Silicon Valley likes to celebrate the cult of the dropout – the inspired entrepreneur who decides that traditional education is not for her because it teaches her nothing relevant, slows her down and, in a world of readily available information , no longer blocks learning resources like it used to.
Legendary defenders of the dropout cult range from Peter Thiel, whose Thiel Fellows program pays students to take a year off from college, to informal mascots like Mark Zuckerberg and Bill Gates, who never got their university degree but who vigorously defend higher education.
My view on college admissions is informed by the support of thousands of ambitious students around the world aiming to get into the best universities in the world, and then seeing what happens next in their careers. Unless you were born into a privileged, well-connected family with substantial capital (which is often the view of many dropout cult advocates), your undergraduate degree from a top university is the most powerful socio-economic opportunity that exists.
The undisputed leading startup accelerator in Silicon Valley is Y Combinator. Its prolific success ranges from huge hits like Coinbase, Brex, DoorDash, Airbnb and many other unicorns. Aspiring young entrepreneurs apply to Y Combinator in hopes of receiving seed funding, mentorship, and networking opportunities to help create the next unicorn.
To understand the cult of the dropout, I took a deep dive in who actually succeeds at Y Combinator, and the results almost knocked me out of my chair – and I was already a big proponent of undergraduate degrees.
The dropouts are no ordinary dropouts – they had earned places at the most prestigious universities in the world and took high school very seriously.
First of all, demographics: the average Founder of Y Combinator who created a unicorn was 28.1 when they started their business. However, the average Y Combinator founder of consumer tech unicorns was 22.5 (fresh out of college). When the founders of these companies are so young, often inexperienced, one has to ask: how can Y Combinator bet so confidently on these young talents? What is the signal that reveals their ability?
The answer, in large part, lies in their degree. Only 7.1% of co-founders did not have a university education. Only 3.9% of co-founders dropped out, and all left well-known institutions like Harvard, Stanford, or MIT; admission alone sends a powerful signal of their academic abilities. The dropouts are no ordinary dropouts – they had earned places at the most prestigious universities in the world and took high school very seriously.
As for the vast majority? You guessed it: 35% of founders went to Harvard, Stanford, Yale, Princeton, MIT and UC Berkeley, while 45% of co-founders went to an Ivy League school, Oxbridge, MIT, Stanford , Carnegie Mellon or USC. Of co-founders who started their companies before age 25, more than two-thirds went to an Ivy League school, Oxbridge, MIT, Stanford, CMU or USC. MIT is the university most attended by the co-founders, followed by Stanford and UC Berkeley.
Where else did they go? A large majority of Indian unicorn founders went to the Ivy League of India: the Indian Institutes of Technology. Founders did not limit themselves to undergraduate degrees – 35.7% of co-founders completed some form of postgraduate training.
In my delivered, I offer a key explanation for this phenomenon: signaling. It’s a term coined by Gary Becker, a Nobel Prize-winning economist. Essentially, the labor market is so competitive that it is too expensive to determine everyone’s talent. As a result, venture capitalists have to use short heuristics to know who to bet on.
An elite college degree means a young person has devoted thousands of hours to academic, extracurricular and leadership activities over an extended period of time and has been judged of a certain quality by an admissions panel. This acts as the necessary cue for accelerators like Y Combinator to quickly sort candidates based on their potential.
Not all Stanford undergraduates will enter Y Combinator, but the success rate of Stanford, MIT, and Harvard dwarfs that of normal universities or people who apply without that level of education.
As I sought to raise growth capital from some of the world’s top investors, I often heard investors mention that some founders were “investable” and some were not. As I dug into this definition, it often revolved around the strength of the founder’s academic credentials. Did this person seem sustainable, and would the fund’s institutional investors scratch their heads or be supportive?
Peter Thiel is perhaps one of the strongest advocates of dropout hysteria. He himself earned an undergraduate degree and a JD from Stanford. In my research, it is difficult to find individuals who have supported the college dropout journey who have not themselves had the stamp of an elite institution.
Founders Fund, Peter Thiel’s personal venture capital fund, seems like the perfect place for budding investors without an elite college background. A closer look reveals the opposite. From 18 people working at the Founders Fund, there are 18 elite degrees, including six undergraduates from Stanford, one JD from Harvard, two MBAs from Stanford, one JD from Stanford, one undergraduate from Cornell, one undergraduate from Yale, one undergraduate from MIT, an undergraduate from Duke and more. An investor approached: he won an award for “most likely to quit” – but still finished his MBA.
The best advice is followed by those who give it – only then will you know that it has been proven. If you aspire to be a unicorn founder and move the world through entrepreneurship, the most effective launching pad is a top college degree.