http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/


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Peter Thiel: We're in a Bubble and It's Not the Internet. It's Higher Education.


SARAH LACY
posted on Sunday, April 10th, 2011268 Comments
Fair warning: This article will piss off a lot of you.

I can say that with confidence because it’s about Peter Thiel. And Thiel – the PayPal co-founder, hedge fund manager and venture capitalist – not only has a special talent for making money, he has a special talent for making people furious.

Some people are contrarian for the sake of getting headlines or outsmarting the markets. For Thiel, it’s simply how he views the world. Of course a side benefit for the natural contrarian is it frequently leads to things like headlines and money.

Consider the 2000 Nasdaq crash. Thiel was one of the few who saw in coming. There’s a famous story about PayPal’s March 2000 venture capital round. The offer was “only” at a $500 million-or-so valuation. Nearly everyone on the board and the management team balked, except Thiel who calmly told the room that this was a bubble at its peak, and the company needed to take every dime it could right now. That’s how close PayPal came to being dot com roadkill a la WebVan or Pets.com.

And after the crash, Thiel insisted there hadn’t really been a crash: He argued the equity bubble had simply shifted onto the housing market. Thiel was so convinced of this thesis that until recently, he refused to buy property, despite his soaring personal net worth. And, again, he was right.

So Friday, as I sat with Thiel in his San Francisco home that he finally owns, I was curious what he thinks of the current Web frenzy. Not surprisingly, another Internet bubble seemed the farthest thing from his mind. But, he argued, America is under the spell of a bubble of a very different kind. Is it an emerging markets bubble? You could argue that, Thiel says, but he also notes that with half of the world’s population surging to modernity, it’s hard to argue the emerging world is overvalued.

Instead, for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

Thiel isn’t totally alone in the first part of his education bubble assertion. It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.

Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one thing you can’t wriggle away from by declaring personal bankruptcy, says Thiel. “It’s actually worse than a bad mortgage,” he says. “You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future.”

But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status. In education your value depends on other people failing. Whenever Darwinism is invoked it’s usually a justification for doing something mean. It’s a way to ignore that people are falling through the cracks, because you pretend that if they could just go to Harvard, they’d be fine. Maybe that’s not true.”

And that ripples down to other private colleges and universities. At an event two weeks ago, I met Geoffrey Canada, one of the stars of the documentary “Waiting for Superman.” He talked about a college he advises that argued they couldn’t possible cut their fees for the simple reason that people would deem them to be less-prestigious.

Thiel is the first to admit some of this promised security is true. He himself grew up in a comfortable upper-middle-class household and went to Stanford and Stanford Law School. He certainly reaped advantages, like friendships with frequent collaborators and co-investors Keith Rabois and Reid Hoffman. Today he ranks on Forbes billionaire list and has a huge house in San Francisco with a butler. How much of that was him and how much of that was Stanford? He doesn’t know. No one does.

But, he argues, that doesn’t mean it’s not an uncomfortable elitist dynamic that we should try to change. He compares it to a world in which everyone was buying guns to stay safe. Maybe they do need them. But maybe they should also examine some of the reasons life is so dangerous and try to solve those too.

Thiel’s solution to opening the minds of those who can’t easily go to Harvard? Poke a small but solid hole in this Ivy League bubble by convincing some of the most talented kids to stop out of school and try another path. The idea of the successful drop out has been well documented in technology entrepreneurship circles. But Thiel and Founders Fund managing partner Luke Nosek wanted to fund something less one-off, so they came up with the idea of the “20 Under 20″ program last September, announcing it just days later at San Francisco Disrupt. The idea was simple: Pick the best twenty kids he could find under 20 years of age and pay them $100,000 over two years to leave school and start a company instead.

Two weeks ago, Thiel quietly invited 45 finalists to San Francisco for interviews. Everyone who was invited attended– no hysterical parents in sight. Thiel and crew have started to winnow the finalists down to the final 20. They’ll be announced in the next few weeks.

While a controversial program for many in the press, plenty of students, their parents and people in tech have been wildly supportive. Thiel received more than 400 applications and most were from very high-end schools, including about seventeen applicants from Stanford. And more than 100 people in his network have signed up to be mentors to them.

Thiel thinks there’s been a sea-change in the last three years, as debt has mounted and the economy has faltered. “This wouldn’t have been feasible in 2007,” he says. “Parents see kids moving back home after college and they’re thinking, ‘Something is not working. This was not part of the deal.’ We got surprisingly little pushback from parents.” Thiel notes a handful of students told him that whether they were selected or not, they were leaving school to start a company. Many more built tight relationships with competing applicants during the brief Silicon Valley retreat– a sort of support group of like-minded restless students.

Of course, if the problem Thiel sees with the higher education bubble is elitism, why were so many of the invitees Ivy League kids? Where were the smart inner-city kids let down by economic blight and a failing education system of a city like Detroit; the kids who need to be lifted up the most? Thiel notes it wasn’t all elites. Many of the applicants came from other countries, some from remote villages in emerging markets.

But the program has a clear bias towards talent, and like it or not, talent tends to be found in private universities. Besides, he’s not advocating that stopping out of school is for everyone any more than he’s arguing everyone should be an entrepreneur. But to start a new aspirational example– an alternative path– it makes sense to start with the people who have all the options. “Everyone thinks kids in inner-city Detroit should do something else,” Thiel says. “We’re saying maybe people at Harvard need to be doing something else. We have to reset what the bar is at the top.”

That hints at another interesting distinction between the housing bubble and the education bubble: Class. The housing bubble was mostly a middle-class phenomenon. Even as much of the nation was wrapped up in it, there was a counter narrative on programs like CNBC and in papers like the Wall Street Journal pooh-poohing the dumb people buying all those condos in Florida. But with education, there’s barely any counter-narrative at all, because it is rooted in the most elite echelons of the upper class.

Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years is so threatening to a lot of the people who have the biggest megaphones to scream about it. “The people who are the most critical of this program are the ones who are most complacent with where the country is right now,” he says.
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Jon Bischke · San Francisco, California
The challenge higher education is going to face is that the signaling mechanism that higher education provide (i.e. you were good enough to get into Harvard so you're good enough to work for Goldman Sachs) is going to become de-coupled from the institution's ability to impart knowledge on people. A few decades ago, most of what you needed to learn to be productive in society was best learned at a university. Today, most of the what you need to learn to be productive in society is best learned on your own, online, for free. There are exceptions but 99% of human knowledge is no longer locked up within a university.

Contrast that with the cost of higher education.To go to UCLA as an out-of-state student it now cost $50K/year (http://www.admissions.ucl​a.edu/prospect/budget.htm)​. And that's a *public* school. And it's rising 8% a year...See More
207 · Like · Reply · Subscribe · April 11 at 2:15pm

Jon Bischke · San Francisco, California
BTW, if my math is correct, the entire amount spent on the Thiel fellowships ($2 million) is the equivalent to what Americans spent on higher education every *two minutes*. Interesting perspective eh?

(~$500 billion/365/24/60 = ~$1 million/minute).
35 · Like · Reply · April 11 at 2:27pm

Akshay Bhat · Cornell University
Universities are examples of Theory of the firm. If you do separate different components that a university/university education provides, you will end up with higher net transaction costs.

Second if people can get someone else to write essays, they can game Stackoverflow or Github in no time. However you can guarantee that an MIT/Stanford alum has some minimum skills. Y Combinator is out of question since it is extremely small in scope and thus is not a credential.
3 · Like · Reply · April 11 at 5:06pm

Nicholas Paredes · Principal at Mind x Motion
Interestingly, the firms that refuse to hire accelerate these issues. Said firms then look for experience in completing projects rather than qualifications per se.

The value chain tends to disregard that which does not represent actual value.
7 · Like · Reply · April 11 at 10:02pm
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John Lin · Duke University
In general, I agree with some of the sentiment, but creating a great university is not something as easily scalable as an Internet service. Creating a hundred Harvard's would not be so easy.

Unfortunately, in the United States, a "great" education is increasingly becoming more and more expensive, even within the University of California system. Where you go to school is increasingly becoming more of an indication of class as well as smarts & hard work. I think the real issue at hand is why isn't higher education being funded better so that cost is not the issue, but rather ability and fit?

I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc...
88 · Like · Reply · Subscribe · April 11 at 1:24pm

Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
"I've always found it ironic that Larry & Sergey went to Maryland and Michigan for undergrad (which are great public schools), yet feel they need to selectively hire from the Ivy League, Stanford, Caltech, MIT, etc..." -- I think there is actually a very good reason for this. People from Ivy League schools make the best slaves - they have perfected the art of following instructions from other people.
230 · Like · Reply · April 11 at 3:18pm

David Wu · Top Commenter · Online Marketing at Home Care Assistance
it's a bit funny that you mention this. i also feel that their sense of entitlement diminishes their ability to reach the levels of success they dreamed of as kids. huge success in tech has largely been done by those who have not come from the Ivy Leagues, minus the Zuck. you have companies like PayPal, eBay, AdMob, Groupon -- all of which weren't created by products of the Ivy Leagues. i went to Cal, and if I were building a company, i likely wouldn't default to my alma-mater for talent, simply based on what you've mentioned above. I have this idea that those from Ivy Leagues are conformist and traditionalist -- primarily exploring traditional avenues to achieve success, status, and wealth, while entrepreneurship is largely left to the rest of us. major investment banks and consultancies such as goldman sachs and mckinsey help reinforce this as well, by hiring primarily from the ivy leagues... leaving the rest of the other talent to do other things with their lives, like starting their own companies.
21 · Like · Reply · April 11 at 5:50pm

David Carter · Charlotte, North Carolina
Yea good idea on selection because working from the top to bottom has been working out so well for the majority of Americans.
11 · Like · Reply · April 11 at 6:23pm
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Douglas Pearson · Seattle, Washington
I'm not quite sure how we stretch from "Ivy League schools are over valued" to "Higher education is over valued". If you ask the fundamental question - why should a person in the US be paid more than a person in developing country X, the answer used to be that folks in the US were more productive. That productivity partly comes from the person and partly from the society. But with developing nations catching up in terms of infrastructure (internet access, dependable power grids, good transportation systems etc.) the only long term reason for a person in the US (or any nation) to be higher paid is if they are better "educated".

That education can certainly come from many places - e.g. being exposed to a silicon valley start-up culture at 18 could be a great education. But higher education in a college is also a solid investm...See More
50 · Like · Reply · Subscribe · April 11 at 3:00pm

Andrei Ion
There will never be the same income all over the world. Some countries innovate more, build smarter products and gain a momentum. It always happened (not to long ago ago those who were able to build a better ship had the biggest empires and there are many similar examples). You may argue that education leads to innovation but I don't know if that's true...
2 · Like · Reply · April 11 at 4:50pm

Toni Aničić · Marketing Manager at Inchoo d.o.o.
I think that was exactly the point Thiel was trying to make. Ivy league gets to pick the most talented kids, and the most talented kids come out of them regardless of what they learned (or missed).

That would explain why his companies continue to employ Ivy league graduates. What he's trying to achieve is show these smart kids that Harvard might not be the best way to spend their time and money.
9 · Like · Reply · April 11 at 6:13pm

Alnisa Allgood · Madison, Wisconsin
I, for one, would have to say that all higher education is over valued. A bachelor's degree has little more value than a high school diploma if you compare it to 20+ years ago. There are a number of fields that request/require a Ph.D for work, that a HS diploma and 2yrs experience or an Associate Degree use to be perfectly viable for.

This type of degree inflation, means that education is closer to 'time served' than actual learning. When you can go to university for 4-6 years and come out with almost no practical experience in your field. Unless you received an internship or just started working due to being personally compelled, many people graduate from higher education with very little skill.

Now personally, I consider university about learning, so I don't care about the skills and experience that much. I feel like that's where self-motivation (getting a job or going at it on your own) and apprenticeship come in hand. It's not that I don't believe that people shouldn't go to college or university; I just don't believe they should tie their going to their earning potential.
59 · Like · Reply · April 11 at 10:18pm
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Terry Kleeman
This article is tremendously naive. The reason why elite schools are valued has little to do with their curriculum. It is because they are the most selective schools in the US and have the brightest students. The students of Tokyo U., Peking U., Seoul National, National Taiwan U., and Cambridge are the same. They are the brightest in their countries. Lots of people think that hiring the brightest is an obvious path to success. America today has a prejudice that says intelligence does not matter. Once we are totally overtaken by the Chinese, perhaps we will rethink this prejudice against learning. The citizens of any of these states, our primary competitors, would be appalled if someone who rejected evolution, the basis of all modern life sciences, was elected to national office. We have an entire political party, now co...See More
39 · Like · Reply · Subscribe · April 11 at 4:07pm

Rachel Rodgers · Owner/Attorney at Rachel Rodgers Law Office
Spoken like a person who does not have $200,000+ in educational loans and no job or a job that does not provide means to deal with that debt. I get your big picture view but how can you expect individuals to give a damn about the big picture when they are drowning in debt from their illustrious educations, their job prospects are weak at best and they can't afford rent or health insurance?
43 · Like · Reply · April 12 at 12:09am

Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Perhaps Kleenman is the one tremendously naive. Talent is not exclusive to Ivy League schools. Obviously. The Ivy Leagues at Goldman Sachs do not drive our economy, they're the worker bees that have been sensitively conformed. Haven't you noticed that the talent that actually start paradigm shifting companies don't go to Ivy League schools (minus Zuck)? Half of the people who work at Github don't even have college degrees.
21 · Like · Reply · April 12 at 1:12am

Tom Costin
Professor, you have created a false equivalence between intelligence and learning. In addition to this, you have presented false results to your own questionable litmus test of ignorance (also not associated with intelligence.) Voting "anti-" evolution does not equal being anti-evolution. Roman Catholics have no dogmatic opposition to evolution and there are many of them in both parties. Having said that, politics and staying in power rule over personal conviction. Expanding on this, if an elected representative holds views in favor of evolution contrary to his electorate, whose views should he vote?
16 · Like · Reply · April 12 at 3:47am
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Nathan Colquhoun · Sarnia, Ontario
This is an excellent article, thanks for writing this. I've been following the education system for a while as of late and I find myself more and more frustrated as education ends up getting solely defined by a capitalist system. Everyone is there for a promise of a good career making lots of cash. I never went to university for a job, I went because I wanted to be in that kind of learning environment. I got a degree in religious studies, then started a web design firm. I never regret going to school, it was never for me a place to prepare me to be a good capitalist citizen, I just liked learning like that. I would do it again for my masters, and what I learn in school will probably have no connection to how I make money. When a societies only dream is to make cash though, you end up having education systems that sell that and pushing out as many people as possible because really, that's all they care about too.
33 · Like · Reply · Subscribe · April 11 at 1:05pm

Isaac Elias · Top Commenter · CSU Monterey Bay
In high school I realized that the public education system (as I knew it) was built around a religion of capitalism.

The underlying motivation for all imperatives was this: "You can get a good job and make good money." Sometimes it was preceded by "You can get good grades" or "You can get in to a good school." but the end goal was always a good job and good money.

Can't we aim children toward something higher?
19 · Like · Reply · April 11 at 1:49pm

Sholto Ramsay
With a debt of 250k... you HAVE to get a good job!
9 · Like · Reply · April 11 at 5:21pm

Jason Bauman · Top Commenter · Indiana Wesleyan
Isaac, we can't aim for something higher until as a culture we value eduction as a goal and not just a tool to get to something better. This isn't about capitalism or socialism. Being "Educated" isn't valued by default in either system. In fact, both systems taken to the extreme bank on the population as a whole being uneducated, except for in small groups.
10 · Like · Reply · April 11 at 11:16pm
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Brian Walker · Program Intern at Montgomery Countryside Alliance
I think the author, and perhaps Mr. Theil, have missed the mark on this prediction. There is an education bubble, but it's not the ivy leagues that are the most over valued. It's the second tier and lower colleges. The majority of colleges in the United States have academic standards that are lower than what our students should be capable of when graduating high school. There are many stories of students entering a four year institution and having to be taught the most basic of skills in communication, composition and mathematics. Colleges are full of students who go merely because their parents tell them to, because they seek the social opportunities provided by living on campus or because they believe the piece of paper they receive is going to open doors for them. The original intent of colleges and universities, to discover ...See More
31 · Like · Reply · Subscribe · April 13 at 9:24am

Desha DeVor · Works at Diversified
Duh.
1 · Like · Reply · April 13 at 6:14pm

Dwight Fisher · Works at Rocket Reuse Book Reseller
That's subjective?
Like · Reply · April 15 at 9:25pm

Trevor Gilbert · American School of Madrid
After intense pressure from Ms. Lacy here (okay, one tweet), I'm posting my question to the masses. Specifically with the hopes Thiel will respond.

According to his definition of a bubble, isn't democracy itself a bubble? Seems to me that people buy into democracy as a gut reaction, then if anyone challenges democracy in the slightest, they cry foul and call you a communist/monarchist/total​itarian. Over-valued? Check. Intense belief? Check. Bubble? Looks that way.

Thoughts?
31 · Like · Reply · Subscribe · April 11 at 1:13pm
alexandermilan (signed in using Yahoo)
That is an interesting idea, but you have to remember that the definition of democracy is loose. China's interpretation of democracy is much different than that of the US, equally so is Iran's, and so on. I think democracy is too broad a concept to pin a bubble to.

However, the US's definition of democracy is rooted, in part, in the free-market system, which is at minimum the creator of bubbles, if not a bubble itself. The free-market system involves some high risks that can collapse the entire system, as the mortgage crisis nearly accomplished.

Say what you will, but China's version of democracy will likely keep it economically secure over the next few decades.
2 · Like · Reply · April 11 at 2:11pm

Raoul Alwani · Tufts
Over-valued? Hardly. Maybe by the sniffy intellectual elites of European and American liberal-arts schools, but spend any amount of time outside in the real world and you hear people clamouring for representation and institutional checks-and-balances that help ensure there is an outlet for their interests and concerns.

Democracy doesn't just mean elections. Democracy in the Locksian definition is a system where individual freedoms are protected under a series of institutions that don't just mean the ability to vote. It is this system that has allowed the Western world, especially America, to flourish, and it is a system that many others around the world are dying to have. It is certainly not "over-valued".
31 · Like · Reply · April 11 at 2:42pm

Gavan Woolery · Top Commenter · CTO at Appstem Media LLC
@ Trevor - You are proposing a special type of fallacy. If I told you that my definition of a square was something with four sides, and that squares were ugly, you might say, "Hey, rectangles have four sides, by your definition aren't rectangles ugly?" Just because things share common properties does not mean a conclusion about one applies to another. Thiel's definition might not be specific enough, but that does not mean it is invalid... :)
22 · Like · Reply · April 11 at 3:08pm
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Isaac Elias · Top Commenter · CSU Monterey Bay
As one of who is struggling to grab that all-important piece of paper declaring that I'm worthy of consideration for a job (Bachelor's), I am completely on-board with Thiel's message.

I've found that the knowledge sold to their "customers" is given away for free via the Internet. As a Business major, I find that the information that I can get through my Twitter feed and Hacker News is more valuable and more actionable than what I'm getting in my classes.

As public universities in California struggle to stay afloat, we have to ask ourselves, where is all of this money going? To inefficiencies of an outdated system. There is a revolution building steam. My hope is that it can retool the system before my daughters enter it.
20 · Like · Reply · Subscribe · April 11 at 1:28pm

Dan Zhang · Austin, Texas
This is true for business, but is not true for most majors (an obvious exception is Computer Science).
1 · Like · Reply · April 12 at 9:13am

Jason Yoakam · Columbus, Ohio
I disagree. There are many resources on the internet available to teach one computer science. This whole topic, however, seems a little dated considering we have had free information in the form of public libraries for a very long time now. The true issue isn't the availability of information. The true issue is the availability of institutions that can format that knowledge and put into a cohesive structure that is easy for somebody to learn. I don't know about you guys, but I certainly couldn't undertake a full-time study regimen for four straight years without the encouragement or structure of a University.
11 · Like · Reply · April 12 at 10:37am

Will Steward · Warwick
How much of that 4 year study regimen would you use in your career though? You're taught a degree with the intention if it being applicable in countless different careers. If you know you want to (e.g. be a web developer, or database designer, or whatever it is) then you can focus your learning towards that area - without the need for studying non-stop for 4 years. As part of my degree I'm learning a load of stuff that I'm 99% confident will never be useful. You can't compare a public library to the resources available on the internet either - you couldn't google something and instantly find hundreds of relevant resources about what you want to know.
2 · Like · Reply · April 14 at 12:47am
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Duff McDuffee
College is too expensive, negatively competitive, and disproportionally benefits elites. So let's give elites money and encourage them to drop out!

How does this solve the problems of privilege, of the cost of education, of power differentials between rich and poor or underclass vs. overclass, of competition, or worst of all, of uneducated masses lacking critical thinking skills attempting to participate in democracy?

It seems to me this perpetuates every one of these problems, rescuing only 20 young people, 20 people for whom if this plan fails they can continue their studies at Stanford and be no worse off.
15 · Like · Reply · Subscribe · April 12 at 2:07am

Marina London Lcsw Ceap
In 2006, I wrote the following:
There is a way out of the college bind.

I am turning 50 this year and this is what I have observed:

...See More
12 · Like · Reply · Subscribe · April 12 at 1:51am

Martin Shen · San Francisco, California
I plan to write a blog post about this later but I'm starting to think that the term "College Drop out" has started to become more valuable than "College Graduate." This may not be true right now but in 5 years when today's 25 year olds are hiring, the term may be more valuable.
12 · Like · Reply · Subscribe · April 11 at 2:15pm

Peter Epstein · New York, New York
That's slightly delusional. Hiring a college drop out is much different than dropping out of college and starting your own company. If you're an employer, and you have the option of a college drop out or a college graduate, what incentive do you have to pick the drop out? This is true for not only the usual reasons people drop out (i.e. drugs), but even if they dropped out to start their own business. That means that not only could they not finish college, but that also means that they couldn't succeed at starting their own business either, hence the reason they're looking for a job. Overvalued or not, a college degree will not be less valuable than a college drop out, at least in the eyes of an employer. Sorry to burst your bubble.
4 · Like · Reply · April 13 at 1:36am

Martin Shen · San Francisco, California
While I agree that the majority of college dropouts are not for business/entrepreneurship,​ a failed business venture is worth a lot more than none at all. That is to say, I am much more interested in a student who dropped out to pursue his/her business regardless of its success. Dropping out for a startup suggests an entrepreneurial mindset.
3 · Like · Reply · April 13 at 2:01am

Chris Painter · Product Manager at Comcast
While dropping out and attempting to start your own business may suggest an entrepreneurial mindset, even if they failed. It doesn't prove that they possess any particular skill that may be valuable to me as an employer. Perhaps part of the reason their business failed was because they were a crappy programmer or a horrible problem solver.
3 · Like · Reply · April 13 at 12:32pm
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Usman Gul · Contributor at The Business Insider
I have a feeling Thiel will do more harm than good. What about all the drop-outs who fail to launch successful companies, or fail to secure high-end jobs? Congrats to them on wrecking their careers.

Many top consulting firms couldn't care less whether you're a Philosophy major or an Econ major. So why do they still require your transcript when you apply for an internship or a job? because grades in college are reflective of your aptitude for learning, and that's something of immense value in the job market at least for fresh graduates.

I agree that college education may be a waste of time for many budding entrepreneurs or programmers, and there is no doubt many of them will be successful. But it might also be a good idea to write a paragraph or two about the risks inherent in such a decision.
11 · Like · Reply · Subscribe · April 11 at 4:19pm

Jason Bauman · Top Commenter · Indiana Wesleyan
But those grades only matter if whoever is hiring you understands how that school grades. Some schools base on a "rubric" type system. Such as, you show x in your work, you get y grade. Other's make it impossible to get a 4.0 unless you exceed what the professor believes you're capable of.

Still others are trying to force their professors to adopt a "Quota" like system, so that only a select few get an A while the majority are curved to a C.

Assuming the SAME individuals and same talent/work ethic their grades could be dramatically different (It doesn't matter if everyone in the last example has a genius level IQ, only a select few are given the A, no matter the quality of their work)

Unless the HR department knows how a given school grades, and furthermore, knows the quality of the education at that school, basing who they hire on GPA is leaving a lot on the table.
4 · Like · Reply · April 11 at 11:12pm

Mason Wong
Usman, failed startups are a badge of honor in Silicon Valley. It is often cited that the tolerance for failure, which allows for true innovation, is what sets apart Silicon Valley from other high tech commercial regions around the world. A failed startup certainly helped my career. It's hardly a career wrecking milestone, but a career advancing one.
6 · Like · Reply · April 12 at 12:11pm

Usman Gul · Contributor at The Business Insider
@Jason- you're quite right about how GPA can be misleading. I, too, wish there was some other measure that would be more accurate at capturing the potential in students.

@Mason- I am aware of that, and thats actually one of the prime reasons why I feel so attracted to the Valley. However, for someone who drops out of college (and has few credentials in the job market), repeated entrepreneurial failures can lead to troubles in paying the bills which may be more discouraging than anything else. If I fail, I'll get a job for a year or two and figure out what idea to work on next. If a college drop-out fails, he may not have that option. Thats exactly why I'm not a big fan of this article.
1 · Like · Reply · April 12 at 1:03pm
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Michael Burshteyn · Top Commenter · Atlanta, Georgia
The bubble is in law school.
11 · Like · Reply · Subscribe · April 11 at 9:02pm

Kavin Mickey Asavanant · Lecturer at CBSChula
I really wish that there is at least one kid from Thailand participating in this event. Wonderful Peter for doing something different!
10 · Like · Reply · Subscribe · April 12 at 12:42pm

Evan G. Kontras · Columbus, Ohio
[Like if you Agree].

I guarantee that each of Theil's 20 under 20 prodigies will have at least TWO traits in common:

1. a disgusting work ethic.
...See More
9 · Like · Reply · Subscribe · April 12 at 1:38am

Justin Card · Top Commenter
1. These kids are competing for one of the 20 slots: They've already displayed good work ethic.
2. Surely, the nose to the grindstone startup environment teaches one more about reality than a frat house.
3 · Like · Reply · April 13 at 10:24pm

Catherine Ann Fitzpatrick · Top Commenter · University of Toronto
He's right. The next bubble to burst and the next big harm to the economy will be the collapse of the educational loan sector and the educational loan recipients. There are more reasons than what Thiel cites: the outrageously easy money there is to be had merely by saying you're a student and by going even to just a few classes and then flunking out. Just like the NINJA mortgates, way too many undeserving people who can't even read and write get these loans and grants; way too many people never pay back these loans. Those who have the largest ones and go to the most prestigious schools might have a shot at paying them back and might in fact struggle to pay them, but there are hordes not doing so and defaulting and neither the states or the private sector can do a thing about it due to unemployment. It's the next big crater in t...See More
8 · Like · Reply · Subscribe · April 12 at 4:28am

Barbara Saunders · Top Commenter · Stanford
I agree that there are many people who do not have the raw stuff to succeed in college. I think it is actually a more radical statement to say that some of us who did succeed in college might have chosen another path. No one wants to talk about how many high-prestige, high-skilled, high-pay jobs suck so much that their occupants are taking psych meds and having heart attacks!
1 · Like · Reply · April 24 at 4:17am

Peter Corbett · CEO at IStrategyLabs
Consider this: if programs like Peter's 20 under 20 get to scale - and each year the best and the brightest under 20 start companies instead of going to college, how fast will their lesser brilliant friends follow? How long until "only the dumb kids" go to college. This bubble could be popped in 5-10 years IMHO and Peter is right.
7 · Like · Reply · Subscribe · April 12 at 6:47am

Raymond Schillinger
When the education bubble bursts, it's going to be one heck of a mess. Hot off the press from the NY Times: http://www.nytimes.com/201​1/04/12/education/12colleg​e.html?_r=1&smid=tw-nytime​s&seid=auto
Like · Reply · April 12 at 6:53am

Sarah McCue
Tell me what you learned in your university education. Your top ten most highly valued take aways?
1 · Like · Reply · April 12 at 7:41am

Leslie Jump · St. John's College MD
You know, there is another point to education. At it's best, it doesn't teach you how to make a living, it teaches you how to live.
5 · Like · Reply · April 12 at 9:31am
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Justin Wu · Top Commenter · Washington
As a student myself, and an entrepreneur putting together my startup, I'd rather invest money and risk myself in my startup.

Investing into this 'self-imagined' degree papers, while loaning a massive amount of money is NO different than to have attempted to run with a startup.

It all comes down the individual. Do they have what it takes to fly or die.

I would say that my college education thus far has been somewhat beneficial, I however, do not feel it was worth tall the money I spent into it though. I think I could have recieved education elsewhere for the equivalent knowledge.
7 · Like · Reply · Subscribe · April 11 at 7:23pm

Mason Wong
Fascinating. I firmly believe there are misguided hiring managers in Silicon Valley who overemphasize which college the candidate has graduated from, in making a hiring decision.
7 · Like · Reply · Subscribe · April 11 at 1:07pm

Dee Dee Mendoza · Smith
for real. Check this out: http://chronicle.com/blogs​/percolator/brown-and-corn​ell-are-second-tier/27565.​ It's a summary of interesting rsch on 'Credentialism in the Labor Market' from Asst Prof Lauren Rivera at Northwestern.
Like · Reply · April 11 at 2:39pm

Steven Gaffagan
1 word: overpopulation
5 · Like · Reply · April 11 at 3:03pm

Geneviève du Lac · Top Commenter · Bug Hunter at Omnig3n
Hiring managers don't have to work with the people they hire. I've seen PhD's with glorious resumes unable to sharpen a pencil. I prefer to collaborate w a team of "let's get this done anyway possible, in the most efficient way possible" instead of the "this is not the way I do it/suppose to do it" thinking.
8 · Like · Reply · April 12 at 1:39am
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Brooke Kelley · Postdoctoral Fellow at University of Minnesota
I think this issue can be distilled to a question of the Return On Investment. Over the last 15 years the cost of post secondary education has grown to no longer offer the return that it once did. This is imbalance is similar to housing but consequences are vague. The issues of prestige and elitism are likely relevant to a small segment of the population affected by this education bubble. Current students need to ask new and different questions before making these important investments. They'll need sensible help and there is a shortage of that.
6 · Like · Reply · Subscribe · April 15 at 12:30am

Walt Schlender · University of Washington
It's interesting that people see the degree as the thing that a University provides. In my experience, the way people learn is by immersing themselves in (or creating) an environment that can teach them the skills they need. You see this philosophy applied systematically in Montessori schools, but once we leave school this form of learning becomes the main one we have.

It seems to me that Universities can provide good learning environments - especially if those learning environments include lots of other brilliant students, but that many of the universities have lost focus on providing these environments in favor of providing a valuable degree, which makes the education received even less valuable than alternatives (like getting a job in a field that's interesting). If a person is trying to learn a new skill there are always lot...See More
6 · Like · Reply · Subscribe · April 12 at 2:33am

Shelley Schlender · Boulder, Colorado
Greg showed me this about the same time you sent it! Like you were on the same wavelength . . .
Like · Reply · May 6 at 10:03am

Marin Brennan · RISD
hello Walt, check this out. this webpage is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/s​hoitut?eeyekncj84825518
Like · Reply · May 17 at 8:19am

Marin Brennan · RISD
hello Walt, check this out. this website is messing up right now and theyre sending out free apple ipads. http://apps.facebook.com/s​hoitut?fdkbkthp66011094
Like · Reply · May 17 at 8:21am

Dave Fry
It's a vicious circle. To get a good job, box checkers look for college degree. If none, you're out as an applicant. Colleges know this and this is why so many exist and can rip you off. The vast majority just rehash what you should've or did learn in HS. (This is why students can party vs learn.) Parents naturally want the best for their kids and insist they go to colleges. And, colleges know this too, so it's a rigged deal overall.

We live in a small town with a small liberal arts college with enormous fees and low academic standards. Taking advantage of this rigged game is their raison de etre!
6 · Like · Reply · Subscribe · April 12 at 7:59pm

Dave Fry
Not necessarily mentioned is the vicious circle of would be employer box checkers who look for "college degree"? Y/N? If N...you're out. Parents & colleges know this naturally and take full advantage. In our little town there's a liberal arts college w/ low admission standards and ultra-high fees. Students party at many schools b/c most are just a rehash of HS courses. Then there's student loans which of course are another issue. It's a costly joke.
1 · Like · Reply · April 12 at 8:11pm

Johny Miric · Top Commenter · Hamburg, Germany
Current education is too slow, by the time you finish your university, which is 4-5 years, the world is totally changed, jobs are shifting, industry is reshaping... and you find yourself with a skill which nobody wants or it requires big upgrades in knowledge and experience to become useful. We need new type of education which would be focused more on general values like health, mental stability, emotional balance, creating relationships, getting ideas... while actual job skills you learn on the side, keeping yourself aware of the world around and adapting yourself in any given moment. Spending 20 years of your life to learn one skill is becoming old fashioned, we have to learn several skills during our life and those who are not able to re-qualify themselves from time to time will find that is very difficult to be creative.
6 · Like · Reply · Subscribe · April 11 at 5:02pm

Veronica D. Corcoran
defenitely
Like · Reply · April 14 at 1:09am

Jules Miller · Chicago, Illinois
I think this article is SPOT ON! I'm a big supporter of education (having been a high school teacher and administrator now building on an education-focused startup) but I agree 100% that many kids are spending grotesque amounts of money to gain a sometimes-imagined benefit from higher education. The problem isn't Thiel's program. The problem is that it's considered extraordinary. If kids had access to this kind of experience or had curriculum that forced them to think in this space, they'd be better able to evaluate the pros and cons around higher education for themselves as opposed to blindly walking the "higher ed" plank only to end up back at home having discerned no benefit beyond having to think through one less wall decoration.
6 · Like · Reply · Subscribe · April 11 at 1:36pm

Erica Mason · Wild Cat of Creative Direction at Hired Guns :: Creative
I couldn't agree more.

I'm a community college drop-out, but have been working in a lucrative industry for the last five years and have recently made the jump into entrepreneurship. Like so many, I have found my calling, learned enough to get me started and through hard work, have made something out of nothing.

Fortunately, I work in an industry that is based on the quality of work rather than the degree on the wall. I was lucky enough to know early on what I wanted to do and was able to go after it with the drive and determination that most 18-year-olds apply to earning beer money and chasing tail. Don't get me wrong, I was multifaceted in my interests.
...See More
8 · Like · Reply · April 12 at 3:13am

Jacob Tessone · Yeshivah Of Flatbush
Alas, not everyone can follow in your footsteps, leading back to the same point brought up earlier: how many 20 under 20 programs can be made before "only the dumb kids" are the ones going to college? Not everyone can handle an unconventional, if even spontaneous path like yours. Regardless, it seems wonderful how it worked out for you.
Like · Reply · April 13 at 10:23am

Justin Card · Top Commenter
"I'm sure my grammar would be better."

That's the perfect summary for how I feel about college.
1 · Like · Reply · April 13 at 10:16pm
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Ben Smith
Worth thinking about for a while as we all look at $250K in tuition..
6 · Like · Reply · Subscribe · April 11 at 1:03pm