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One often hears anecdotes about how successful CEOs / founders / entrepreneurs are college or university dropouts, usually bringing up the same set of examples with one or two CEOs du jour. Most commonly Steve Jobs and Bill Gates, lately also Mark Zuckerberg. When I was in university everyone was using Shawn Fanning as an example (today I'd be surprised if most people knew who he was without looking him up).

For example, Caterina Fake, co-founder of Flickr:

Want to be an entrepreneur? Drop out of college.

Fred Wilson and I, on the way back from an Etsy board meeting, were talking about how many entrepreneurs had dropped out of college. Rob Kalin, Etsy's founder, never finished college. Evan Williams, Biz Stone, Jack Dorsey -- the founders of Twitter -- are not college graduates. Mark Zuckerberg, Facebook founder, is another dropout. And of course Steve Jobs and Bill Gates. As an angel investor, I've invested in two college dropout founders this month. What gives?

Investor John Doerr claimed the same thing (along with a bunch of other stereotypes that don't bear out in real analysis). Particularly suspicious is the claim Sergey Brin and Larry Page "dropped out" of a university, ignoring the degrees they both received before abandoning their Ph.D. program.

To me, this sounds like the normal "rooting for the underdog" story, the same sort that keeps the story of Einstein's (non-existent) mathematical failures alive.

So here's my questions. I think they're all closely related. I am most interested in the IT and science sectors, but if there's more general evidence that's great too.

  • Among founders, have a significant percentage (more than the general population) not achieved a B.A., B.Sc., or equivalent degree prior to starting a company?
  • Are founders without post-secondary degrees more financially successful, on average, than founders with them?
  • Are companies founded by such people more financially successful than the average company?
Community
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    I seriously doubt that the fact of dropping college will make you a better entrepreneur. I would rather see it as a consequence of the fact that the people you mentioned are somehow "out of line" from the general population, hence they may have seen college as something that was restraining them from developing their own projects, for which they had a pretty good plan in mind. They just did not need further education to start up their plans. – nico Oct 02 '11 at 20:32
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    @nico: I'd certainly be surprised to find causation, yes! (And if I found it, the first thing I'd suspect would be that this is a self-fulfilling prophecy.) But even in your proposed scenario, one may find strong correlation (if people who do not have a pretty good plan also do not drop out and start companies, or do so less). That in turn becomes a basis for sounder investment advice. –  Oct 02 '11 at 20:58
  • My guess is that founders who *voluntarily* dropped out of a program and who *went on to be very successful* are, on average, more successful than those who completed the degree and were successful, because if you manage to build up such a profitable business while in school that dropping out is the better solution, you're off to a pretty good start. – Jonas Oct 02 '11 at 21:16
  • @Jonas: That statement is tautological, your claim is people who are "very successful are, on average, more successful than those [who] were successful". –  Oct 02 '11 at 21:21
  • @Joe Wreschnig: Exactly my point. :) If anything, the claim is, IMHO, a case of very biased selection. – Jonas Oct 02 '11 at 21:23
  • @Jonas: The bias that exists in your claim is not found in my questions, as far as I can tell. –  Oct 02 '11 at 21:28
  • @Joe Wreschnig: I wasn't attacking your well-worded question. I was suggesting that the observation leading to the claim was based on biased selection. – Jonas Oct 02 '11 at 21:32
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    You hear about the people who dropped out AND did well. They would have succeeded no matter what. Those who did well were driven and smart. Do they talk about the gazillions of kids who dropped out of school and ended up living in their parent's basements, sponging off mom and dad? About those who end up homeless, without a job or a place to live? Those people are faceless, no more than statistics. –  Oct 03 '11 at 03:46

1 Answers1

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No, it seems the opposite is true. Higher education is correlated with entrepreneurship success.

All the examples you give are of entrepreneurs in the tech industry.

There is a relevant report from the Kauffman Foundation, called Education and Tech Entrepreneurship, May 2008, Vivek Wadhwa, Richard Freeman, Ben Rissing.

This report was limited to U.S.-born tech entrepreneurs, building on a previous report of U.S. immigrants.

We observed that, like immigrant tech founders, U.S.-born engineering and technology company founders tend to be well-educated.

[...]

The vast majority (92 percent) of U.S.-born tech founders held bachelor’s degrees. Additionally, 31 percent held master’s degrees, and 10 percent had completed PhDs. Nearly half of all these degrees were in science-, technology-, engineering-, and mathematics- (STEM) related disciplines. One third were in business, accounting, and finance.

Strictly, I should also present a control group and check for statistical significance, but I think you will agree that 92% of them holding bachelor's degrees (with a sample size of 652 surveyed) is grossly more than the background population of the United States.

The people being interviewed were "chief executive officers and heads of product development in 502 engineering and technology companies established from 1995 through 2005. These companies [...] have more than $1 million in sales, twenty or more employees, and company branches with fifty or more employees." I believe that to be a reasonable proxy for "more financially successful than the average company".

Stay in school, kids!

Oddthinking
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    I'll add this: My education is NOT correlated with my success in *spelling* entrepeneurship. Wait, I mean entreprenuership. I mean entrepreprene... oh, whatever. – Oddthinking Oct 03 '11 at 03:44
  • While driving, I remembered this answer, and had a sudden pang of guilt. "Stay in school, kids!" is not meant to imply that correlation = causation! – Oddthinking Oct 03 '11 at 05:38
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    Not trying to detracting from your answer, however $1 million sales companies aren't the types of companies venture capitalists are interested in (which of course isn't what the question is asking directly, but from the quotes cited it feels like a relevant point to make). VC's are looking for the next billion $$ companies that disrupt the status quo, so perhaps the correlation may be different among that class of entrepreneur. The problem then is that that class of entrepreneur is a much smaller sample size. – Davy8 Oct 03 '11 at 22:58
  • @Oddthinking, Lol, we use [google-autocorrect](http://i.stack.imgur.com/8dakm.png) these days old man. – Pacerier Dec 30 '14 at 01:18