Thinking About Thinking

College Optional

Posted in Philosophy, Venture Capital by larrycheng on August 26, 2009

I have always believed that a great education is invaluable.  The ability to learn new things, grasp new concepts and retain information are all important ingredients of success.  But, how valuable is a college education – which is only one form of education?  In the business world, I think a college education is extraordinarily nice to have, but not a must have.  I’d certainly recommend that everyone get a college education, but if for some reason you can’t or you didn’t – perhaps your best bet is to go find a career in business.

Reinforcing that point of view is the sheer fact that there are many successful CEO’s that do not have college degrees.  Some of these include but are not limited to:

  • Richard Branson, CEO, Virgin Group
  • Michael Dell, Founder and CEO, Dell
  • Barry Diller, CEO, Interactive Corp
  • Bill Gates, Founder and Chairman, Microsoft
  • Paul Allen, Founder and Chairman, Vulcan Group
  • Dean Kamen, Founder and Chairman, Segway
  • Mark Zuckerberg, Founder and CEO, Facebook

You could say that they are outliers, and you would be completely right.  They are outliers in their lack of formal education – but also outliers in the magnitude of their success.  Even if you look at my portfolio of six emerging technology companies, two of the CEO’s do not have college degrees.  And both of those companies are going gangbusters.

At the end of the day, I’m not sure that the traditional college educational process of reading a textbook, listening to a lecture, and then taking a test is a process that is often replicated in the real world of business.  Sitting in a classroom listening to a teacher every day for four years in so many ways is exactly the opposite of what someone with an entrepreneurial DNA should want to do.

After seeing many talented executives come in without a college education, there seems to be a blueprint to succeed if you don’t have a college degree:

  1. Learn how to sell.
  2. Find a problem you’re passionate about solving.
  3. Be courageous and more willing to take risk.
  4. Make a lot of friends.
  5. Develop instincts by failing quickly.

And perhaps the most fundamental thing you need to learn to succeed in business whether you have a college education or not is to learn how to take $1.00 and turn it into $1.10 (without lying, cheating, stealing, swindling, etc.).  I don’t mean that in a theoretical way.  I mean literally, take a dollar bill out of your pocket right now, and figure out how to get someone to pay you $1.10 for it a week from now.  Usually that means you take the $1.00, go buy some stuff, package it up in a value enhancing way, and see if you can sell the end result for $1.10 to someone other than your mom.  If you can do that with $1.00, you’re off and running.  The same principles that enable you to turn $1.00 into $1.10 are the ones that will apply for turning $100 million into $110 million.  That ability is what some call business instincts – and instincts aren’t always learned in college.

30 Responses

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  1. Scott Truitt said, on August 26, 2009 at 6:28 pm

    This afternoon, in the midst of my work to define and design my first startup, I took a look at the hole on my LinkedIn profile and shuddered. To be fair, those days are far in the past, and even though I personally don’t think twice about my decision to leave early, it remains a fact of my life.

    Will it be an issue? Perhaps, but I believe my creativity, passion, and the sum total of my experiences are far more pertinent. I have my limitations, and will likely find more as I proceed, but I have reason to be confident. I can do this.

    Again, that was much needed and much appreciated. Thanks, Larry!

  2. rudy said, on August 26, 2009 at 6:49 pm

    I think it’s important to note not whether someone went to college, but whether they could have but chose not to. That signals that the ability to learn is on par with anyone who chooses to go to college, but that the individual has elected to gather their knowledge outside the fairly restrictive (by necessity, not many people at 18 will elect to study if given other options unless prodded and led down a path) nature of undergraduate eductation.

    Personally, I think about 50% the colleges and about 75% of the degrees offered need to be culled. Most people can get on the path to a career w/ 2 years of concentrated training + some form of apprenticeship. Not EVERYTHING needs to come with a BA/BS, but because of social stigma and modern norms we’ve turned “Recreation Studies” into a college degree. Just watch NCAA basketball for the first 5 minutes of a game while they’re doing the athlete bios / majors to see a whole bunch of subjects that don’t require 4yrs and $100k+ to be educated on.

    • larrycheng said, on August 26, 2009 at 10:17 pm

      Rudy – are you saying you’d swap out 1/2 the colleges and replace them with trade schools?

      • rudy said, on August 27, 2009 at 5:27 pm

        Yes. Less costly and more narrowly focused schools. However, I also include “pre med” and “pre law” in there as well. In other countries, law is a Bachelor’s degree completed in 4 years. In the US, it requires a BA/BS and is a JD degree. While that has advantages (wider scope of educational base for those of us who became JDs w/ engineering degrees) for most students it adds 3 years of cost burden vs. the foreign equivalent. The same thing for MDs, in other countries it’s a ~6yr professional program vs. 4 + 4 here in the US. That’s two years of unnecessary cost.

        The second part is that I’d replace those eliminated years with more apprenticeships. Medicine has a residency requirement. To get a professional license engineers have to work under a PE for a certain number of years. Teaching licenses usually have a classroom time component to them. Most, if not all, law students work summers. So, the value of learning under someone with experience can’t be dismissed. I think rather than burdening students with costly classes unrelated to their field of interest, it would be better for them to spend that time working with an active professional.

  3. busyevent said, on August 26, 2009 at 7:20 pm

    I can’t prove this right now, which is why I’m hesitant to write it, but I’ll make you a bet that if you take the Fortune 5000 and the Inc 500 and simply ask “College Degree or Not”, you’ll find that well more than 95% of those CEOs DO have a college degree.

    Their portfolio’s are more valuable than the “NOT’s”, as is their market caps and frankly, they wouldn’t be in the position they are without the degree.

    And, perhaps that’s your point – are the traditional methods used to get on the path of success valid in a time of change?

    I would agree that perhaps the content of some courses of study aren’t particularly strenuous nor do they prepare the graduate for a traditional path to success. But the content isn’t necessarily the point either.

    I’ll tell you that as we hire people into our company, we look for a variety of things; relevant college degrees being one of them because if nothing else, over and above the ‘learning’ that might occur, a college degree declares to all who care that for a 4 or 5 year period, 3-4 months at a time, you were able to focus and complete a series of tasks and goals that ultimately led to an ‘exit’.

    That, in itself, is what every entrepreneur should be trained to do and every successful entrepreneur has either learned that in college, in life or in failure with the willingness to try again.

    • larrycheng said, on August 26, 2009 at 9:54 pm

      Busyevent, I think you’re right. I remember seeing some statistic like that for Fortune 500 CEOs. I think about 10% of Fortune 500 CEO’s went to Ivy League colleges, but many other smaller schools were well represented.

      • busyevent said, on August 26, 2009 at 9:58 pm

        Right, but, bigger than the statistics is the point that it’s not about ‘college’, it’s about the ability to set a long-distant goal and do what’s needed to accomplish it.

        In today’s world, the first/best evidence of that is college.

        I think your blog post is more about “Socratic or Not” rather than “College or Not”.

        We can certainly agree that for a ‘trade’, like law or medical or pilots or even VCs, a little bit of schoolin’ is a good thing and that no amount of apprenticeship can make up for a strong foundation in the basics.

  4. Bill Samson said, on August 26, 2009 at 8:22 pm

    Larry Larry, first I see a tweet about wanting a caterer for a NE Pats game – weak sauce bro, you make real fans ashamed that rich people like you are the only people with access to tickets these days. And now a Harvard grad, who benefited immensely from the name of his school and his education calls into question whether college is a good idea. Interesting

    • larrycheng said, on August 26, 2009 at 9:41 pm

      Bill, no doubt catering a tailgate is totally weak. Have to call a spade a spade on that one.

      I don’t think I ever questioned whether college is a good idea – if you can go to college you should. But, if for some reason, life has thrown you a curveball and you weren’t able to or didn’t go to college, I don’t think all is lost.

  5. SMC said, on August 26, 2009 at 9:22 pm

    Another dynamic that might be in play here is this: sometimes successful people who have a college degree are not necessarily successful because of the degree. The fact that they pursued and completed a college education is just one manifestation of their ambition, or their discipline in taking on a challenge and working it to completion. Then, when they enter the business world this same character trait plays out in that forum, and they tend to be successful there as well. A theory.

  6. Apolinaras Sinkevicius said, on August 27, 2009 at 12:17 am

    I don’t put too much value into my education. I spent time in two failed companies (I was a partner in one of them and had tiny bit of equity in another) and been part of the teams building real sustainable fast-paced growth companies. No BA, MBA, etc. could have prepared me for that. Good ol’ trial and error with a healthy dose of asking people who have been there before made me who I am today.
    Sometimes I wonder what I could have done with the money I paid for the school.
    I do agree with Larry, I think everyone should go to college. But what I do think is kids should not specialize, but rather do liberal arts or other thinking type study track. Leave the specialization for the masters degree.

  7. Phil said, on August 27, 2009 at 3:49 am

    Hi Larry,

    I hate to be a troll, but as you know, 3 out of the 7 CEOs you listed (Bill Gates, Paul Allen, and Mark Zuckerberg) all went to Harvard and dropped out … before that, they all went to prestigious private high schools and were nurtured in upper-middle-class well-educated families where their exceptional computer programming skills were able to thrive to their fullest potential.

    I think that many readers might skim thru your article and think that what you are trying to say is “hey guys, you don’t need college! look at these average joes who never went to college and see how rich they are today!” Even if that’s not your intention, that was at least how I read it on first glance 🙂

    • larrycheng said, on August 27, 2009 at 1:54 pm

      Phil – hope you’re well. Totally fair and observant point. I’m glad you deciphered that my intent was not to squash the idea of going to college. If it’s any consolation, my two CEO’s who didn’t graduate college didn’t matriculate at Harvard. Maybe that’s the key, back people who drop out of Harvard to start a business – success rate seems disproportionately high.

      • Phil said, on August 27, 2009 at 2:15 pm

        Actually your response got me thinking … in the old days, I think it might have been more important to go to a prestigious college so that you could become part of the ‘old boys’ network and have connections with hotshot businesspeople. however, the modern internet age has opened up the doors to a lot of people who didn’t get to go to a big-name college. firms like yours and seed funding programs like Y Combinator are constantly on the look-out for bright, industrious people without nearly as much regard as to whether they have ‘old boys network’ connections. keep up the good work!

      • rudy said, on August 27, 2009 at 5:44 pm

        Phil, I’m going to have to disagree on that one. If anything, I see an unusual weight placed on university “prestige”. Most i-banks/hedge funds/vcs, law firms, etc. almost only hire students with a degree from a small subset of schools. It doesn’t help that most are located on the East Cost, so it’s a feedback loop that reinforces the status of certain schools.

  8. Alan said, on August 27, 2009 at 7:46 am

    I think the trick is to take $1.00 and turn it into $10.00.

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  10. Des said, on August 28, 2009 at 8:46 am

    Larry, given the passion in the responses, clearly your subject hit a nerve! You propose that one could call the CEO’s on your list “outliers.” Some of them are, in fact, “10,000 hour outliers” as defined by Malcolm Gladwell in his third book, “Outliers; The Story of Success.” Gladwell details, for example, how Gates “got his eduction” by sneaking out of the house and heading to the University of Washington computer center from 3 AM to 6 AM every day.

    But I’d say the best proof of the points you make is the success of your two portfolio CEOs.


  11. kriz_wong said, on August 28, 2009 at 1:11 pm

    AWESOME Article. I actually have some perspective on this topic as I am a 20 something that has worked in the high-tech sector (with pretty good success) that is now returning to University.

    So my perspective is this. Success is not based on the formal education you have; however, it MAY limit your salary potential unless you make a start-up. I worked for Dell USA, Canada, and International launching Call Centres and was doing awesome there; however reached my glass ceiling without a a college or university paper. It is unfortunate since I worked with MBA’s and was able to keep up with the best of them. Oh well. (P.S. I did 1/2 a year of pre-med at a prestigious school before dropping out and doing this)

    I now have returned to University @ a really good business school. The biggest thing is that this will increase my earning potential and strategic agility going forward. Additionally, it provides me with a HUGE networking base that I can leverage for future success. I make a last impression on my professors because I challenge them on their textbook views and ideology (which is sometimes old-world values and not the environment I have worked in). I find that this is HUGELY satisfying for me but has it draw backs.

    -I needed to leave my previous job. I now work for another fortune 500 but in a less demanding role and only part-time (20-30 hours a week).
    -I have little to NO social life or time to spend with my family. (huge dissat)
    -Earning potential in the long run might be increased but in the short-term it is much lower
    -Stress is very prevalent as time management is hectic when priorities clash (work deliverables vs School deliverables vs Family deliverables) Basically the Work/Life/School balance is very hectic and hard to get use to.

    Overall, I think it is a challenge but is also hugely rewarding. Ultimately this is not to only get a paper anymore but rather have me derive my own theories and tactics in business. The “consultation” from industry experts without paying per hour is crucial to my development (at least in my perspective).

    BTW if you are going to do this you need to get a Blackberry. I would be lost without that damn calendar/reminders/memos/tasks/contacts/etc.

    Anyways, just my perspective.

  12. Daddy said, on September 8, 2009 at 5:34 pm

    I think the bigger point of this write-up is not letting your resume/background puts a limitation on what you can or cannot do.

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  14. Rachelle Disque said, on April 25, 2010 at 5:19 am

    I Adore the way in which you write…thanks for posting

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    excellent post on education.

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