PayPal founder pays entrepreneurs to skip college
CHICAGO (Reuters) - Dale Stephens was homeschooled for most of his academic life, so when the 19-year-old was offered $100,000 to skip college and work on his startup, he jumped at the chance.
His decision was helped by the fact he had already dropped out of a post-secondary institution - Hendrix College in Conway, Arkansas - after just one semester to launch UnCollege (www.uncollege.org), a nonprofit that helps other teens educate themselves outside the conventional university system.
"I created my education, essentially hacked it by leveraging the resources of the world around me," said Stephens, who was homeschooled from grades six through 12 outside Davis, California. "You can do the same thing at the collegiate level."
Stephens, who started UnCollege last January and is also writing a book, is one of the young entrepreneurs selected to participate in the inaugural "20 Under 20" program created by PayPal founder Peter Thiel, now a prominent Silicon Valley venture capitalist.
Thiel, who runs the hedge fund Clarium Capital and is a managing partner in the VC firm The Founders Fund, in March introduced a program that lets self-starters like Stephens sidestep academics in favor of a hands-on approach.
"There are a lot of talented people for whom it makes sense to do something not entirely tracked," said Thiel, 43, who ironically earned both undergraduate and law degrees from Stanford University. "We wanted to encourage talented young people to explore some alternatives."
The 20 Under 20 initiative was born in part from Thiel's concern about the skyrocketing costs of higher education, as well as his belief that the status associated with some academic degrees has become more important than their educational underpinnings.
"It's unfortunate that we have this runaway credentialing process," said Thiel, who initially followed a conventional career path, pursuing jobs in law and on Wall Street before becoming an entrepreneur. In 1998, he co-founded online payments site PayPal, which was bought by eBay in 2002 for $1.5 billion. Thiel was also an early investor in the social networking site Facebook.
"When I look back, I was in this automatic default thing," he said of his academic choices. "Higher education, it becomes strangely this way that most people don't need to think about their lives - some sort of substitute for thinking about your future."
Thiel, who has argued the U.S. needs to jumpstart technology innovation and investment, is giving the two-year fellows annual stipends of $50,000 with no strings attached to help get their projects off the ground. Many are sharing housing in the Bay Area, creating ad hoc learning communities.
From biotechnology and robotics to energy and IT, their initiatives include pie-in-the-sky ideas as diverse as decentralizing banking in the developing world to improving motors for electric cars - even extracting minerals from asteroids.
Whether or not Thiel's program helps to transform these ideas into successful ventures, it has sparked a larger debate over the value of a college education in the world of entrepreneurship, which takes many of its cues from the school of hard knocks.
"The jury is out and I'm slightly skeptical," said Steve Blank, a former Silicon Valley entrepreneur who teaches at Stanford and the University of California, Berkeley, but doesn't think business schools do a particularly good job of prepping students for start-up careers.
"To generalize that this is great or bad is missing the argument," said Blank, a Vietnam veteran who dropped out of the University of Michigan just short of earning a degree. Since then he has co-founded numerous tech companies, including Web startup E.piphany, which he led to a successful IPO in 1999 before retiring. "After seeing how people learn, you can't generalize what is great for one group is great for another."
Thiel dismisses any criticism that the program encourages young people to take an easier path by forgoing college. He is quick to point out that the fellows, who were selected from more than 400 applicants, bring high levels of focus and determination.
"Dropping out has a whole connotation of dropping what you're doing and not doing anything," said Thiel, who prefers "stopping out." "We looked very hard at the motivational question."
Participants clearly require enthusiasm to make the most of what is arguably the greatest benefit of the program: access to more than 100 influential mentors from the ranks of West Coast tech entrepreneurs who are assisting with everything from business plans to networks that may lead to initial investment.
"They're absorbing everything fast," said mentor Barney Pell, a 43-year-old angel investor and founder of Powerset, a natural language search engine that was acquired by Microsoft. "They're young and they're raw, so there's a lot of stuff for them to learn, but they're learning machines."
Christopher Rueth, at 17 among the youngest of the fellows, fits the bill. Rueth's project began with the frustration he experienced in high school, where administrators placed restrictions on students' Internet use. He was eager to move to Palo Alto and get started on making the Internet more affordable to people throughout the world.
"In San Francisco I'm hoping to be hooked up with product development experts, product designers," he said. "A thing like the fellowship is good for the people who are ready for it."
For Stephens, Thiel's program offers an alternative to the expense and constraints of a traditional college degree.
"I've never been a conformist," he said, adding: "It's about bending the rules of the institution or the rules of society to meet your needs."
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