In a world of easily available knowledge, Silicon Valley loves to glorify the cult of the dropout — the inspired entrepreneur who concludes that regular schooling isn’t for her since it teaches her nothing of value, slows her down, and no longer fences learning resources like it once did. Legendary dropout cultists include Peter Thiel, whose Thiel Fellows program pays students to skip a year of college, as well as unofficial mascots like Mark Zuckerberg and Bill Gates, who never finished their degrees but are ardent supporters of higher education.
My perspective on college admissions is shaped by my work with hundreds of bright kids throughout the world who want to attend the greatest colleges in the world and then explore what happens next in their lives. Unless you are born into a wealthy, well-connected family with a lot of money (as many of the dropout cult proponents are), a college degree from a top university is the most potent socioeconomic opportunity you will ever have.
Y Combinator is the acknowledged top startup accelerator in Silicon Valley. Its numerous successes include mega-hits like Coinbase, Brex, DoorDash, Airbnb, and a slew of other unicorns. Y Combinator accepts applications from young aspiring entrepreneurs in the hopes of getting seed financing, coaching, and networking opportunities to help them develop the next unicorn.
I did a deep dive into who truly succeeds at Y Combinator to understand the cult of the dropout, and the results nearly made me fall out of my chair — and I was already a major proponent of college degrees. The dropouts were not typical dropouts; they had been accepted to some of the world’s most prominent colleges and had taken high school very seriously. To begin, consider the demographics: the average Y Combinator founder who built a unicorn was 28.1 years old at the time of its inception.
The average Y Combinator founder of consumer technology unicorns, on the other hand, was 22.5 years old (fresh out of college). When the founders of these businesses are so young, with little to no experience, you have to wonder how Y Combinator can be so confidence in these bright young people. What is the indication when their skill is revealed?
Their degree has a big role in the response. Only 7.1 percent of the co-founders did not attend college. Only 3.9 percent of co-founders dropped out, and they all came from prestigious universities like Harvard, Stanford, or MIT, where just getting in sends a strong signal about their academic talents. The dropouts were not typical dropouts; they had been accepted to some of the world’s most prominent colleges and had taken high school very seriously. What about the great majority of people? 35 percent of founders attended Harvard, Stanford, Yale, Princeton, MIT, and UC Berkeley, while 45 percent attended an Ivy League institution, Oxbridge, MIT, Stanford, Carnegie Mellon, or USC.
More than two-thirds of co-founders who launched their firm before the age of 25 attended an Ivy League institution, Oxbridge, MIT, Stanford, CMU, or USC. The most common university attended by co-founders is MIT, which is followed by Stanford and UC Berkeley. Where did they go after that? The Indian Ivy League, or Indian Institutes of Technology, attracted the great majority of unicorn creators. Founders didn’t stop with undergrad degrees; 35.7 percent of co-founders went on to get a postgraduate degree.
In my book, I propose signaling as a possible explanation for this occurrence. Gary Becker, a Nobel Laureate in Economics, created this word. In essence, the job market is so competitive that determining how skilled everyone is is too expensive. As a result, venture investors must rely on quick heuristics to determine who to back. A young person with an elite college degree has spent thousands of hours on academics, extracurriculars, and leadership endeavors over a long period of time and has been recognized of a specific caliber by an admissions panel. This serves as the signal that accelerators like as Y Combinator require to swiftly sift candidates into how promising they are.
Although not every Stanford undergrad will get accepted to Y Combinator, the success rate of Stanford, MIT, and Harvard graduates much outnumbers that of other colleges or applicants without this level of education. As I worked to get growth capital from some of the world’s most prestigious investors, I frequently heard investors say that certain founders were “investable” and others were not.