Graduating from an elite university may not ensure entrepreneurial success(businessweek.com)
businessweek.com
Graduating from an elite university may not ensure entrepreneurial success
http://www.businessweek.com/technology/content/aug2007/tc20070830_254262.htm
9 comments
From my own personal experience of having a degree from a prestigious university, my main source of risk aversion when it comes to startups is opportunity cost. Job offers of +100k a year for a 25 year old are really tempting when you've just spent the last 25 years wondering if you have enough money in your checking account to afford a double cheeseburger.
There's also a lot of pressure from society, family, etc, to go out and "get a real job" once you've graduated, because that's how most people define success. School is a major investment of time and money, and graduating from a prestigious school sets high expectations for that investment.
EDIT: Just to be clear, I'm not arguing that it's a good idea to give in to these pressures/temptations. I'm just saying that they exist, and perhaps more so for people who graduate from prestigious schools.
There's also a lot of pressure from society, family, etc, to go out and "get a real job" once you've graduated, because that's how most people define success. School is a major investment of time and money, and graduating from a prestigious school sets high expectations for that investment.
EDIT: Just to be clear, I'm not arguing that it's a good idea to give in to these pressures/temptations. I'm just saying that they exist, and perhaps more so for people who graduate from prestigious schools.
Written by a Yale professor:
http://www.theamericanscholar.org/the-disadvantages-of-an-el...
The article is long but it's a very good read. I like to reread from time to time.
A point I liked especially:
They [his graduate students] were talking about trying to write poetry, how friends of theirs from college called it quits within a year or two while people they know from less prestigious schools are still at it. Why should this be? Because students from elite schools expect success, and expect it now. They have, by definition, never experienced anything else, and their sense of self has been built around their ability to succeed. The idea of not being successful terrifies them, disorients them, defeats them. They’ve been driven their whole lives by a fear of failure....
http://www.theamericanscholar.org/the-disadvantages-of-an-el...
The article is long but it's a very good read. I like to reread from time to time.
A point I liked especially:
They [his graduate students] were talking about trying to write poetry, how friends of theirs from college called it quits within a year or two while people they know from less prestigious schools are still at it. Why should this be? Because students from elite schools expect success, and expect it now. They have, by definition, never experienced anything else, and their sense of self has been built around their ability to succeed. The idea of not being successful terrifies them, disorients them, defeats them. They’ve been driven their whole lives by a fear of failure....
I believe empirical proof is needed for the claim that elite university grads are more risk averse.
If you are an elite grad, you likely have (1) a wealthier family and (2) enough job offers over the course of your life that your "baseline" is extremely comfortable. Hence you have some margin to take risks.
On the other hand, one could also say that the type of person who is likely to become wealthy might be more prudent and less of a risk taker than a daredevil.
I guess one needs to drill down into "risk aversion".
If you are an elite grad, you likely have (1) a wealthier family and (2) enough job offers over the course of your life that your "baseline" is extremely comfortable. Hence you have some margin to take risks.
On the other hand, one could also say that the type of person who is likely to become wealthy might be more prudent and less of a risk taker than a daredevil.
I guess one needs to drill down into "risk aversion".
Actually this does not mean that Ivy gards are risk averse just because they are from Ivy college - in fact it may be other way round. People who prepare for getting into Ivy colleges maybe inherently risk averse hence want a no-brainer, proven method of moderate success. So there might be a self-selection going on there.
I think his view is distorted a bit. Take HBS statistics for example: 40% of graduates found a company at some point. 40%! Top business schools know how to create entrepreneurs and teach people how to take risks.
The problem is that the engineering education and the MBA education are totally different to the point of being orthogonal. There are 2 distinct cultures formed by science geeks and MBAs. The entrepreneurial view of the world is taught in business school while the engineering school produces engineers and scientists. The problem with tech entrepreneurship is in education. An engineering student is unlikely to take an entrepreneurship class because that belongs to the MBA crowd. Such a pity.
PS I also have an issue with MIT. The students there, especially the ones at PhD, are strongly pushed towards academia rather than creating a business. I went there to school and when I took the "new enterprises" class and I was the only student in the class that was not in business school.
The problem is that the engineering education and the MBA education are totally different to the point of being orthogonal. There are 2 distinct cultures formed by science geeks and MBAs. The entrepreneurial view of the world is taught in business school while the engineering school produces engineers and scientists. The problem with tech entrepreneurship is in education. An engineering student is unlikely to take an entrepreneurship class because that belongs to the MBA crowd. Such a pity.
PS I also have an issue with MIT. The students there, especially the ones at PhD, are strongly pushed towards academia rather than creating a business. I went there to school and when I took the "new enterprises" class and I was the only student in the class that was not in business school.
Top business schools know how to create entrepreneurs and teach people how to take risks.
Or they just know how to attract entrepreneurs.
Or they just know how to attract entrepreneurs.
Statistically illiterate article full of wishful thinking. Let me count the ways.
1. Most important: it is highly likely that elite university graduates are enriched over background frequency among tech startups, and furthermore that the degree of enrichment increases with financial success. Google, Yahoo, Facebook, Microsoft, VMWare, etc. were all founded by people admitted/affiliated with Stanford or Harvard.
At least one person quoted gets the statistical fallacy here of this, but Wadhwa quotes it without understanding how it demolishes his argument:
> He notes that IITs only graduate 5,000 of India's 176,000 engineers every year, and that based on the number of companies started by its graduates, they were five times more likely than others to start tech companies.
2. Elite university grads are elite because they are the best in the world at hard science. Obviously they are more likely to understand stuff like restriction enzymes, operating systems, and machine learning than your average Directional University grad.
3. I HIGHLY doubt that UW is producing more "blue chip CEOs and university professors" than Stanford and MIT. UW-Madison does have a very good biology PhD program but this claim just does not pass the smell test.
4. Note also that "blue chip" is considered a compliment in certain parts of the article ("blue chip university professor"). This is a common self-contradictory refrain I've heard among critics of elitism. "Oh yeah? Well it doesn't matter if I didn't get into your fancy school, because I work at Google now." In other words, they're not attacking the idea of elitism or the validity of a name as a signaling mechanism. They're contesting the much more limited point of whether undergrad pedigree alone is the signal. Of course it is not and this is a straw man.
5. Lastly, I guarantee that someone has recently asked Wadhwa to name "his school". It is Harvard, as he is a fellow at Harvard. Was he an undergrad, grad, or faculty there? Then he's a Harvard man. Obviously he recognizes that "elite colleges" are marks of quality or he wouldn't include it as the first thing in his bio.
1. Most important: it is highly likely that elite university graduates are enriched over background frequency among tech startups, and furthermore that the degree of enrichment increases with financial success. Google, Yahoo, Facebook, Microsoft, VMWare, etc. were all founded by people admitted/affiliated with Stanford or Harvard.
At least one person quoted gets the statistical fallacy here of this, but Wadhwa quotes it without understanding how it demolishes his argument:
> He notes that IITs only graduate 5,000 of India's 176,000 engineers every year, and that based on the number of companies started by its graduates, they were five times more likely than others to start tech companies.
2. Elite university grads are elite because they are the best in the world at hard science. Obviously they are more likely to understand stuff like restriction enzymes, operating systems, and machine learning than your average Directional University grad.
3. I HIGHLY doubt that UW is producing more "blue chip CEOs and university professors" than Stanford and MIT. UW-Madison does have a very good biology PhD program but this claim just does not pass the smell test.
4. Note also that "blue chip" is considered a compliment in certain parts of the article ("blue chip university professor"). This is a common self-contradictory refrain I've heard among critics of elitism. "Oh yeah? Well it doesn't matter if I didn't get into your fancy school, because I work at Google now." In other words, they're not attacking the idea of elitism or the validity of a name as a signaling mechanism. They're contesting the much more limited point of whether undergrad pedigree alone is the signal. Of course it is not and this is a straw man.
5. Lastly, I guarantee that someone has recently asked Wadhwa to name "his school". It is Harvard, as he is a fellow at Harvard. Was he an undergrad, grad, or faculty there? Then he's a Harvard man. Obviously he recognizes that "elite colleges" are marks of quality or he wouldn't include it as the first thing in his bio.
For the past decade, the majority of entrepreneurs (at it is a growing majority, year-by-year) I have represented in my early-stage startups have been immigrants who did not attend elite schools.
This group is smart, innovative and, above all, hungry for entrepreneurial success, and eager to sacrifice in order to achieve it.
The elite school grads can, of course, also exhibit a similar entrepreneurial vigor but most often don't - I don't know if it is an entitlement mindset or aversion to risk, but they are the exception and not the rule among those I have represented in connection with startups (several thousand entrepreneurs in all since I started doing this in 1984).
I can't speak for the broader world, but this is the clear pattern I have seen among early-stage (largely bootstrap) startups in Silicon Valley in recent years.
This group is smart, innovative and, above all, hungry for entrepreneurial success, and eager to sacrifice in order to achieve it.
The elite school grads can, of course, also exhibit a similar entrepreneurial vigor but most often don't - I don't know if it is an entitlement mindset or aversion to risk, but they are the exception and not the rule among those I have represented in connection with startups (several thousand entrepreneurs in all since I started doing this in 1984).
I can't speak for the broader world, but this is the clear pattern I have seen among early-stage (largely bootstrap) startups in Silicon Valley in recent years.
The author likes to talk about Ivy grads having risk aversion, but how do you explain cases like Bill Gates where they were so rich to begin with, there wasn't much being gambled on?
Wouldn't it make more sense that these type of schools have richer students with safety nets that allow them to take riskier ventures?
Wouldn't it make more sense that these type of schools have richer students with safety nets that allow them to take riskier ventures?
Today I met a great Debian Hacker who works with an MNC. He was into gold business and is from commerce background. After knowing this from him, I understood one thing - its the interest should be driving us, and its worth spending more time developing interest in something rather than trying tested paths.
As far as I can tell from direct personal observations there is very little correlation between academic success and success in business/industry.
Well in my opinion the graduates from the so-called elite Universities with a science or tech. degree are not at all supposed to found a startup at all. I mean they are trained in the finest art of making things possible by using science and engineering not giving a sales speech or making a marketing strategy. These are the things to be done by people from management schools.
Also if a engineering graduate is willing to start a start up he would first like to go to a management grad school. Like the example the author gave for the IIT students, they are not at all trained in even the nominal management skills. The sole purpose of an IIT is to make a promising engineer. The indian government set up these IITs to give india some quality engineers. Not start up people.If he had to look at the start up scene in India he should have taken a look at IIM grads. I dont exactly know about others but the best IIM, the IIM - Ahmedabad is in my city and I know definitely that there graduates are more inclined towards making a start up than getting a job. Also IIM also provides funding to make it much easier for them.
Also if a engineering graduate is willing to start a start up he would first like to go to a management grad school. Like the example the author gave for the IIT students, they are not at all trained in even the nominal management skills. The sole purpose of an IIT is to make a promising engineer. The indian government set up these IITs to give india some quality engineers. Not start up people.If he had to look at the start up scene in India he should have taken a look at IIM grads. I dont exactly know about others but the best IIM, the IIM - Ahmedabad is in my city and I know definitely that there graduates are more inclined towards making a start up than getting a job. Also IIM also provides funding to make it much easier for them.
I've come to a similar conclusion that the author of the article does: risk-aversion is real, and prevalent for Ivy grads. This is probably for a mix of reasons -- I could imagine wealthy students not 'needing' the success as much, and poor ones saddled with loans which make risking much harder. I started out in a risk-averse career, management consulting, but I just couldn't hack the lifestyle and people, and left to do something that was crazy and eventually much more lucrative.