. They have--get this!--an in-your-face attitude about business. They don't wear wingtips. And the last thing they want to do is conform. Mark Rabe, a 29-year-old Fuqua grad, turned down Clorox, Gillette, Coca-Cola, the Alexander Group, and PricewaterhouseCoopers to work for About.com, an Internet media company. "I didn't want to go to a company where I'd have to force myself to fit in," he says. "The whole three-piece-suit thing was a little daunting. I wanted to go where I can create the environment."

How will traditional businesses deal with this? It's a problem, concedes Donald Jacobs, the dean of Kellogg: "The major concern of big companies is they can't hire enough talented students." Inevitably, they will have to recruit more at second- and third-tier business schools, where the talent doesn't run nearly as deep. They can hope that a good recession or a downturn in the economy or a dot.com shakeout will knock some sense into the top-tier kids. And they could even change and try to accommodate the talented people they want to hire. "They have to recast their hooks--change the way they are fishing," says Jacobs.

Most big corporations are doing all they can to emphasize their e-commerce and Internet efforts. Some are even trying to reshape jobs to be more entrepreneurial. Good luck. Because they'll have to do backflips to keep Gen Xers like Margaret Arakawa, 29. Five years ago she would have been thrilled to be a packaged-goods brand manager. But on her way to Kellogg from Penn, where she took ten marketing classes, she stumbled into CKS Partners, a tech-savvy San Francisco ad agency. She became the account director for MCI, earning a six-figure income for creating and selling a vision of e-commerce long before most people could imagine it. Now, going to a place like P&G is out of the question. "You'd be an assistant to an assistant brand manager," says Arakawa. "If you got assigned to something mature, like Tide, you could spend a year deciding whether to change the thickness of a line on the box a fraction of a centimeter. I want to work on a project I can get excited about." She starts at Microsoft in September.

Most of the frenzy is about money and heroes--especially money. There's rich, then there's really rich, and it seems so easy to get really rich really quickly with the Internet. Everybody has seen the numbers: Michael Dell's wealth, on paper anyway, at $13 billion and counting; Jeff Bezos' stake in Amazon.com worth more than $12 billion. Their stories and their fortunes make some recent corporate heroes--Jack Welch, Lou Gerstner, Michael Eisner--seem like affluent duffers. Plenty of 30-something MBAs have made millions on their IPOs--and not just on paper. The exuberant stock market enables them to cash out quickly and move on to another startup, pausing just long enough to buy a new pair of Nikes and a Porsche.

This year's B-school graduates may not run their own dot.com--yet. And they may not even earn $100,000-plus a year. But many do get options potentially worth $1 million-plus. Of course. It's the options, stupid. And it is. But it's not just the options. Really. To be fair, this new breed of MBA is genuinely enchanted with all things nimble and entrepreneurial, and profoundly disenchanted with lumbering, process-oriented corporate America. Add to those feelings a lingering backlash from the restructuring that began in the early 1990s, and you have a "natural trend," says Kellogg's Jacobs. "The kids see their parents get dislocated in their 50s. One way to avoid that is to do it themselves." The money is available, and so is the technology to make it happen.

Some major recruiters of MBAs insist that they're finding plenty of talent. Andersen Consulting says its hiring hasn't been significantly affected but acknowledges fierce competition that may get worse if established Internet companies like eBay and Excite get serious about hiring MBAs. John Worth, national director of MBA recruiting at Deloitte Consulting, says, "It's not a catastrophe. But it is going to make the recruiting wars more intense." He wonders how long the dot.com frenzy will continue, noting, "For every magnificent startup, there are lots that don't work. Lots of people don't get rich."

The new MBAs already know that, thank you very much. Furthermore, they look at failure differently than their buttoned-down predecessors did. Failure is a plus in the Internet Age: It's called experience. Big-company recruiters who don't understand that mindset certainly won't be able to hire it. "This is not a fad, and it's not a phase," says William Reina, director of recruiting and employee relations at Procter & Gamble. "People are calling it the second gold rush, and to some degree it's true. The mom-and-pop.coms can recruit almost as effectively as the IBMs and the P&Gs. They can go online straight into the dorm room." At the moment, he says, "we feel very good about the talent we've attracted. But if we were to do nothing and just sit back, we'd see a severe erosion in our ability to attract the best people. Companies like ours will have to adjust the way they do business and become part of the mainstream and culture of high-tech e-commerce" (see following story).

Often it was a less than satisfying experience in corporate America that pushed the new MBAs into e-commerce. Sharon Goldstein enrolled in Kellogg after three years at Andersen Consulting. She fully intended to return to consulting with her MBA. But last summer she worked at a small high-tech firm, RealNetworks in Seattle, and loved it. The work was an exhilarating rush, not the crushing grind of the consulting circuit. At RealNetworks people had a real life. They ate lunch, took breaks, controlled their own schedules. In consulting, the clients dictated Goldstein's schedule and her locale du jour. It was 45 weeks of travel a year--too many hotels, too much restaurant food, not enough exercise, no independence.

Yet Goldstein, 27, still regarded RealNetworks as just a summer fling. She interviewed for traditional jobs after returning to Kellogg and got offers from three consulting firms, including Bain and Andersen. Since Andersen offered to pay off her tuition loans, her decision seemed a no-brainer. Yet the more the firms pressed for an answer, the more thinking she did. "I thought, 'I've done this already. No matter how much money they pay me, I'm not going to be able to get up and want to go to work," recalls Goldstein, who spent two weeks agonizing with her professors, her friends, her parents. Then she took a fourth offer: to be product manager for media systems at RealNetworks. She figures she gave up $45,000 in extra salary, a heftier signing bonus, and a $60,000 loan payoff. "It's a lifestyle and career-positioning decision," she says.

Around the same time investment banking lost two of Goldstein's classmates: Peter Jarman and Eric Berg. After working last summer in the industry, they concluded that it was too bureaucratic and too confining.

Jarman, 28, was genuinely disappointed. He had already been part of a successful startup, and he had hoped to work with more seasoned executives who could provide some mentoring. But he arrived at his job at Robertson Stephens in San Francisco last summer just in time to watch the breakup of its marriage with BankAmerica. "I got to see corporate America at its worst," says Jarman. The place was roiled in politics. He worked long hours, but not necessarily productive ones. "You spent a lot of time waiting for things to happen, for things to be given to you," recalls Jarman.

He found it a real turnoff, especially after his experience at a startup, where "everybody is so essential, you have to work as a team." He rejected several consulting and banking offers to go to Campus Pipeline, a startup that creates intranets for colleges and universities. "I didn't want to spend a lot of my time figuring out how to rise in an organization," says Jarman. "I'd rather figure out how to impact industry and society."

Berg, 29, spent his summer at Goldman Sachs, where "by design, work is driven by senior partners, who are loaded down. Changes and reworkings come in at the last minute." As an associate, "you're at the end of a whip." Berg turned down Goldman and other investment banks for a job at Nextlink, the telecom firm founded by Craig McCaw. He'll earn a higher salary than he would have at Goldman Sachs; he will not get that fat year-end Wall Street bonus, but he will get lots more options. "I think the bankers and consultants have a difficult battle to fight," says Berg. He wonders if they "still offer the great opportunity that allows people to offset the personal sacrifices." At Nextlink, he expects to work long hours too, but he believes he'll have a better chance of "owning my own project, start to finish."

For Sarah Heckscher, the ability to instantly make an impact, command respect, and have fun influenced her decision to join an Internet startup. The 28-year-old MBA from Kellogg worked at Andersen and Kaiser Permanente after graduating from Princeton. Last summer she went to the funky red-and-yellow offices of Excite, which has a conference room that resembles a garage and a slide--yes, a slide--from the second floor to the first. (Clients often insist on going down.) It has a Ping-Pong table, a pool table, and free Coke. Best of all, there was a level playing field: Being 28 was not a drawback. "You're looked at as somebody with new ideas and potentially a lot of skills," she says. "You don't have to climb a corporate ladder. Things move so fast that you're totally rewarded on your performance and ability to get things done." She's about to begin a new job at Epicentric, a startup in San Francisco that will create custom portals for businesses to offer their customers. As for money, "Oh, my gosh, I didn't care," she says, sounding as if she truly meant it. "I just wanted to make enough to live on."

Josh Keller, 27, got sucked in too. He had begun the year knowing he would like to do something entrepreneurial. But the last thing he wanted was to end up in high tech. He's a sales and marketing guy, after all. He had shunned technology as an undergraduate at Stanford, majoring in public policy and political science. And at Harvard he recoiled from the hype. "Everybody was talking about the Internet, yeah, yeah, yeah," he says. Between college and business school, he worked for Boston Consulting Group. Then he joined an ex-Procter & Gamble marketer to make and sell an herbal anti-acne pill called Nature's Cure. By the time he left, his tiny product had sales of $2 million, and he had muscled it onto the shelves of Wal-Mart and Kroger. Keller felt great.

In his last semester at Harvard, however, as he sat in the entrepreneurial management class of professor Jeffrey Rayport, Keller too caught Web fever. In case after case, the students compared old ways of selling with new Web ways. There really was no comparison. Keller was particularly struck by back-to-back presentations from Monster.com--which essentially posts online classifieds and help-wanted ads--and from the people who produce online editions of the Boston Globe and the New York Times. "You could see that the [newspaper guys] just didn't get it," he says. In Rayport's class, he became convinced that "the new markets, the new ways of doing things, are just going to destroy these old dinosaurs." Keller realized that "there was this incredibly exciting show on another screen in the theater, and I began to see that I would bitterly regret not being part of the scene."

He said goodbye to an invitation to return to Campbell Soup, where he had spent an interesting summer in Europe. He joined three other Harvard MBAs and three MIT programmers to form a startup called UBUBU.com (get it?--you be you be you). With $1.5 million in seed money, they are developing a product that will make the Internet more intuitive to use and enable Internet consumers to personalize the way they surf the net. Keller, the vice president of sales and marketing, will earn $50,000--less than half what he might have made at a traditional company. But he has no regrets.

The Harvard graduate who probably best embodies the metamorphosis from Organization Man to Web Man is Patrick Mullane, the guy with the family. The son of Mike Mullane, an Air Force navigator and astronaut, Patrick went to Notre Dame, majored in math and business, and then served four years in the Air Force. After the military, he managed a distribution center for Federal-Mogul, a manufacturer and distributor of auto parts. When he applied to Harvard, he remembers explaining in his application that he wanted to start out on a factory floor and work his way up the corporate ladder. "It was probably what everybody used to do in the '50s," he says now, a bit incredulously.

The consulting firms wooed Mullane at Harvard, and he spent last summer at Andersen's supply-chain and logistics group. He was invited to return. "Quite honestly, it was just not work that I really enjoyed," he says. He had traveled constantly and by the end was asking himself, "Do I really want to do this? I will never see my kid again." Beyond that, "I felt too removed from the decision-making. I never felt like I really belonged to the issue or to the team that was dealing with the issue."

When he returned to Harvard, he remembers that "Amazon and eBay were just skyrocketing. The excitement here was unbelievable." He interviewed with conventional corporations like Toys "R" Us and Circuit City, hoping he could land an unconventional job in an e-commerce division. Toys "R" Us made him an offer, but the company wanted him to join its executive-development program. To heck with that. When he began to focus more on Web-related jobs, doors slammed in his face, including General Electric's. Mullane says GE was putting together an Internet think tank for its aircraft-engine business and planned to hire an MBA. But when Mullane seemed intrigued, he was soundly rebuffed by the HR person. Never mind that Mullane knew parts procurement or that he showed even a flicker of interest in heavy industry. What GE wanted, the HR guy insisted, was somebody who had those qualities and who had also tried to start an Internet company. To Mullane, it sounded like the quintessential bureaucratic turnoff. Come on, he thought. "Do you really think anyone with those qualifications is going to want to move to Cincinnati and work for GE?"

Mullane had turned down the offers from Andersen and Toys "R" Us. He wasn't getting much sleep. At times his wife would worry, and his mother would ask, "How's the job hunt going?"--sort of like, Have you met any nice girls lately? He knew a couple of classmates were writing a business plan; he thought their project might have something to do with supply chains. "If there's one thing I do know, it's supply-chain procurement," he says. They brought him aboard, and now they all work at SupplierMarket.com, a Web-based business whose mission is to help manufacturers reduce their supply-chain costs. One of the founders came from procurement at Ford, the other from finance at Tiger Management. "It's kind of a rush," says Mullane.

He concedes that his salary isn't what it would have been in consulting. "I just wanted enough to live on--to feed my family and break even," he says. "I wanted as much equity as I could get. I believe in this company, and I hope someday there will be a payoff. Because after we're done here, I'd like to have enough money to tide me over so that I can look around for another job I'm really going to like. In five years where do I hope to be? I hope to be at my second job, doing my second startup."

He'd still like to know what happened to that GE job in Cincinnati. Not because he's interested. No way. Says Mullane: "I'd love to know if they found somebody for that job in Cincinnati. Because if they did, I'd hire him to come here."

REPORTER ASSOCIATE Jane Hodges