This question originally appeared on Quora: Does getting an MBA make someone a better entrepreneur?
Answer by Auren Hoffman, CEO of LiveRamp. started and sold 5 companies (and many more that failed), on Quora
The value of an MBA is declining and for most schools, it is negative.
In the 1980s, the ROI of almost any MBA (even from the least selective schools) was very positive. MBAs were the fast-track to a management career and many amazing companies exclusively recruited its management-track employees out of MBA programs. Most people without an MBA were at a disadvantage.
Today, the winds have shifted. For companies in Silicon Valley (especially the hottest start-ups), MBAs from most schools are actually seen as negative signals (verses the a person with a similar resume but with two additional years of experience). Only a few schools (like Stanford, Harvard, Wharton, etc.) still have a positive ROI for jobs in technology companies. In fact, for most careers, the value of any graduate degree is significantly less today than it was 20 years ago.
I expect a similar trend to continue to other industries over the next decade. Which means that one should have a really good reason and carefully think it through before getting their MBA.
MBAs are really expensive
1. They generally run over $60k+/year in tuition and housing.
2. They take the person out of the workforce during the core growth years of their career. That means forgoing substantial after-tax income and also giving up career raises and promotions (which set a basis for compound interest).
For many people, the total cost of getting an MBA (tuition, housing, lost income, lost promotions, etc.) will run over $400k and for some it will be even higher. So one needs to see a fairly high return to justify the costs long-term...