Got degree envy? No worries, you can still make it big.Saturday, October 24, 2009 8:00
An Ivy League degree may get you a job as an investment banker or VC, but it wonâ€™t increase your odds of becoming a successful entrepreneur.
So you couldnâ€™t get into Stanford, Berkeley or Harvard, huh? Donâ€™t sweat it. You can still make it big. Some people might believe that an Ivy League education provides a huge advantage in entrepreneurship. But after researching this over and over again, Iâ€™ve found no such correlation. To the contrary, it seems that those who are born without the silver spoons in their mouths are more motivated to succeed. And those who arenâ€™t members of elite alum societies develop the skills needed to hustle in the rough and tough business world. The Ivy-Leaguers may be able to get their buddies from Sequoia and Kleiner to return emails, but they arenâ€™t going to be any more successful at building companies.
With my affiliations at three of the greatest universities in the world (Harvard, Berkeley, and Duke), I know Iâ€™m going to take a lot of flak for this piece. (Yes, I know that Berkeley and Duke aren’t Ivy League — but they are in the “elite” category). Itâ€™s not that I havenâ€™t been trying to find the good news. Iâ€™ve done three big research projects on entrepreneurship. Each of these reached the same conclusion about education and entrepreneurship: What makes entrepreneurs successful is the education, not the school. Itâ€™s the same in India and China. Indiaâ€™s IITs and Chinaâ€™s Fudan University (their “Ivy League” schools) donâ€™t hold any monopoly on graduating tech stars.
In the first research project, we looked at the background of 317 immigrants who started tech companies. We were surprised to learn that Delhi University graduated twice as many Silicon Valley company founders as did IIT Delhi. And that both Osmania and Bombay University trumped nearly all of the IITs. Chinaâ€™s Tianjin University and Shanghai Jiao Tong University graduated more founders than Fudan or Tsinghua.
These were immigrants, and we werenâ€™t sure if it would be the same with American schools. So we looked into the educational background of American tech company founders. We found that the 628 U.S.-born tech founders we surveyed received their education from 287 unique universities. Almost every major U.S. university was represented. The top ten institutions in this group accounted for only 19 percent of the entire sample. In other words, 81% of the tech company founders came from â€œregularâ€ schools. To make my colleagues at Harvard feel better (and to keep my job), Iâ€™ll acknowledge that the Ivies represented 8% of the sample even though those schools only graduate 1.6% of American students.
Then we broadened our research and looked into the backgrounds of the founders of 549 successful businesses across a set of high-growth industries. The proportion of Ivy-Leaguers was even smaller (about 6% of the sample). We also found that MBAâ€™s tended to start companies sooner after graduation (13 years) than bachelors degree holders (17 years). And both these groups were quicker to the startups than PhDâ€™s â€“ who typically waited 21 years from the time they graduated to start their ventures. Thatâ€™s right, tech company founders arenâ€™t spring chickens. Also, we found that Computer Science/IT grads were faster than MBAâ€™s (13 years vs. 15 yrs) and the applied science majors (20 years).
The most interesting findings however were the difference between those who had college degrees and those who never even got a sheepskin. The average sales revenue of all startups in one of our samples was around $5.7 million, and these companies employed an average of forty-two workers. Startups established by tech founders with Ivy League degrees had average sales and employment of $6.7 million and fifty-five workers, respectively. The success of these two groups markedly contrasted with startups established by tech founders with only a high school degree. Those founders had average revenues and employees of $2.2 million and eighteen, respectively. (Sorry, Bill and Steve). In other words, it didnâ€™t matter so much if you graduated from an Ivy. What made the greatest difference was having a higher degree.
Company founders also value their education. In a paper which the Kauffman Foundation will release on Nov 17 (during Global Entrepreneurship Week), we report that 70.3% said their university education was important. Ivy League graduates valued their education even more, with 85.7% indicating this was important. Surprisingly only 18.8% believed that university or alumni networks were important. Of the Ivy graduates, 28.6% ranked these networks as important.
To be fair, an Ivy League education does provide other advantages. An Ivy degree makes it much easier to become an investment banker at Goldman Sachs (is that a positive these days?), a venture capitalist (most are elite school grads) or a powerful attorney. It probably makes it easier to become a professor, as well. And, as my research shows, it may confer a slight advantage to entrepreneurs. But not enough of an advantage to make any real difference in the equation. So, Mom and Dad, save your dollars. High school juniors, save your tears. Ivy Leaguers, check your ego at the door. What makes you good is what and how you learn, not the name on your framed diploma.
Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.
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