To drop out or not drop out?

Dropping out of college is not for everyone, but is it for you?

There is an increasingly common “contrarian” take that is slowly becoming more mainstream: 19-20-year-olds should drop out of university and start a business. This comes as scathing critiques of the education system, complaints about skyrocketing amounts of student debt, and distaste for the skills that most universities teach (or more critically don’t teach), are becoming more familiar topics in public debate.

Certainly, when Peter Thiel launched the Thiel Fellowship, people criticized his new venture and the ideas behind it. But in the years since, the Thiel Fellowship has been a massive success, with the critics proven wrong.

Since then, programs such as OnDeck, Revature, and Lambda School are looking to revolutionize this space, while more specialized courses such as Write of Passage explore topics such as how to write effectively to an online audience (if I had to guess, these are only the beginning of a much larger trend).

Add to that the slew of classes offered on platforms such as MOOC, Skillshare, and Udemy, where motivated individuals can learn just about anything they want. Take for example the MOOC classes of Balaji S. Srinivasan or Psychology and the Good Life, the most popular Yale class ever, which is now available for free online. 

With the resources, support, and models available online, those who advocate dropping out of college are certainly correct in much of their analysis. No one can argue with Elon Musk that “You don’t need college to learn stuff!”. And Musk was also right, that “colleges are basically for fun and to prove you can do your chores, but they’re not for learning”. That’s not a good enough reason to abandon college altogether, but it’s enough reason to not trust the power of a degree. 

I’d guess Musk’s ideas are popular among the 40+ college dropout billionaires in the US (there are likely more, but there was no definitive source for this information). This is a startlingly high number of extremely rich individuals who eschewed “education” and I imagine that the number of college dropouts millionaires is more common than commonly thought.

However, overlooking the problems of higher education that clearly exist, there needs to be a more nuanced examination of whether or not it makes sense to drop out of college with the goal of starting a business. 

For some companies and ideas, action must be taken when the market is right. Had Mark Zuckerberg waited even a few months longer, may have never gotten off the ground. Instead, he worked around the clock to get his fledgling business off the ground while his peers (sorry Winklevoss twins) were more focused on their classes and social lives. Mark seized the opportunity while the market was right, and no one can deny that he made the correct decision to focus on his new business full time.

Evan Spiegel is another example where dropping out made sense. Spiegel had discovered a market secret about the way young people communicated and doubled down to create an app for sharing video and photo messages with friends. For Snapchat to succeed, quick decisive action was critical for survival. Spiegel focused on his business, dropping out of Stanford before receiving a degree, guiding Snap to a valuation of over $100 billion. 

What is often the case with successful businesses founded by college dropouts is that they are consumer-based, therefore they do not require years of specialized knowledge and experience. Most start with a social insight or market secret that young founders can leverage into massive customer-facing products. Act quickly and hustle, and a unicorn is definitely possible. This is exemplified in the early Facebook motto of “move fast and break things”. As Chamath explained later, the practical application of this motto allowed Facebook to try a wide variety of techniques to see what had the most profound impact on human behavior. Without this approach, Facebook would have limited itself and the impact it has had. 

On the other hand, there are businesses that require large amounts of industry-specific knowledge often coming from specialized education. Few remember that Elon Musk has a B.A. from UPenn in physics which served as the foundation for his work on both Tesla and SpaceX. The same holds for Jeff Bezos who graduated summa cum laude from Princeton University with a 4.2 GPA and a B.S. in Engineering. Add to that the need for many startups to hire great lawyers as they grow larger. To take an example from the PayPal mafia, Peter Thiel brought on Keith Rabois from leading law firm Sullivan and Cromwell, thanks in part to his legal knowledge. This later proved to be a wise decision as Paypal routinely locked horns with Visa and eBay in legal battles. For better or worse, you need to go to law school to become a lawyer.  Whether or not law school actually makes you a better lawyer is not as agreed upon. 

So the next time someone urges you to stay in college or to drop out, take a second to think about it. Not every business will become the next Facebook or Paypal and as Peter Thiel says, you are not a “lottery ticket”. For some ventures and career paths, getting a technical or professional education is most definitely the move to take while for others, it will only encourage groupthink and decrease your chances of success. Instead of focusing on the action of dropping out or staying in college, focus on what both have to offer, what your career goals are, and what the opportunity cost is. 

Whatever decision you choose to make, consider the heuristic used by Jeff Bezos for all of his most important decisions, the “regret minimization framework”.  Imagine yourself at 80 years of age and ask whether or not the current decision would minimize the number of regrets that you might have. 

In Bezos’ words, 

I knew that when I was 80 I was not going to regret having tried [Amazon]. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day, and so when I thought about it that way it was an incredibly easy decision.

Use this decision tree to think long term, forget about short term security and make decisions that actually matter.