What kind of philanthropist encourages college students to leave school in the hope of making a fortune a la Bill Gates, Paul Allen, and Larry Ellison? Pay Pal founder and Facebook co-founder Peter Thiel. Thiel is offering two-year fellowships of up to $100,000 to 20 entrepreneurs under age 20 to drop out of university and work full time on ideas.* Jon Marcus takes a moderately positive view in the Times Higher Education (London):
The San Francisco-based founder of PayPal and co-founder of Facebook is offering two-year fellowships of up to $100,000 (£63,800) to 20 entrepreneurs or teams of entrepreneurs aged under 20 in a worldwide competition that closes this week.
With the money, the recipients are expected to drop out of university - Thiel calls it "stopping out" - and work full time on their ideas.
"Some of the world's most transformational technologies were created by people who stopped out of school because they had ideas that couldn't wait until graduation," Thiel says. "This fellowship will encourage the most brilliant and promising young people not to wait on their ideas either."
Thiel says the huge cost of higher education, and the resulting burden of debt, makes students less willing to take risks. "And we think you're going to have to take a lot of risks to build the next generation of companies."
The quotes suggest that Thiel's goal isn't just to help budding entrepreneurs. After all, why not open the competition to 21 or 22 and put graduating seniors and underclass students on the same footing, judging applications only on their merits? It's one thing not to discriminate against a prospective dropout, another to debar a graduate with a perhaps even better project.
Mr. Marcus, following Thiel, rattles off the usual list of celebrity dropouts. But where would those people have been without the research done in universities and the basic-science parts of industrial laboratories? Bill Gates and Paul Allen began their ventures in high school as programmers in BASIC and dropped out of Harvard to port the language to the new Altair microcomputer. But where would they have been without John Kemeny and Peter Kurtz, Princeton Ph.D.s teaching at Dartmouth, who developed BASIC and never copyrighted the original program, making Microsoft's proprietary microcomputer versions all the more lucrative? Larry Ellison's Oracle would almost certainly not exist as we know it without the (likewise unpatented) relational database concept published by IBM's Dr. Edgar F. Codd. Steve Jobs may be the paradigmatically creative technology dropout, but according to this interview (link via Wikipedia) he drifted at first when he left Reed College formally; a class on calligraphy he audited became a major inspiration for the Mac, but only ten years later. At the time, Jobs had no blockbuster idea that would have qualified him for a Thiel fellowship.
American culture loves extreme points of view, whether it's extolling the virtues of advanced math and science education or encouraging leaving it. Occasionally the timing of dropping or "stopping" out does work perfectly, as with Microsoft and Google (whose founders were in a prestigious Ph.D. program). But there's something to be said for a degree as employability insurance. After all, startups can be as profitable as a few are, only because the great majority of other entrepreneurs with similar ideas fail. It's better to discourage than to encourage dropping out, so that it's done only for compelling reasons.
* This post originally implied that Peter Thiel was himself a college dropout. We regret the error.
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