PayPal Co-Founder Gives Out $100,000 To Not Go To College

Paypal co-founder Peter Thiel says the key to quicker business innovation is skipping college. His foundation is handing out $100,000 to 24 people under 20 to drop out of college for two years and start companies. From the press release: "As the first members of the 20 Under 20 Thiel Fellowship, the Fellows will pursue innovative scientific and technical projects, learn entrepreneurship, and begin to build the technology companies of tomorrow. During their two-year tenure, each Fellow will receive $100,000 from the Thiel Foundation as well as mentorship from the Foundation’s network of tech entrepreneurs and innovators. The project areas for this class of fellows include biotech, career development, economics and finance, education, energy, information technology, mobility, robotics, and space."

Comments

Neat!

[DWMorse]

That's forward thinking right there! Why beat the competition if you can pay them a pittance to fail outright early in life?

Re:Neat!

[LordLimecat]

These students should avoid failure by blowing $150k in college to qualify for a entry level job. Much more successful.

Whenever I see this I have to ask, "what posessed that young student to go to an out-of-state college"?

I mean, I am right now attending college part time (trying to convert an awful associates to a full bachelors). Im just finished freshman / sophmore levels at a community college at a whopping $95 per credit hour, and will be going to a state university this fall at an astounding $500 per credit hour. My bill at the end of all of this will be less than $45000, for a full bachelors degree.

I could, of course, have chosen to go to an out-of-state ritzy school like Georgetown, lived on campus, and blown $45000 per semester... but then, I really wouldnt have anyone else to blame for my debt but myself, would I?

Re:So tell me

[Culture20]

No, but he'll prevent some of his future competitors from being more educated than him.

Funny Thing

[Sonny Yatsen]

For a guy who's claiming that college impedes innovation, Peter Thiel sure had a lot of it. He has a BA in Philosophy and a Juris Doctor from Stanford.

Re:So tell me

[ozziegt]

I went to GT for a BS and an MS. Could I have learned about 80% of what I learned there by getting some syllabus off the internet and hunkering down in my basement? Maybe. Would I have been motivated to do so? No, especially when I was 18. Would I have had a network of people around me for moral support and to answer questions? No. Would I have been in an environment which helped me stay focused and learn what I needed to? No. Were there times when I asked myself if it was worth it? A few. Would I have done it again? Absolutely. I have an awesome job and a great resume of education and employers and I really don't know what things would have been like if I had dropped out of high school. I am pretty sure I wouldn't be where I am now. I didn't have the wisdom or maturity when I was 18 that I do now.

Just a caveat: I was an instate resident and I got out of school without a single cent of debt.

I think most people who have been through college and are working in the field where they got their degree have no right to say anything against it. It's easy to deny one's reality in hindsight and talk about how things "could have been different" but we really won't ever know...when starting college most people are pretty "green", and that needs to be taken into account when thinking back on it as well. People are bitter right now because the job market sucks as well...imagine being in this job market without a degree at all. Yeah.

Re:So tell me

[flyingsquid]

I think that the 20 Under 20 program is probably a really good idea... if you're Peter Thiel. I imagine his thought process went something like this: "Man, investing in Zuckerberg and Facebook was the smartest thing I ever did. Half a million dollars turned into two. billion. f***ing. dollars. How in the hell can I possibly do that again?" It's a long-shot gamble that paid off huge. 4000 times his original investment, or 400,000% return. That's one of the best investments in history. Imagine giving a friend 250 dollars for his company and becoming a millionaire. How can you replicate that success?

The answer is to recruit as many wannabe Zuckerbergs as you possibly can, throw money and some guidance at them, and if any of them show promise, you're in a position to invest heavily in them and get in on the next FaceBook or Google from day 1. It's a long-shot bet, sure. But long-shot bets are worth taking, if the potential payoff is large enough and the amount you wager is low enough. Imagine a lottery where it costs 1$ to play, and the odds of success are 1%, but the payoff is 4000:1. What would you do? You'd buy as many tickets as you can. Spending a modest (by Thiel's standards) $2 million dollars for a 1% chance of making another $2 billion dollars is a damn clever investment. The downside is fixed (2 million) and not enough to hurt, but the potential upside is virtually unlimited.

If you're one of the people applying for Thiel's grants, however, the risk:benefit calculus works out a bit differently. Thiel is hedging his bets, he's got 24 grantees, if he runs the program for four years he would have almost 100 startups. He only has to have one modest success to break even, and if every single company is an abject failure, he hasn't really lost much. Heck, the whole thing is a foundation, so I assume it's even tax-deductible. He has a reasonable shot of winning and can hardly lose. The grantee is in a very different situation. I'm totally pulling numbers out of my ass, but I would guess that 90% of these companies will fail to ever break even, 10% will make some profit, and 1% will be real successes. So you're trading 2 years of your life, and 2 years of college, for a fairly modest sum of money and an extremely remote chance of starting a major company. It's kind of like dropping out of college and a conventional career path to run off to L.A. and become a rock star or an actor. Sure, you could win huge, but odds are you won't. On the other hand, the real-world experience gained in starting and running a company, and the mentorship, are arguably more useful than what you'll learn in college and would probably be attractive to a lot of companies, especially if you could show that you did manage to produce and learn something in those two years. And hell, maybe one of them will even invent the Next Big Thing.

And of course, this kind of gambling is probably stupid at the individual level but it's vital at a societal level. If everyone took the conventional path then we'd have a nation of actuaries, doctors, bankers, management consultants, and lawyers, and no movie directors, rock stars, artists, novelists, or visionary CEOs. If nobody took these kinds of risks, you wouldn't have companies like Google, FaceBook, Apple, and Microsoft. You wouldn't have the Beatles, Tom Hanks, or Harry Potter, either. For most people, you'd be a fool to take Thiel's wager, you'll be safer and happier staying on the safe path. But for a small percentage, it's a hell of an opportunity and an experience, and encouraging this type of risk-taking could produce a lot of benefits for the whole of society, for all the doctors and lawyers and bankers and management consultants and actuaries. Overall, I think that Thiel is probably right, that a lot of our best and brightest are being encouraged to play it too safe, that we're probably squandering a lot of talent pushing really smart kids into safe career paths in management consulting, investment banking, and medicine. And at the same time, I hope he's encouraging these kids to have some backup plans.