Saturday, May 28, 2011

Facebook and PayPal's Peter Thiel Pays College Students to Drop Out

PayPal cofounder Peter Thiel knows a thing or two about finding the next big thing.

Thiel was the first investor in Facebook and predicted the dotcom crash and the housing bubble. Now he believes the next big thing to burst is higher education, and he's willing to put his money on it.

"Learning is good. Credentialing and debt is very bad," he said. "College gives people learning and also takes away future opportunities by loading the next generation down with debt."

The 43-year-old with a net worth of $1.5 billion recently started a $2 million fund to get college students younger than 20 to drop out of school and start a business with $100,000 each.

"We ended up picking 24 people to try to get them to work on very specific projects that would push the frontiers of science and tech in areas ranging from biomedicine to computers to robotics," Thiel told ABC News.

Even though Thiel has a law degree from Stanford, he's still questioning the value of a college education. New York Magazine recently rated the worthlessness of a college degree as "one of the year's most fashionable ideas."



  1. Actually, this doesn't seem all that out there to me. We've lost the trades, so why not funnel some talent to enterpreneurship? I don't think a college degree is worthless in every case, but it some cases it's not the best investment.

  2. Around my house, we've been using the term "higher education bubble" for several years now. Thiel is right that the debt loads are not sustainable.

  3. F&T, I'm pretty cool with the idea too. If these kids can hone their mad skillz and do something interesting and commercial with what basically amounts to venture capital in place of a scholarship, what the heck.

    I wish something comparable could be done for trades. Maybe it can. I don't know. I'm not well monied enough to try it out. Who am I kidding? I'm not monied at all.

  4. Just want to point out that when Mr. PayPal was talking to the ABC reporter, his eyeline was aimed at her chest.

    Walking away from college to start a business is not new; Bill Gates dropped out of Harvard to create "MicroSoft"*; Steve Jobs dropped out of Reed College in 1972 to start Apple Computer with Steve "the Woz" Wozniak and some other people who didn't have `70s nicknames. But they were both lucky and (in Gates' case) came from wealthy, connected homes. What I'm afraid of is that some of the people who take Thiel's money will bomb and then be stuck with being out of sync with their age cohort if they go back to college. I completely agree with everyone who says that college debt is reaching uncontrollable levels and that some of these degrees are not worth it, but from the looks of the two examples in the ABC piece, they were both in technical fields whose degrees would have truly meant something in this botch of an economy.

    New York Magazine gets it wrong; the meme is not that college degrees are worthless, but that certain graduate and terminal degrees are shit - mainly the Juris Degree and some Liberal Arts degrees. The idea that the former is junk comes from the "scamblogs"; places like "Third Tier Reality" and "Thomas Cooley School of Law is a Scam." The latter comes from the "100 Reasons Not to Attend Graduate School" and the columns of Thomas Benton.

  5. Thiel makes the same error that a student in a Sat. morning college algebra class made when I had a conversation about what the overarching reason was for taking college math courses-it wasn't because we were trying to crank out math majors, we're trying to teach students to think analytically.

    I commented that we, as a society, are in a post-industrial world; whereas I was able to run down to the local GM plant and get a good paying job on an assembly line, those opportunities don't exist in today's US of A, for the most part. On the other hand, we're not going to survive as a nation of burger flippers, and, if anyone thought they could live on a McDonald's salary, go out and try, I said to the class.

    That's where the student jumped into the conversation-he worked at McDonald's, liked it, and besides, he said, his boss owned 24 restaurants, was a high school dropout and worked his way up from running the fryer at a McDonalds to where he's at today.

    So, I said: "I'm sure he's worth a whole lot more that I am, however, are you saying that it's better to drop out of school and get a job at McD's?-If so, then, why are you here?"

    He couldn't answer that question and acknowledged that his boss was the exception rather than the rule and this is the point I propose that Thiel seems to overlook-we all see the fabulous successes like a Gates, Jobs, or, himself. They are extreme outliers; 95% of all start-ups fail within 5 years. I don't mean to imply that entrepreneurship should be disavowed but it is not the logical alternative to a well rounded education. If cost is the issue, we should be arguing the case of a state university system vs private schools. As a SUNY professor and graduate, it is the best deal around.

  6. Lord Humungus, the main argument for this goofy setup is money and "dead-end" degrees, but mostly the money. Student loans do not go away through bankruptcy (though they should), and it get really onerous when college grads go to law school and rack up 200 thou on top of the 20 thou from their undergrad years (which is why there are blogs like Third Tier Reality.) Personally I think that both systems stink and need reform, but that will only come after the revolution.


    * Yes, this is actually how Gates spelled the company name. MicroSoft. Remember when slamming two words was cool? LeCar, ProfScam, PowerShot - man has that dated badly. Almost as cheezy as putting an undercase word next to a capitalized one: "dBase III", "iTunes."

  7. @Strenikov-that's also my point; I got through the SUNY system and obtained a graduate degree from Columbia without 10 cents in student debt, albeit 15 years ago. The point is that you can minimize your debt. The problem is "out of sight, out of mind".


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