The very latest higher education idea: pay students to drop out

Here’s an interesting initiative: Paypal co-founder Peter Thiel is offering $100,000 each to 20 students willing to leave university for two years to start their own companies. And why do this, rather than offer the incentive to graduates? Because Mr Thiel believes that ‘ideas can develop in a start-up environment much faster than at a university’. Indeed he is reported to want to ‘question the idea of higher education’.

I won’t worry too much about Peter Thiel, who is a successful entrepreneur, but is also often described as a ‘libertarian’. However, the question must be asked whether he is encouraging student conduct that most academics would consider reprehensible. And is he right to suggest that innovation stalls in a university environment?

It is perfectly possible to argue that not everyone should go to university. However, once a student is there he or she will work with staff and students in a journey of discovery, and what they acquire is not so much a degree certificate as a capacity for critical inquiry and innovation. It is silly to suggest that a university education is somehow a bad idea for entrepreneurs. Right now an increasing number of start-ups trade in intellectual property and therefore rely on knowledge and scholarship for success.

Peter Thiel himself has two university degrees. He should be slow to suggest that dropping out is better – for anyone – than what he himself did in completing his education.

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20 Comments on “The very latest higher education idea: pay students to drop out”

  1. Levi Says:

    Hi Ferdinand,

    Interesting post. Picking up on one of the points you made: Are we sending too many people to university? Thirty years ago about 10% of those completing 2nd level went on to third level – now I think it’s about 70%, & a huge percentage of those go on to do some form of post-grad course (my figures may not be exact, but I think they are in the ball park).

    I was recently in Lidl where they had large posters up inviting people to apply for their management training programme which included a business degree. Making conversation, I asked the girl on the till if she was thinking about applying. She looked at me sourly and said she already had a masters degree. That’s probably an extreme case, but it does seem to me that we are now requiring degrees for jobs that a good second level education was thought sufficent a few years ago. Education inflation if you will.
    What’s your perspective on all this?

    God bless,

    Patrick Burke


    • Thanks, Patrick – this is in fact a question I have addressed in this blog in a couple of earlier posts. I suspect that participation rates above 60 per cent, unless higher education is re-defined quite considerably, are not necessarily a good idea. On the other hand I do believe that as many people as have the necessary talent and interest should be given access.

      In fact, I suspect that it is in the upper middle classes that we have too many going to university.

  2. Pidge Says:

    One of the big points he makes is that he reckons that higher education is in a bubble, and is wildly overvalued in financial terms, both by employers and students. Does that strike you as accurate for the US?

  3. Music for Deckchairs Says:

    The other point his initiative makes is that universities move relatively slowly. Curriculum, for example, often seems to be inscribed in a particularly stubborn bit of stone. We’re good for the long-term curation of ideas and knowledge, but it’s compost rather than spark. If we had a flexible rather than monastic approach to learning, could we meet him (and more importantly, our students) half way?

  4. Al Says:

    Perhaps his proposal would read better if put in terms similar to this:
    Academic education involves a significant cost in time and money that may be better realised in an entrepreneurial effort as opposed to gain student debt an a qualification that does not distinguish yourself from your peer group?

  5. anna notaro Says:

    isn’t this only another version of the academia vs university of life debate discussed in the ‘Quality assurance for the university of life’ post earlier this month? Looks like Peter Thiel and Alan Sugar sing a very similar tune…

  6. Vincent Says:

    Still I’ll bet he doesn’t go near anyone who hasn’t got into a University.

  7. jfryar Says:

    The question is would it make any difference when the money is offered? Offering people the chance to set up their own companies half-way through a degree or after a degree would, to me, seem to be irrelevent. And if it’s irrelevant then why chose a mid-point in a degree other than the fact that such a proposal is likely to provoke debate and provide publicity?

    What happens if the business fails? As an employer you have two candidates applying for a job – a college dropout with a failed business plan and failed company versus a new graduate with a degree.


  8. Your response to Peter Thiel is interesting and might possibly supports his assertion. I would have thought the response of true academics would be:

    “This is a plausible theory. Now what can we do to find out if it is true or not”

    Instead you say that he has two university degrees and therefore should be slow to suggest this. I can’t see the reasoning here. I could just as easily say that he has two degrees so he has had the experience to know what he is talking about.

    If you are not going to suggest that we research this further, then at least put forward some evidence that would suggest that what he says is not true. (Otherwise we’ll have to fail you on your methodology) If a layman was looking in at this debate they would see a graduate of a university expressing doubt in the value of third level education and a university president and academics refuting this. Their immediate reaction would be to doubt the parties with the vested interest.

    I have two university degrees and work in higher education and seriously doubt its value. Where would that doubt spring from. Perhaps I’m a libertarian and don’t know it.


    • Hm, Brian – when I have a moment I’ll follow that up. But in the meantime, let me pick up your concluding paragraph. It contains a sentence with an assertion backed up by no evidence or argument. I’d like to see you expand it.

      As for the doubting the ‘parties with the vested interest’, surely that gets the observer nowhere, as it applies to both sides?


      • I’m not sure if my last paragraph is an assertion. I said I have doubts about higher education despite my involvement in it. This is an observation that needs to be looked into (as observations tend to be the initiators of many research initiatives).

        If you are asking what are the specific observations leading me to doubt higher education, I could mention the appalling teaching I received as an undergraduate, the resistance to change I see all around me (and of which lecturers seem to one of the least offenders), the stunning level of learning efficiency in mature working part-time students compared to full-time younger students, the funding mechanisms and lack of competition in the sector, employment legislation that encourages certification as opposed to real learning…I’m sure you could even add more.

        Doubting vested interests is a natural and very useful human reaction and generally puts the onus on the vested interest to produce evidence if they genuinely want to influence the interested bystander. If the opposing party had a hidden vested interest which was revealed, that would also influence the bystander. People tend to be short of time and use intuitive methods for guessing where the truth lies. Sure we should get in touch with Thiel and ask him to back up his assertion with evidence, however, in the meantime there is no point in defending a system that seems to be under performing unless we can produce evidence. In the absence of evidence the impartial observer will fall back on intuitive techniques to make a judgement.


    • Brian, you say: “I could just as easily say that he has two degrees so he has had the experience to know what he is talking about.”

      That would make sense if he had dropped out himself, or maybe even completed just one degree. But he went on to a second and, if you read his bio, made very good use of both. What he is suggesting now does not seem to reflect his own experience, so why is he saying it?

      As for the evidence that what he says is not ‘true’ (not a word I use a lot, mind you), it’s all around us. Most foreign direct investment over the past 10 years has got to Ireland solely on the back of the companies being reassured that the country has sufficient skilled graduates to meet their needs. Those who have started up businesses over the past 10 years are, totally overwhelmingly, graduates. The uneducated, self-made entrepreneur is largely a thing of the past. Peter Thiel himself is an obvious example. Larry Page and Sergey Brin met as PhD students in Stanford.

      I am not saying, of course, that universities are perfect training grounds for business, and in my post I did not at all dismiss Thiel out of hand, and indeed suggested some of what he said should be considered. But his action in paying students to drop out is a publicity stunt and is silly.

  9. anna notaro Says:

    On university drop outs and the internet, just got this from Twitter:

    *Think of the history of innovation in the Internet.
    Netscape, started by a drop-out from undergraduate university.
    Hotmail, started by an Indian immigrant,
    ICQ, started by an Israeli kid..
    Google, started by two Stanford dropouts.
    Napster, started by a dropout and someone who
    hadn’t yet been able to be a dropout.
    Youtube, started by two Stanford students.
    Kazaa and Skype, started by kids from Denmark and Sweden. And then, of course, Facebook, and Twitter, started by kids.
    What unites all of these innovations?
    They were all done by kids, dropouts, and non-americans.*
    (Lawrence Lessing, Harvard Law Professor extract from Keynote at eG8 Forum, Paris)
    http://www.universalsubtitles.org/en/videos/C6wmjKWrZwlP/info/Keynote%20-%20e-G8/

    • jfryar Says:

      Yes and let’s not forget that Intel, AMD, Analog Devices, Sony, McAfee, etc were founded by people with degrees. And that Alexander Graham Bell graduated from UCL.

    • Wendymr Says:

      Well, considering that Page and Brin were PhD students at Stanford, I hardly think that the term ‘dropout’ is a fair description. I wonder how many of the other so-called ‘dropouts’ already had degrees by the time they ‘dropped out’?

      • anna notaro Says:

        Jfryar/Wendymr I agree with you, in fact the point of quoting Lessing (a media coryright law expert well respected in the field) was to show exactly how strong the myth of the drop out kid/university drop out is to construct a certain narrative of internet innovation..

  10. George Says:

    At first glance, this didn’t even seem like a publicity stunt. It seemed like an entrepreneur or venture capitalist making an investment as much as making a point about the perceived value of higher ed.

    But after thinking about it, the parallel for me is the incidence of luring away (U.S.) university athletes to the pros before graduation. While that is now officially frowned upon, it was not always so. The point is that leaving school for an immediate influx of cash is not a new idea, and it may or may not work out for the student. The downside can be the same in either case, whether due to a failed startup or a bad knee or back. No degree, and as the excitement fades, no coterie of adoring friends.

    We (most who would engage with this topic) likely agree there a value beyond the merely economic in higher ed– as “a journey of discovery, and…a capacity for critical inquiry and innovation.” Thiel’s initiative forces the point. We need to become better at discussing this with those not already in the higher-ed choir.


  11. I notice that Peter Thiel is now “enticing” one of our own Collison brothers out of college: http://www.siliconrepublic.com/start-ups/item/22016-exclusive-interview-with-a

    We seem to have plenty of examples of entrepreneur drop-outs and college graduates, possibly suggesting that there is no correlation. As academics we should be saying “Let’s test the hypothesis”. It may seem that I am taking sides in this, but I’m not – I genuinely do not know, but the assertion by academics with anecdotal evidence does encourage me to act as the “devil’s advocate”.


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