Multiple people have sent me links to an interview with Peter Thiel on National Review Online. Thiel made a fortune with PayPal and was the venture capitalist who originally funded Facebook. He's part of that global elite that were highlighted in the cover article of this month's Atlantic Monthly, who jet around the world going to conferences and pontificate about politics and ideas.
When I first read about the interest of the new global elite in policy, I was amused. It's great to see influential people taking an interest in education and the environment and all that. They'll help get more people talking about this stuff. Great. They'll kick in money for schools and new energy programs. Great. They'll hire people who really know about this stuff to advice them. My resume is in the mail.
But after reading Thiel's interview in the National Review, I'm just disgusted. How incredibly arrogant to you have to be to make these great pronouncements about how to make the world a better place, when you know absolutely nothing about the topic?
I know. Blogger. Pot. Kettle. Black. But, still, hear me out.
So, Thiel wants smart kids to drop out of college and become entrepreneurs. He's even started giving out grants to kids who drop out of college. He thinks that college is expensive (true) and that kids aren't learning anything there (some yes, some no). It would be much better for them if they started their own businesses and saved the money that would have been blown in college. The more money they have in their pocket, the more likely they are to take risks.
Let me take apart his argument.
First, college is expensive. No question about it. Especially private colleges that don't provide scholarships. Money is being wasted on ice-skating rinks and football stadiums, which have no relationship with increasing the brain power of the students. Public colleges, on the other hand, are a much better deal and many provide an equivalent education to the top private colleges. Parents really need to do a better job of sorting through the crap and spending their education dollars wisely.
There are a million studies that show that people with BAs have a much higher income than those with high school degrees. Sure, there is some self-selection going on. Motivated people get college degrees, and they would have been motivated even without that college degrees and may have ended up making that much money anyway. But that degree means something. There are so many barriers to employment to people without a college degree that it's really impossible to progress through traditional businesses without that diploma.
Second, Thiel says that kids aren't learning much in college. I pointed to a study last week that showed that kids aren't doing much writing. Other studies find that kids are studying less and reading less than in the past. So, what's the truth?
It's really hard to measure how much a kid learns in college. There are way too many courses and teachers offered at one college to devise a test that measures all that knowledge. One standardized test that has everything from Socrates to micro-economics? Really? Even the same course can be taught a dozen different ways by equally qualified and committed professors. I'm highly skeptical of the validity any of the new assessment tests for graduating college seniors.
That said, how much a kid learns in college has a lot to do with the particular college, the commitment and age of the professor, and the major they choose. If you go to a third tier college, with a lot of commuters, and take classes with a bunch of old farts, you're not going to learn much. Actually, if you go to a top tier school, where the faculty is too busy to actually teach the courses themselves, you aren't going to learn much either. If you choose correctly, then you'll have a feast of ideas and information.
Third, let's deal with the entrepreneurship crap. Do you know how many people I know who are trying to start their own businesses? I'm talking gluten-free cheese crackers, jewelry, consultancy, online this and that, iPhone apps, books. Every miserable commuter in the city has his dream of starting his own micro-brew shop (I'm looking at you, Steve) or cornering the market with artisanal pickles. And nobody is making it big, because you either need a buttload of cash or a one-in-a-million idea or mad programming skillz to make it big as an entrepreneur.
It's really foolish of Thiel to tell kids to drop out of school and create their own Facebook. It's cruel, really. I love that outsiders like Thiel are questioning the status quo and making bold pronouncements like "College is an Education Bubble," because the system is in major need of repair and we need more contrarians in the world. But I wish he had done a little homework first.
Apt. 11d 
I liked the “work with your hands” guy better than this guy.
LikeLike
I believe (can’t find the reference now) that much of the lifetime earnings of college graduates has been captured by the colleges through tuition increases. Which makes it rather weird to go to school so you can get a high-paid job so you can pay the school back for the privilege of getting a high-paid job.
If it’s just learning, you can do that on your own. I never stop learning–I’m always taking a class or learning something new through reading.
LikeLike
A friend of mine coaches and teaches workshops to wanna be entrepreneurs. You would be shocked and saddened at how many individuals show up for help having no idea that the money they borrowed from friends/borrowed on their home is not real “income”. They have worked very very hard and sunk lots of money into ideas that were very shaky to begin with. Much due to a lack of basic business knowledge.
So yes, I agree that his recommendation of dropping out of college is rather silly.
To me this also speaks to why I (caveat – I am one of those lefty Canadians…) prefer government funded education to private individuals. Once you have significant individuals donating, you have to do a bit of dancing to his/her tune. Major donors are never going to just hand over a cheque and not expect to have some input in how it’s spend.
I trust (and again, this is probably a cultural difference between many/most Americans and many/most Canadians) my government elected by my fellow citizens more than I trust an individual billionaire indulging in his/her flavour of the month interest. The lack of accountability is a bit unnerving.
LikeLike
“Which makes it rather weird to go to school so you can get a high-paid job so you can pay the school back for the privilege of getting a high-paid job.”
Well, not if you actually enjoy the high -paying job. Then, you’re paying for the privilege of doing something you enjoy doing.
I think the Thiel article is interesting because I do agree that there’s a “bubble” in education, by which I mean I believe that education is economically overvalued, and that people make unwise decisions about the cost they are willing to bear. But, as Laura points out there are different ways to deal with this. One is to not go to college, another is to look for value in colleges, and to only pay what you can afford. The same was true, of course, of the housing bubble. And, as with the housing bubble, it might even be OK to “overpay” as long as you gain personal value from what you paid (even if you don’t gain significant economic value). If you can actually afford to pay, that is. We didn’t buy our house in the bubble, but it wouldn’t really have mattered if we had, because we bought a house to live in. Buying a Harvard (or even Oberlin) education bubble is OK, too, even if it wasn’t a good investment, as long as you can afford to pay for it as a consumable, not an investment.
I’m not so worried about what 100K fellowships given to 20 very elite kids is going to have any impact on others decisions. My guess is that those kids won’t have any significant problem recovering from their entrepreneurial experiment if it fails. That doesn’t make dropping out of college best for everyone.
LikeLike
you
eitherneed a buttload of cashorand a one-in-a-million ideaorand mad programming skillz to make it big as an entrepreneur.Fixt.
LikeLike
But that degree means something. There are so many barriers to employment to people without a college degree that it’s really impossible to progress through traditional businesses without that diploma.
Which is the problem I’d love to see Thiel tackle. Spend the money helping businesses implement pilot programs to hire bright-but-not-elite HS grads for jobs they’d otherwise require college degrees for, but don’t really require it.
Or spend the money lobbying against laws and regulations that make it dangerous to implement the simple fitness tests many employers would be happy with, forcing them to require a four-year degree instead because they can’t yet get sued for that.
LikeLike
Do you know how many people I know who are trying to start their own businesses?
I’ve been reading about the gourmet food truck trend and I was thinking about waiting two years and opening one of the old crappy kind for a retro appeal.
LikeLike
MH, one wishes there were a like button for comments here.
LikeLike
Here are a few thoughts:
1. A lot of the people who most want to be their own bosses are the least able to cope with self-employment.
2. A lot of people love what they do and are really good at the thing itself, but stink at the business side. Unfortunately, they tend not to realize it.
3. I have a very entrepreneurial family. At least starting from the Baby Boomer generation down, all of those people also have degrees, including a lot of advanced degrees. I know there are a lot of college dropouts among the ridiculously successful, but it’s very unlikely that this program will manage to sift out and fund that small handful of students who can leave college at 20 and turn into Bill Gates.
LikeLike
If I can be the pro-Thiel counterpoint here:
1. People who would take his money to drop out of college are not people who are enjoying/learning in college — they are people who are doing it just to get a certification. They are the ones who will lose least from dropping out.
2. Thiel is giving grants. This is a better deal than taking a loan from a bank, or borrowing from family, or running up your credit cards. I’ve got no problem with someone running a business into the ground in 18 months with Thiel’s money.
3. If your stupid entrepreneurial business fails, you can always go back to college. There’s no rule saying that if you drop out, you can’t drop back in.
4. It only has to “work” in a small percentage of cases to be a good thing for the economy.
5. People are probably happier if their stupid business fails at 20, and then they get a real job, than if they go to college first, get a real job, and spend their lives wondering “what if.”
LikeLike
If your stupid entrepreneurial business fails, you can always go back to college.
Baby get moving,
Why keep your feeble hopes alive?
What are you proving?
You’ve got the dream but not the drive.
If you go for your diploma, you could join the civil service.
Turn in your IPO and go back to UC-Davis.
Entrepreneurial grant drop out, hanging round the failing store.
Entrepreneurial grant drop out, it’s about time you knew the score.
LikeLike
4. It only has to “work” in a small percentage of cases to be a good thing for the economy.
That might be good enough for the “economy,” but a lot of individual lives might be ruined in the process. That seems pretty inhumane to me.
5. People are probably happier if their stupid business fails at 20, and then they get a real job, than if they go to college first, get a real job, and spend their lives wondering “what if.”
That “real job” they get after their stupid business fails at 20 probably rests in the customer service industry seeing as how they have no college degree.
LikeLike
One of Fallows’ guestbloggers has a post on the 12 years and $1.5M+ it has taken one entrepreneur to try to sell a mirror mounted on school buses so that said vehicles do not kill children getting on or off of them.
LikeLike
If only she hadn’t tried to make the mirror out of smoke salmon.
(More seriously, the article says $3.1 million but doesn’t mention those barrier-things mounted to the front bumpers that keep the kids from walking into the blind spot. I think those are to address the same problem and I see them on most school buses now.)
LikeLike
I suppose I’ll step up and present the pro-Thiel position. He isn’t proposing to leave the winners on their own.
The Thiel Foundation will award 20 people under 20 years old cash grants of $100,000 to further their innovative scientific and technical ideas. In addition, over a two year period, Peter Thiel’s network of tech entrepreneurs and philanthropists—drawn from PayPal, Facebook, Palantir Technologies, Founders Fund, the Singularity Institute, and others—will teach the recipients about creating disruptive technologies and offer mentorship, employment opportunities, support, and training.
“University is a tremendously valuable experience, but when entrepreneurs are ready to launch, they should do so immediately, rather than sticking around to satisfy expectations of a full four years of college or eight of grad school,” said Elon Musk, who co-founded Tesla Motors, SpaceX, and PayPal. Musk himself stopped out of his graduate program before classes began to co-found his first company Zip2, which he sold to Compaq for $307 million.
“There is absolutely no experience that matches the real world, so if you have the passion and drive and want to work on a great idea, you should just do it,” said Scott Banister. Banister left the University of Illinois before taking a degree and founded ListBot, the largest ASP for business email, and IronPort, the anti-spam company that Cisco acquired for $830 million.
Entrepreneurs are different. If you’re a young person who sees a need which should be met, and have the skills to start a business, what will four years on a college campus bring you? Yes, you will get to network with people who might be useful later on in life–except Thiel offers to introduce you to people who are immediately useful, now. You would graduate after 4 years with debt (either your own or your parents’.) Debt robs you of the ability to take a chance.
Given the choice between four years of academic courses, most of which will not have any bearing on what you do as an adult, and an apprenticeship with entrepreneurs, I think the Thiel fellowships are very attractive.
Any number of software moguls did not finish their degrees, and are doing just fine. Quite a few people finished their degrees, and can’t find a job despite their certificates.
LikeLike
20 is still plenty of time to get back into school. And, I think folks are wrong that these fellowships are going to go to people in danger of failing collee. Theil’s looking to seed people like Gates, Zuckerberg, Winkelvoss, Jobs, who just don’t have the innate willingness to take on risk (or the fall-back parental support) to take the risk now. He’s also giving the 19 year old tiger-mother child an official competition that they can wave in the parents’ face (when the parent wants them to stay in the biology/economics class so that they can go to law school).
I don’t see anything wrong with these fellowships. The problem is the people who drop out to do nothing not the ones who drop out with 100K in seed money and a business plan. Hey, some of these kids might even have a shot at a higher ranked school, when their business fails at 20. Then they have an essay about a practical business experience and the Thiel fellowship on their college CVs. Probably pretty good for business school, too.
LikeLike
There are people who live inside the box, and there are people who live outside of the box. The whole issue I have with education is that you cannot necessarily put everyone inside the box (i.e. traditional education). My older child thrives in traditional educational institutions, as did I. My younger? Well, we do not know yet. He thrives now, but I am mentally preparing myself – and my husband – for the possibility that he will not (because of his Asperger’s). I agree with Theil that we need to provide more opportunities/alternatives, but we shouldn’t make the same mistake we’ve made with “traditional” educational institutions–believing that they are the best/only way to educate.
LikeLike