There's been much flap in the blogosphere about early Facebook investor and PayPal co-founder Peter Thiel's new 20 Under 20 scholarship program. Thiel recently awarded two dozen young entrepreneurs the opportunity to receive $100,000 and mentoring from a team of Silicon Valley pros. All they have to do to claim their prize is leave college and work on their business full-time.
Thiel -- himself a college graduate -- has said part of his motivation in creating this program is to call attention to skyrocketing college costs and to encourage more innovation, rather than graduating more students who'll be risk-averse as they struggle to pay off student loans. As a mother of a teen who is headed off to college in the fall, I think Thiel's venture raises some interesting questions about how best to educate the next generation of entrepreneurs. Is the classroom really a better learning lab than a storefront?
An important thing to remember here is there's a reason you read about college-dropout billionaires in the paper, from Microsoft's Bill gates to Facebook's Mark Zuckerberg and others. These stories are newsworthy because mega-successful dropouts are one in a million. Most college dropout stories end fairly predictably, with the student going on to earn substantially less than if he or she had earned a bachelor's degree.
Critics have blasted Thiel for encouraging students to drop out of school, but his actual premise is to take a break -- "stopping out of school" -- rather than dropping out. I think he may have a great idea there.
The thing about college is, it's not going anywhere. You can always take a leave and resume your studies later. If you come back within a decade or so, your credits usually still count. So there's not a lot at risk in taking a year or two off to pursue a business idea. There's a bigger risk students will emerge from the ivory tower after four years with little practical work experience and find it hard to get a job, much less launch a business.
Currently, about one-third of students don't finish college in four years anyway, due to spiraling tuition fees. Many have to take a year or two off to work and save up the money to go back.
Given that, if you've got a business idea brewing in your dorm room and see it bringing in some revenue, why not pursue it? I'd say it's a darn sight better than taking a year off to work at a big-box store as a flunky, which many college students end up doing. Even if your business fails, you'd return to school with some valuable hard-knocks lessons that would likely make you a more motivated and mature student.
If Thiel's initiative has a broader positive influence beyond the two dozen students who won slots in his program, it's that it sends this "go for it" message to would-be entrepreneurs. After all, when you're 19 or 20, what have you really got to lose? It won't get easier to chuck it all and make the leap into business ownership when you're 30 or 40 and have a family to feed.
Most young entrepreneurs won't get an offer as good as Thiel's. But it could still be worth taking an entrepreneurial risk early on in life rather than later. Maybe your college will give you an honorary diploma if you hit it big and you can skip the class time.
Should entrepreneurs stay in school? Give us your thoughts in the comments.
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Comments:
I am currently in the same situation. I do not have a full business idea but I know I want to begin a start up and eventually fully own my own business. It is fairly difficult to make enough money to have a reasonably comfortable lifestyle in my own opinion. Not only must we worry about keeping a good gpa, good social life but we must also dedicate enough time a week to make enough money to pay for everything on top of that. Many students are completely comfortable with this life style but what about the ones who are not? I for one have trouble with this juggling act called the college life. I have recently stopped taking classes in order to work more hours at my local grocery store and devote my brain power to create something that can hopefully make me enough money to pay for everything I need while fully focusing on my college classes.
$100,000-Investors drop that kinda cash to students everyday. The reason why real people have to have a backup plan - like going to school and getting a job and then using our savings to fund our business ventures initially - is because we don't have $100,000 to potentially blow. There are no short cuts...that is unless you have cash. If your already bootstrapping, do yourself and your business a favor by being realistic. When the crap hits the fan, which the odds say there is a high possibility that it can...have something to fall back on...just in case. Too many people are operating on bad hope which some call confidence. It's true entrepreneurs need to be passionate but sound planning is more important. Let's not get too far ahead of ourselves... higher learning requires discipline either way, whether in a classroom or in a storefront. Unfortunately, risks are associated with both.
I think that taking time off can be an excellent approach if you are avidly pursuing a business idea that has great potential. Of course you should make sure you can maintain financial stability and gain access to valuable resources. A business plan to help you calculate your risks is absolutely necessary. Most people have to realize that the outlook of today's fresh business ideas trend rapidly due to the ease of accessibility to start-up resources. If you don't act on your idea now, take that calculated risk and become the first to capitalize, you will be struggling to catch up to the leaders who got that large head start while you were focusing on school projects that help you earn the credibility rather than allow you to apply the practicalities. As a student at school right now, my work load is heavy and I do see the benefit of the education I am receiving. With interest in entrepreneurial endeavours I am avidly pursuing a business plan right now and working on my start-up company, but it is hard and frustrating to effectively move forward at a desirable pace within a start-up when school projects and arranging group meetings around four different courses get in the way. As much as I love school, I see the point you are making through this article because I am experiencing those exact difficulties. There is also much you can learn on the World Wide Web if you access the right resources. Most of what I am learning through school I have already discovered on the web through gaining access to other Universities resources. Thanks for this great article and something great to consider. I have learned so much from reading your web articles and magazines.
That's a great idea. However, there are those of us that have great businesses that we are struggling to get off the ground but because we have had to put our money into medical bills, we haven't be able to. Send me $100,000 and I'll turn it into a few million.
Great idea "try and try and you will succed""it go so" jah bless
The current education system in this country is antiquated. It was designed in the Industrial Age, but we are now in the Information Age. Most of those principles and philosophies no longer hold true. We were brought up to go to school, get good grades, find a good job with good benefits and a pension. Well, those jobs simply don't exist anymore. In 2010, student loan defaults nearly hit $1 trillion. That says that there weren't any jobs waiting for graduates when they left college. Add to that the insane cost of college today, and it doesn't seem like a very wise investment. In fact, most economists today say that traditional 4-year college is a bad investment. I agree with Chuck Blakeman's comment that college is designed to train students to be employees. We get a Practical Education (reading, writing, and arithmetic), and we get a Professional Education (med school, law school, etc.). However, nowhere in our school system is a Financial Education. That is, how do you make money and actually become wealthy? The rich think differently because they simply have different information. All the middle and poor classes need to do is get that same information and apply it. But you're not going to find that information in our school system because it's set up to churn out employees for the workforce. College is totally inadequate in the Information Age.
The modern college system was developed in consultation with tycoons of giant corporations. As a result, college is designed to churn out employees - extensions of machines - for Giant Corporation, Inc. But it is not designed in any way to turn out people who would be inclined to start their own businesses. The college industry wants everyone to see their product as necessary. But there is zero correlation between college degrees and success, and the much touted income differences are not there, either. If someone goes into plumbing right out of college and puts their college money in an investment, they end up with more in the bank at 65 and nearly equal lifetime earnings as the college grad. The college grad has to wait four years (usually longer) to enter the workforce, losing that very key early earning power. Then they pay off loans for 8-15 years, further reducing their earning power. 12-19 years after the plumber started, they finally reach their full earning power that MIGHT be more than what a plumber is making. Bottom line - it's never the process, it's always the person. The best college in the world will not turn out a successful student if they aren't motivated, and the most motivated person will figure out how to be successful without regard to the processes they've gone through. People make themselves successful. College is just one of many routes, and likely not one of the most helpful
This is an interesting view that will take a whole book or life time to argue. Like some of the commentators, I have a personal experience on both sides of the isle. I am a sole proprietor with a college degree, but when I evaluate the pros and cons that this degree has on my business and financial well being and then compare myself to the many of my fellow sole proprietor countrymen, most of whom has never step foot in elementary school let alone college, it makes it difficult for me to argue that to be successful, an entrepreneur must attend college. Attending college brought a lot of wisdom to my personal well being. It has made it easier for me to navigate this world and interact with different cultures. College made it easy for me to imagine, create and solve things which are traits that are very different from those of my country men who never attended college. Although it is the college acquired skills that is allowing me the opportunity to earn a living from the business owners within my community, these skills hasn't made me a better entrepreneur than my rich business owner client who never attended college. I'm greatful for my college degree, but being from a community of successful business owners who has never attended college, it is hard to argue that successful entrepreneurs must attend college.
Its refreshing to see other people are taking the entrepreneurial route as well! I graduated high school a year early, started university, went for 2 years and decided to take this past semester off. In my semester off I started my second business under the guidance of my entrepreneur parents. I can honestly say, I've never learned so much or been so elated. Thankfully at 19, I have the luxury of working from home. Although I plan to grow my business even more and eventually own a few self sufficient businesses, I'm enjoying having the time to work hard on my passions and making them come to fruition. It seems the entrepreneurial bug bit me young and isn't going away anytime soon. I've experienced the same thing as "Startups," friends and distant family members were puzzled as to why I would leave school. They didn't understand why I didn't want the security of a degree. Its interesting the importance people place on "security" and "degrees." I personally feel more secure being self-employeed. I plan to take a few classes here and there in the future and eventually gain my degree, but I'm not stressing about it or filling out millions of loan papers. I'd rather put money into building my business. Great Article!
I took a year off of school, not to start my own business, but I did. With only having one more semester out of school left my business is doing well. My hopes are that when I go back, that my business will be running and I can go to class, train some one to operate it and collect my check and maybe start a new venture. Well see how it works out. I have pretty high hopes.
It is totally fine for someone to leave college if they think they have a successful idea that needs to be implemented full-time. Notice how I did not say 'dropout.' The students still keep the credits that they earned and can take a leave of absence that will enable them to go back if their idea is not as successful as they once thought.
This is a great discussion for these times. It’s true that college offers the advantages of exposure to ideas you might not encounter in the single-minded pursuit of an entrepreneurial business idea as well as a potentially valuable alumni network. Yet these days the lack of employment opportunities for graduates and the level of debt they carry makes those advantages costly indeed. At the same time, online education and the creation of professional and peer networks (made more vital today through use of social media) offer compelling alternatives. However you come to it, in the end it’ll be your maturity in dealing with opportunities and challenges that matters more than the degree.
Having just the education or capital are not the only prerequisites to becoming a successful entrepreneur. Personality traits,mindset, aptitude,enthusiasm, having a desire and dream are equally important.There are lot of venture capitalist around who are willing to lend capital if you have innovative ideas and viable business plan.Not everyone is cut out to be an entrepreneur. -Ranjan A.
There is a lot to be said for this article. I have been on both sides of the spectrum and I can speak from personal experience. I left one of the top public universities in the country to work directly under an entrepreneur. What started out as an internship developed into a full time position. In short, my 2 years with this company was indescribable. I was passionate about what I was doing. I was surrounded by like-minded, motivated, mature and dedicated individuals. I became a seasoned sales person, marketing manager, account manager, web developer... sharing my passion and closing deals. I learned far more about life, business and myself, than college can and will ever teach me. I have never worked harder and enjoyed doing it. I was completely bit by the entrepreneurial bug. Society puts so much stress on the importance of college- the experience and the degree. I can't disagree more. However, that being said, college serves its purpose for many individuals... they need that time to mature, grow and decide what they want to pursue. Other than the people in my entre-bubble where I lived, worked and played, people frowned upon my decision to leave school and pursue such a career. Why? Did my passion scare them? Were they channeling some deeper frustrations with their own job? I couldn't understand why some of the people closest to me didn't support this... couldn't they see I was happy? They were too focused on earning that piece of paper. Finally that people pleaser inside of me, decided to give college another shot. I was over the pressure and the disapproving comments. I'd make my parents happy and get that degree as an insurance policy... if the entrepreneur/start-up thing didn't last, the big guys would at least look at my resume and maybe hire me (it would pay the bills). Having been back in college for six months, I have never been so confused, distraught and frustrated in my entire life. I feel like I have had to retreat back... that I'm moving backwards rather than forwards. Its a bizarre scene in general... and has many correlations to big business. Part of why I loved working for a start up and living in that world was the creativity, the drive, the flexibility and freedom... in college, that is rare; you are working for "the man." Entrepreneurs and maybe those who haven't been bit yet (but are great candidates), do not thrive in this environment. We have more to design, innovate, discover and produce... and with the growing industry, we don't have time to waste-- someone might beat us to it. Book smart vs Work smart. Your peers may have a higher degree of education but you have an invaluable education of life and work experience. Just because the guy next to you has an MBA from Wharton, doesn't mean he is going to be successful or that he is smarter than you. They stop in their tracks: I earned my degree, now what? "There's a bigger risk students will emerge from the ivory tower after four years with little practical work experience and find it hard to get a job, much less launch a business." Your 20's is a great time to take these risks because you have little to risk. If it doesn't work out and you change your mind... go back! "The thing about college is, it's not going anywhere. You can always take a leave and resume your studies later." This last comment might be my favorite... "Even if your business fails, you'd return to school with some valuable hard-knocks lessons that would likely make you a more motivated and mature student."
This is a great discussion for these times. It’s true that college offers the advantages of exposure to ideas you might not encounter in the single-minded pursuit of an entrepreneurial business idea as well as a potentially valuable alumni network. Yet these days the lack of employment opportunities for graduates and the level of debt they carry makes those advantages costly indeed. At the same time, online education and the creation of professional and peer networks (made more vital today through use of social media) offer compelling alternatives. However you come to it, in the end it’ll be your maturity in dealing with opportunities and challenges that matters more than the degree.
Helo everyone! I'm looking to connect with some business-minded young people who are willing and dedicated to seeing business through to the end. I'm currently looking for programmers with the business mind who are looking to connect and hopefully stay in contact for the long-run. If any persons with the mind to sacrifice and strive for business are exchanging info through this site, please contact me so we can chat. -François B.
I don't think college is necessarily bad. But I think too many students use it incorrectly. After graduating, they think a degree will instantly land them a job. They think they can coast along and not worry. But it's coming to a point where that doesn't work. If you're a business student and want to start a company, you're not going to learn how to do that in school. Start a business while you're in school. I think what Peter is doing is great: making students question their choice of college which ultimately will help them make the most of their experience.
While I'd never discourage anyone from pursuing a higher education, I think there is definitely some value to this idea. Many college students simply aren't mature enough to know what they want, which is a big part of why it takes more than four years on average to graduate. But if they're not mature enough to decide on a major, are they really mature enough to launch a business? I would think whoever took this deal would have to be pretty highly motivated and mature to begin with, and if that's the case, he or she is likely a good student. But I agree with you Carol, taking a couple years off from college doesn't really hurt and in many cases, it might actually do some good.
Hi Carol, I think that a combination of academics and experience is the best option for any entrepreneurial success. There is no doubt that practical knowledge is very important to get street smart, however, what you learn in college is equally important to understand how to go about in making key decisions in the business especially regarding finance. Therefore, the option of dropping out for sometime may be al right rather than completely quitting school. Even though I have seen very few people returning back to school after a long break. Good idea though. Thanks for sharing the news! Riya Sam Training for Entrepreneurs.com
I am currently going to college and will drop out without thinking twice if I had a solid business plan I loved. edit: I take that back lol. I am honestly very poor and will end up in the streets with a failed attempt. My education hopefully will land me a job good enough to save for a business.
I think kids should keep learning. School is not the only place where people can learn. But a degree helps get a job. I wish college taught people how to be money smart!
I'm with you...you'll never have more support resources than on campus, unless you get a deal like Thiel's.
That's a really good point, particularly with tech-related ideas, you might need to seize a moment or you'll be left behind.
Pursue your venture while attending school. You can take a lighter load and still do the gruntwork of building a business. Once your startup hits the tipping point where cash flow is solid and the future is bright, then you drop out. Dropping out off the get go is foolish since 9 out of 10 startups fail. I say get a few failures under your belt or at least get the poor decision making done while your still in school. Plus there are usually many mentors around campus that can help you out.
For me, college was the right decision. But the answer isn't quite that simple. Prior to going back to college, I started a couple of companies. Part of the reason I ended up back in school was the fact that I didn't know what my next venture was going to be. If at anytime during my college years I had another business I truly wanted to tackle, I would have left in an instant. I value the time I spent in school, but not more than I value actually practicing what I was supposed to be learning. These days, there are so many ideas floating around - many of them hi-tech. In today's business environment, waiting a two years or even six months to complete school could easily mean the difference between being a pioneer and being behind the times. If you want to start a car wash, you can probably hold out, but if you are considering some kind of a tech startup, leaving school may be the only option.
I agree and disagree with Peter Thiel. Yes, a college education is becoming more and more overpriced, but it's still one of the best investments a person can make (unless you're paying Ivey league tuition rates). For the 10 or so people he's sponsoring to skip school and start a business, it's a great idea—why pay $100,000 for school when someone will give you $100,000 to start a business. That's a no brainer. For everyone else that isn't getting that kind of money thrown at them, going to college is the way to go. That's also the best time to start a business. Instead of going to parties or hanging out at the gym, entrepreneurial minded students can invest their free time in starting a business. There's a good chance that it will pay more dividends than drinking beer at the lake. So yes, college is expensive; no, students shouldn't skip college to start a business; instead, they should start one while they're in school.
Well,I think women should go to college, it might help them get considered for your Entrepreneur awards. I just checked on your 2011 Entrepreneur of the Year Awards site and I think I am having a flash back or deja vu or something to make me hot under the collar. There were no women shown! Couldn't you find enough women to consider for these awards! If not, I am sure my colleagues and SBA friends could help you. They had quite a few female winners last week! Renee Jones, SCG Group, Philadelphia