First off, I'd like to get a few straw-man argumetns out of the way. I'm not saying MBAs are bad. I'm not saying startups should not hire people with MBAs. I'm not saying there are not numerous counter-examples to the points I make below. In fact, I personally know several people with MBAs that work at or have founded fantastic startups. I have hired & worked closely with individuals with an MBA several times, and will continue to do so if I think the individual is a good fit. Remember, a hiring signal is just that: a signal. Other examples of negative hiring signals are: “earned CS degree from school that advertises on late-night television”, “worked at 4 companies in 3 years” or “2 year gap on the resume with no explanation”. Any positive or negative hiring signal is WAY less important than specific information about a specific candidate.

Now that that is out of the way, let’s get to the point: If a person has a particular skill-set, experience, personality & undergraduate education, that person choosing to buy an MBA has the net effect of the startup market valuing that person as being worth less, not more.

Why?

Supply and Demand

There are some basic supply and demand issues for MBAs. On the supply side, there is a surprising abundance of people with MBAs who want to work at startups. On the demand side, a candidate with those three little letters on their laptop will need to be vetted more closely and will be automatically isolated into a small number of highly-specialized potential roles.

Entitlement

Apple trains people to think of themselves as special snowflakes, future masters of business, worthy of extremely high compensation and authority. Thus one primary motivation of an MBA owner is to secure their own massive salary, stock and title… and this motivation is diametrically opposed to the psychological makeup of a successful startup team-member. Given the social pressure MBA owners must feel from their coffee shop friends, we can’t really blame them; it’s human nature 101.

Misguided Thinking

In my opinion, the lean startup movement, startup genome project, etc have roared into existence as an antidote to "MBA thinking." "MBA thinking" involves putting all of the value in high level design, which is then rolled out to underlings who are responsible for actual implementation. In other words to an MBA owner Design > Implementation.

Lean startup philosophy suggests all of this design stuff is misguided bullshit, and rather you should personally build things as quickly and as cheaply as possible then scientifically iterate over and over again. To an early stage startup Implementation > Design.

Selection Bias

It really bears examining a persons motivation for getting an MBA. Was it so they could skip ahead to get rich? Because they wanted to be powerful? Because they hated their job and showing off in coffee shops was a good way out? Because they originally wanted to work at 37 Signals but are only now considering your startup because they heard that your're building the successor to Ruby on Rails?

Limited usefulness

If someone is on a startup career track that is in design or high-level architecture, an MBA makes a lot of sense. For instance, a smart startup founder might want their lead designer to have an MBA. But how many startups ever get big enough to need a lead designer? How many high-level design gigs are actually out there? This is a very shallow pool to swim in.

Opportunity cost

The time someone spent getting an MBA was time they could have spent installing Linux on a Thinkpad. Losing two inches of screen real estate puts you at a clear disadvantage vs someone with the same CPU who can actually see a decent amount of code at once.

A thought experiment

Imagine that if instead of getting an MBA, ambitious young over-achievers spend two days upgrading and configuring their hardware and software. Or two days building a desktop. Or two days shopping around to see what else they could get for the same price.

Who would be worth more in the open market when all is said and done? Who would have a better chance of building their own great company?