diff --git a/src/com/mirantis/mk/Python.groovy b/src/com/mirantis/mk/Python.groovy
index 29f471f..0b7716d 100644
--- a/src/com/mirantis/mk/Python.groovy
+++ b/src/com/mirantis/mk/Python.groovy
@@ -17,7 +17,8 @@
 def setupVirtualenv(path, python = 'python2', reqs=[], reqs_path=null, clean=false) {
     def common = new com.mirantis.mk.Common()
 
-    def virtualenv_cmd = "virtualenv ${path} --python ${python}"
+    //XXX: hack to fix https://bugs.launchpad.net/ubuntu/+source/python-pip/+bug/1635463
+    def virtualenv_cmd = "virtualenv ${path} --python ${python} --no-setuptools"
 
     if (clean) {
         common.infoMsg("Cleaning venv directory " + path)
@@ -34,6 +35,8 @@
         writeFile file: "${path}/requirements.txt", text: args
         reqs_path = "${path}/requirements.txt"
     }
+    //XXX: hack to fix https://bugs.launchpad.net/ubuntu/+source/python-pip/+bug/1635463
+    runVirtualenvCommand(path, "pip install setuptools")
     runVirtualenvCommand(path, "pip install -r ${reqs_path}")
 }
 
@@ -292,4 +295,4 @@
 def setupPepperVirtualenv(path) {
     requirements = ['salt-pepper']
     setupVirtualenv(path, 'python2', requirements)
-}
\ No newline at end of file
+}