In this video, Michael, a veteran CEO and business commentator, examines the emerging challenges facing MBA graduates and the degree itself. He begins by noting recent news that Harvard Business School graduates are taking longer than three months to secure their first job, a stark reversal of the MBA’s historic role as a fast track to high‑earning middle‑class positions. He traces the MBA’s origins to early‑20th‑century industrial America, explains how the sector exploded from a handful of programs to over 600, and how tuition ballooned into a luxury price tag by targeting mid‑career professionals with high earning potential. Michael then outlines three converging forces eroding MBA value: (1) CEOs like Mark Zuckerberg and Elon Musk are flattening organizations, cutting middle‑manager layers where MBAs traditionally sit; (2) the supply of MBA graduates now far outpaces demand, while the broader labor market favors technical trades and engineers; and (3) AI tools can automate core MBA tasks such as PowerPoint creation and Excel analysis, reducing the need for costly graduates. Despite the gloom, he argues that top‑tier programs (approximately the top 30 worldwide) still deliver strong ROI through elite employer pipelines and powerful networks. He concludes by warning prospective students that unless they gain admission to a top‑5% program, the MBA may no longer be a worthwhile investment.
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So, two news stories out today that were pretty bad news for MBAs and aspiring MBAs. These are people that have Master's in Business Administration degrees. And look, these types of degrees have for a long time been a huge ticket to the middle class, um, or even the upper class with average graduating salaries of $175,000 or more and companies snapping up MBA graduates left and right. Well, for the first time, Harvard Business School, which is arguably the toppest of the top-tier business schools, is reporting that their graduates are having a tough time getting jobs. In fact, the number of graduates for whom it's taking longer than 3 months to find their first job post-graduation, that number has nearly doubled. And so, pretty interesting stuff. And also, AI is something that is going to be coming for MBAs as well, and it has a role to play in all of this. What does it mean for the future of kind of the MBA profession and the degree? And secondarily, what does it mean for us as entrepreneurs with a lot of companies like Facebook, Starbucks, Ford, all these different folks suddenly not recruiting MBAs anymore, at least not like they used to? Let's dig in. Hey, I'm Michael. I record videos about business because I'm a business nerd. I've been a CEO for 20+ years, and I do send a weekly email to people that are entrepreneurs and aspiring entrepreneurs. There's a link to that in my bio here. And if you like this type of stuff and you want to learn about business, please stick around and subscribe. So the story of how we got to today is actually pretty interesting, and it starts with the invention of the MBA degree itself. The very first one was done by Harvard at the Harvard Business School starting over 100 years ago. And back then in the early 1900s, the United States was basically the factory of the world. We were starting to be, you know, what kind of China is today, building things for everybody around the world and exporting tons of goods. And that created all kinds of things like the automotive industry with these huge organizations, and you needed people that could come in and know how to run and be managers and operators inside of those organizations. So the MBA degree was invented at that point. We would teach people finance and management and accounting, and all the different types of stuff you would need to know in order to basically be helpful as, you know, the United States industrialized. And over time, as the United States continued to build more and more and the economy continued to grow here, what we saw was an explosion of these programs around the MBA. And so up through and post-World War II, we saw the number of MBA programs grow from just a handful to hundreds here in the United States. Until eventually in the early 1970s, we were graduating about 20,000 MBAs a year. But starting in the '80s, '90s, and finishing in the early 2000s, something totally changed in the MBA environment. Basically, the number of MBA graduates went from back in the 1970s, 20,000 people graduating per year with that degree, to by 2011, we were graduating 200,000 MBAs a year from United States schools. And that was being done at over 600 different programs that were offering the MBA degree. So what caused this? Well, as with most things that happen in the United States, the root cause is money. And what changed starting in the '70s and '80s was instead of taking people straight out of their bachelor's degrees and putting them into master's degrees programs as MBAs, the way most master's degree programs tend to do, what we started to do was The industry of universities realized they could go and attract people who are a little bit further in their career. And by making it the norm that somebody would get a bachelor's degree, then go work in industry for 3, 5, 6, 7, 10 years, get a little bit of money, and then come back to school to get an MBA. Well, suddenly that changed the game because universities at that point can start to charge real money. Because if you're bringing in somebody who's a broke college student who just graduated from a 4-year degree, you're not going to be able to charge them like you can somebody who's been earning $200,000 a year. For the past decade. And so now, because MBA programs are targeting these folks, tuition can rise like crazy. Um, and me personally, I went and looked at an MBA program, you know, in my early 30s, 15 years ago, and I was shocked to discover that a 2-year program at the University of Texas, which is down the road from me, $154,000 for a 2-year program. Uh, it's a pretty crazy thing, like it's turned into a luxury and status symbol to go get an MBA from some of these high-end programs like the UT program or the other ones around the country. In fact, I was kind of surprised to see when I went to go visit the UT School of Business, they have a hotel like in the actual academic building where like people can stay and visitors to say stuff like just the type of stuff that you're like, wait a second, Is this why this is $154,000? And UT is not the only one. I mean, by and large, it's the same thing we've seen across lots of things in universities. They become basically these luxury type things where prices keep going up and so does like the spending on the background. And so for years, the music kept going and the dance party kept going, right? Tuition kept going up and students would come in and see a total good ROI from getting an MBA program. And there are a lot of statistics out there, by the way. Like, when you Google something and there's a lot of statistics convincing you to buy something, that's usually a bad sign. That's the way it is with MBA programs. But I'll put up some statistics here on the screen. Like, people have done, like, what it does to your— done research into what it does to your lifetime earnings if you go and go to one of these top MBA programs. It might change 5 or $8 million in terms of the total amount of money you're going to earn for the rest of your life. Like, that's life-changing money. So the music kept playing, the students kept applying, and the companies kept eating up the graduates. And then COVID happened, and the music stopped, and everything changed. And those two things changing were pretty darn interesting. And the number one thing that's changed is the attitude of CEOs. By and large, you're seeing folks like Mark Zuckerberg, Elon Musk, and other folks very visibly saying they don't need as many middle managers and they don't need as many kind of, well, PowerPoint and Excel pushers inside their organizations anymore. And the new trend and the new hotness with CEOs is to have flatter organizations. And if you go and look at it, like, who's the first person to get cut when you start to flatten your organization and reduce the layers of management? Well, MBAs who ended up in management positions. End up without jobs. And this trend towards flattening came through in another article today that was super interesting. British Petroleum, now called BP, announced they were laying off 5% of their workforce. There's a really interesting quote I'll put up here on the screen from the CEO of the company, and he said they want to simplify their business. And when I read that, I was like, what does that mean, simplify? And then I realized, oh, simplify means we're going to cut out a lot of the people whose jobs just aren't that critical. In other words, middle managers and people that really aren't delivering value directly to the customers. And probably in that situation when the economy is not great, not that necessary. And the second trend hurting these MBAs is the number of applicants into these programs and the number of students being cranked out keeps growing. The job market is dying for things like electricians and plumbers and HVAC folks and engineers and all that kind of stuff. It doesn't need somebody else making PowerPoint and Excel spreadsheets inside of big companies. We just have too many damn MBAs running around. And it doesn't help that, well, more and more people are applying to these programs and they're accepting them and graduating them. And look, I think this situation is only going to get worse for MBAs. And that third thing that's going to make it even worse is technology. AI, you can already use it to do things like take a Word document and make me a PowerPoint presentation out of it. And if you look at what a lot of MBAs do in their job, it's a lot of Excel spreadsheets, meetings, and PowerPoints. And if software can do that for me, why do I need to pay somebody $175,000 who just graduated from a business school program to do that? It's not going to help. And look, my final opinion on MBAs, uh, I think there's still good ROI despite the doom and gloom in this video. Uh, the ROI is pretty good given you do it the right way. And I think the only MBA programs I would encourage people to go into are the top 30 programs. Those are the ones that are still going to be getting the elite employers coming in. And secondarily, those are the ones where you're going to build a lifelong network of other badasses who were part of the selected few to get into one of these top 30 programs. But otherwise, if you can't get into a top program like the top 5% programs, which is about what the top 30 is, I don't think it's worth doing and I would recommend against it. And look, the tides are turning against the MBAs of the world. And I think if you're not getting into one of these top programs, it's time to be very scared.
