Thiel's Unicorn Success Is Awkward for Colleges
washingtonpost.com
washingtonpost.com
The article is also comparing this very small group with university student _on average_. If we look at university performance at the margin, we would really be expecting some of these people to have won a Fields Medal or a Nobel Prize-winning discovery.
Obviously Thiel is unique, but he’s only paying $100k vs the much larger sums from all these other programs.
I think it’s worth debating the merits of the discussion whether than just saying “Thiel magic, college is still better and nothing else matters.”
If it’s really just Thiel’s network then is the right move to make him the president of Harvard since that will have a greater reach?
Yes. You're essentially talking about academic organizations there, with diffuse industry involvement. That's a world away from direct access to a tech billionaire's network.
Networks don't scale like that. As in the people in the network have finite time and mental capacity to take on new relationships.
It’s like saying Y Combinator has failed to produce a single National Book Award nominee, or judging Juilliard by how many future dentists studied there.
# literary and scholastic attainments
# energy to use one's talents to the full
# truth, courage, devotion to duty, sympathy for and protection of the weak, kindliness, unselfishness and fellowship
# moral force of character and instincts to lead, and to take an interest in one's fellow beings
In comparison to that, Thiel's success rate looks a bit more ordinary.
Rhodes scholarships etc on the other hand are a fair bit more successful at generating academics and researchers and mid level managers from backgrounds that don't usually become mid level managers, because that's what they're for
Meanwhile, whose interests are served by future unicorn founders being plucked away from the liberal arts, or from the connections and experiences they would’ve had in college with people very unlike Peter Thiel?
At the end of the day there is a lot of meat behind a real unicorn company. It is possible to do more for humanity than a billion dollar company - names like Gauss and Euler sprint to mind - but such names are rare.
Are they? I notice you only picked mathematicians. What's the value to society of a Mozart, a Picasso, a Dostoevsky, a Michelangelo ... ?
And of course it’s very difficult to evaluate the impact along these types of values. Saying college is good because Mozart is valuable and not STEM seems like a reach.
First, I don't think that society is best when optimizing for adding as many dollars of value to society as possible. This is easy to measure, but there are a great many other incredibly valuable things that don't involve large visible changes in the economy.
Second, I don't think that unicorn startups are necessarily providing economic value to society. A company can become worth an absolute mountain of money while making society materially worse.
Technically there is still an implicit money transfer in those cases, it's just the debt is settled immediately. Remember, money is an IOU – used when you promise to give something that you cannot deliver on right now.
Business seeks to deliver value at a scale that would make it impractical for all the debts to be settled in the moment, thus money (promises owed to the business) does become a reasonable measure of how well it is scaling. Things that are incredibly valuable to society do benefit from being scaled up to provide that benefit to more and more people.
> A company can become worth an absolute mountain of money while making society materially worse.
No company becomes worth mountains of money without making society better in some way. Every act comes with negative externalities, of course.
A pharmaceutical company that concludes that they can increase the price of their drug by 10x and only lose 3/4 of the sales is going to be a more valuable company. It will have increased revenue and profit and that will be reflected in its stock price.
This decision makes the world materially worse. It only looks like an improvement when we measure based on revenue and profit rather than the amount of health improvement that the business provides to the world.
What I expect you are really trying to get at is that society has created rules that prevents others from providing that value, thus creating artificial scarcity. That is definitely true, but that's on society who created those rules and not truly related to the discussion taking place.
The point OP is making is that value to society and money are only loosely correlated. Sometimes it correlates well but often not so well. That’s because there’s externalities in any marketplace that aren’t captured by the marketplace itself.
So in the presented hypothetical case, the externality of “provide life saving treatment” is not captured in the costs side of the drug company’s balance sheet, so treating 75% fewer people for 10x more per unit cost makes the company look even more financially positive even though the change is a societal negative. And this externality shift in the balance sheet need not be a conscious “evil” decision. It could simply be market dynamics and competition playing out with the players not even realizing that they’re just making money from an externality and not providing any benefit.
Your argument that it’s the legal system is flawed on several counts:
1. The US (and many places) have regulatory capture so the legislation preventing future competitors is written by today’s competitors. So while it’s the law on one hand, it’s the current set of players that’s the real problem.
2. There’s no collective buying power in places where this is a problem (eg you don’t see the cost of penicillin being an issue in countries where single payer healthcare is a thing). We’re starting to see this with insulin where non profits and California are getting into the game, but it takes a while to ramp up production so even if the price does come back down, the companies involved have managed to make a lot of money in the short term at the cost of lives and financial health of many households.
Yes, that's right. Because others who could be playing cannot, in this case because society has decided they don't want more players, for whatever reason.
However, the original premise still holds true given the constraints the actors are operating in. The 10x represents the additional value offered to society to operate within those rules created by society.
So while, again, all acts have negative externalities, we cannot deny that society sees great value in having a limited set of players. In fact, society sees so much value that, in this example, it is willing to pay 10x more and accept that some people will not have access to drugs in order to maintain the benefits.
I suggest nothing. That would require injecting my feelings towards the matter, and that would be in bad faith.
But I don't think the presence of these broken systems means that we can conclude that every company that is worth billions is necessarily making the world a better place today. It is evidence in the other direction! Our society does not perfectly align wealth creation with providing value to society.
But there are always tradeoffs. Something that makes society great in some way is also likely to make society not great in some other way. As before, every act comes with negative externalities.
Saving a rich person's life and a poor person's life has the same value to society. But a rich person can pay far more money to have their life saved than a poor person can.
Of course, as before, no benefit is consequence free. We see in the example that said benefit means that some people may not have access to drugs, which negatively affects society in other ways. That doesn't mean society sees no benefit. There are always tradeoffs. Something can be a benefit and detriment at the same time.
Perhaps what you are trying to say is that you think that society should see better access to drugs as being a higher priority than the benefits it expects from the regulated market? But clearly society, which is free to repeal or change said laws as it sees fit, disagrees. Society will certainly never please all individuals. That's a tradeoff of having a society.
After all, society can repeal the regulation if it wanted to – it created the regulations! But clearly it doesn't want to, because society recognizes it as a benefit and is willing to pay, perhaps as much as 10x more according to previous comments, to see that value delivered. That may not suit your or my fancy, but, again, society cannot cater to everyone.
Naturally, even society itself is both beneficial and detrimental, just like everything else. Tradeoffs, as always.
There is no such thing as a best possible world. Not two people would ever be able to agree what that even is. Every benefit comes with a detriment. It's just a matter of what tradeoffs do you want to accept. Society has made its choice, seeing a regulated market as being more important than access to drugs for all (for now; that choice is fluid and able to change in the future should society change its views, but trying to predict the future is well beyond this discussion).
It isn't generating value that makes a company valuable, it's capturing it. You can generate value for society without earning a cent.
There was a time where FTX, Theranos, and WeWork were all unicorns and none of them had real “meat.”
Uber is/was a unicorn and the gig economy has proven awful for society. (Underpay what amount to employees while giving them no benefits or recourse and at the same time destroying taxi companies that did)
Facebook was also a unicorn…
I think billion dollar companies that “do more” (eg. be a net good) for humanity are as rare as individuals who do, especially if they are profit driven.
https://newsroom.haas.berkeley.edu/research/study-ride-shari...
Lets be real, I'm sure many of people here have jobs where they have to insist this is true, but that billion number is inflated nonsense. Most startups are not adding that much value to society. Maybe finding a way to middle-man extract that from society, yeah, but not adding it.
> and does not match the success of Thiel’s programs for generating successful startups (11/900 is a pretty amazing success rate)
That may be an amazing success rate for generating startups, but it would also mean that 98.8% of the startups weren't successful. Was dropping out actually good for the fellows aside from a few? Couldn't many argue that for most of these "smart and ambitious" students it really did fail?
I'm not really taking a position here because I don't think failure alone means something wasn't worth it. Also I haven't followed Thiel's program that much so can't speak to the specifics. But given the numbers in this thread, I certainly wouldn't recommend students drop out.
Although even it meant 11 unicorns out of 900 and the rest were zero, those are amazing odds that many would gamble 1-2 years of their life on. Especially at 20.
But the article talks about how the others were also successful, just not multi-billion dollar company successful.
The actual choice set is drop out and spend several years trying to become very wealthy and then go back to school and be delayed by those several years on the path well traveled, or just take the path well traveled right away.
It seems extremely unlikely to me that it would be possible for this to be a net negative on average at any point in time past the first few years. average[0.02(mega wealthy)+ N(success but not mega wealthy) + (1-N-0.02(regular path delayed 5 years)] should always be larger than average(regular path) and it should get more pronounced over time and the spread between regular path and regular path delayed 5 years will likely diminish over time.
On the society level, unless you are so cynical that you think all the benefit that causes the value of those companies to be in the billions is coming from some sort of market power abuse and none of it is coming from creating something that is so much better than what was there before that people are buying it in a big way, it would be a massive benefit as well because you just increased the conversion rate of ideas into product that benefits society by a massive multiple.
> 11/900 is a pretty amazing success rate
But completely unscalable. It seems perfectly reasonable to think you can take a select group of people give them resources that allow them to succeed (at a certain level) better than people who went to college. You could probably get similar results by just giving a select group of people a million dollars to start with.
Or am I misunderstanding something about the situation.
There are tons of people giving $1M to groups of people who don’t have these returns.
Also, this is a comparison of working vs college. So it’s an opportunity cost experiment. Giving $1M to skilled management teams is completely different.
College, for all its trumpeting about better outcomes, has shown no actual change in the financial success of the population. Incomes have held stagnant the entire time.
Thiel's experiment really just goes to reiterate what we already knew: That successful people are born that way.
That is aside from the fact that I don't see any way, fundamentally, to become something like a scientist or a physician outside of the university system. You can't run controlled experiments, especially if they require any kind of specialized lab equipment or human subjects, without fairly strict oversight, and you certainly can't go into a hospital and put yourself into rotation getting clinical experience with patients outside of being supervised by a teaching physician.
There are other ways to meet these sort of dynamics outside of universities in principle. Guilds serve this purpose in some professions. But for many modern professions, the university system is the guild. It's where scientists train other scientists. It's how you get an apprenticeship.
Nonetheless, not every profession is like running a business, where anyone with money is at least allowed to try.
Getting accredited to be a Physician in the US is a political thing controlled by the Physician Cartel(AMA and ACGME).
That line about Ivys and Presidents just seem to line up more with the political situation of Physicians. Heck, residencies and med school are all tied up in special points.
To it into perspective, his native country—Germany—only produced about double that number of unicorns over the same time frame, and he invested in many of those as well.
Don't elite colleges do the same? Select a small slice of society and give them opportunities beyond what society at large has?
The difference between what Thiel is doing and what colleges are doing seems to be a difference in degree and not in kind. That difference in degree is exchanging a larger reward for a smaller pool of candidates.
The same criticism of the Thiel Fellows could be leveled at college, from the perspective of someone who didn't attend college.
At the highest-level universities, nearly every applicant is already exceptional before they're even accepted, and yet:
Even if you carefully selected 100 or so people out of nearly any university, it's statistically unlikely that a Fields medal winner, Nobel prize laureate, or unicorn founder would come to fruition out of any of them, even if we allow more than a decade.
Initially I dropped out of college to work on internet startups in the 90s. I didn’t make a billion but I learned skills and made a good living and was definitely the highest earner out of all my college friends for at least 10-20 years.
But I went to night school and got an undergrad and masters and now work in a field with a lot of very educated people phd/md in a non-bullshit way. And I wouldn’t have had that opportunity without my degrees, even know I had the same skills and knowledge.
Is it right that I was filtered out by degree and not by capability? No, it’s not right, but it happened.
Practically, I’m not sure what to advise my kids. I’m leaning toward college because taking out loans and having 60% of the money go to admin staff and mega gyms is just overhead to opening more opportunity.
And I think the college route has a higher median outcome as I wrestle with was I lucky or will everyone with skill and obsession in an area be able to support their families.
For masters I went to a very reputable school in my field and studied something new. Learned a lot, but hard to know what’s helped and what didn’t. I think it gave me basic context knowledge in my new field. Made lots of relationships with students, not they helped with work. With faculty led to future work (teaching, volunteer work).
It is not obvious how to find a better way to filter.
In an ideal world, there would be plenty of time and resources to learn the personality and skills of each applicant, as an individual human being.
In reality, HR has limited resources and needs shortcuts to effectively screen applicants. Experience has shown that degrees and grades are useful summary statistics for filtering. It is not "right, and there are obviously Type I and Type II errors in this process.
I question this. There is signalling value in a degree, but it's more about providing HR and the hiring manager with reputation cover in case the candidate is a failure. "They were from $SCHOOL, it couldn't have been predicted." Another part is signalling value not to your employer, but to the employer's clients. If you're in law or consulting, the value of an elite degree is more to show the client that your firm's high billing rates are justified. A third factor is that some firms are like clubs, where a de facto caste system exists and people from lesser schools are discriminated against. It's morally wrong, but it happens in many of the elite firms and startups.
It takes only a few seconds to legitimately scan through the non-college achievements in order to get a feel for a candidate's true potential. So it should not a real blocker to anyone who is serious about hiring the best people.
I've been part of the hiring process at multiple companies over the course of a decade now, both at large companies and small ones, and not once has anything like this ever happened. A degree in the field has only ever been used as a filter at the start of the process, and in the small number of times there was a bad hire, no one ever used the candidates degree as an excuse because there was no need to: no one blamed anyone for the fact that a shitty employee was hired.
An open exam process where anyone can take the test and receive a diploma for each individual class.
A bit like how professional certifications work.
That way, no matter the way you acquired your skills, you can try and get the same diploma.
Of course, you would also need to revise what skills and topics are tested to also provide exams for more practical topics usually ignored in colleges.
If we just set the "college is important for well-rounded life experience blah blah" party to the side for a second and consider it strictly as a job-prep factory (because why else would an average schmuck spend that much on something if not for a good ROI), apprenticeships seem like an obvious better pattern for everyone.
1. They run for a similar length - multiple years
2. They attest to work ethic in the same way college degrees do
3. They're actually productive, unlike (most) undergrad programs
4. They train actual job skills and provide actual job experience, unlike (most) undergrad programs
5. And on top of it all, apprentices still get new life experiences, but probably more productive ones than Greek Life.
To me, it seems companies providing apprenticeship programs as a replacement for an undergrad program should lead to a better-equipped workforce and provide HR with better signal to filter by. Never mind that a successful apprenticeship could lead straight into a longer-term job offer in many cases, making things easier both for new worker bees and for HR.
Perhaps this is what that one financial firm was on to when everyone ridiculed them for their "Pay us to work for us" scheme (which does sound ridiculous, unless perhaps you can sell demonstrable educational and networking value from the program and can frame it as competing with what colleges offer).
Or to have a work system that allows for lots of contributions to filter people’s work without requiring 40 hours of interviews.
The resume filter by education is used because it’s easy. Graduating from Harvard isn’t perfect. But it’s a fast way to filter out lots of candidates when you don’t have time.
But another huge factor in all this is that 20-year-olds just get pushed around a lot, especially in our workplaces.
A better question IMO is: Is college more useful than the alternatives?
College is a huge investment: tens of thousands of dollars, plus 4 years of full-time work.
When I went to college in 2007 (not in US, but I digress…) it made sense to go in for a 4-year degree because there were no alternatives. Coursera, Udemy, etc. did not exist. YouTube was just born. And to start with, we didn’t even have broadband in my house or school, that could stream video.
It’s a very different world today. The opportunity cost is too great. Even without being a Thiel fellow, there are many alternatives to what you can do with 4 years of your life that will set you up for success – not only educational opportunities but also starting a business, freelancing, etc.
The value of college is not only education, but also community.
We are seeing, and will continue to see, many new online and IRL ventures that provide community and learning to young people, which will serve them much better than colleges.
Buildspace (https://buildspace.so/) is a beautiful example.
Smartphones and internet have changed how we can and should be learning and voting.
But the current experts in charge will resist losing the power they hold.
They are certainly up for improvement, but throwing everything away and starting back from first principles almost never work for something that complex. "What first principles should it follow" is an open problem by itself.
Eidolon is a now defunct online magazine specifically about the classics. The last thing they did was publish a 'fail' essay. In it the head editor, who holds a PhD from Princeton in the Classics, goes through all the challenges, mis-steps, and lessons they all learned. 'Fail' essays in tech are a dime a dozen. But in the classics, they tend to be rare. As such, Eidolon's essay is a goldmine.
Two things stuck out to me the most:
1) This passage was particularly worrying: "I’m not going to downplay the extent of the problems we’re facing. In addition to the concerns facing Classics specifically and the humanities more widely, there are also enormous and terrifying problems facing higher education in general. Even before the massive disruption of the Covid-19 pandemic, these problems already looked insurmountable: on one side the student debt crisis, which has financially crippled an entire generation, and on the other side the increasing precarity of the academic workforce has made teaching Classics (and every other discipline in academia, really) a terrible professional prospect. This is not to mention academia’s endemic problems with classism and sexual harassment."
2) The author/head editor was Donna Zuckerberg. If that name sounds a bit familiar, it's because it is. She is the sister of Mark Zuckerberg, one of the richest people in history. That her assessment of Eidolon's efforts is so dour and bleak, despite her astronomical privilege, should register that there is indeed 'something wrong in Denmark'.
The rest of the essay goes into much more depth about what exactly is wrong. But the essence is simple: The Humanities, and the Classics specifically, are Dead.
https://eidolon.pub/my-classics-will-be-intersectional-or-14...
Edit: Gifted article
Just realized I can actually do this ten times per month!
Political organisations could try to kick start the careers of aligned young people in politics. Spreading a few tens million of dollars across hundreds of promising people is worth it if you can get a good governor or senator out of it.
Could a movie studio do well by writing big cheques to aspiring directors/writers with a tolerance for risk?
In some ways the record labels already acquire talent in this kind of model, rather than relying on credentials.
They do this. State parties have paid fellowship programs where you make a decent salary (by entry-level politics standards), and they train you to be an elite campaign manager. All the while, you live in the state capital and hang out with party members.
I'm reminded of Teach For America, which I did 15 years ago. I became a full time teacher with only 5 weeks of training. Most teachers go to 4 years of ed school. I firmly believe 2 things: TFA has produced some elite teachers, but it is not a scalable model because it is not better for most people. Similar argument for bootcamps vs college for training technologists.
> There are nearly 7,000 Ethereum-based projects, including some of the most innovative and promising ideas today.
Ethereum is a truly incredible and fascinating project, but at this point, I don't think anything that has come out of it qualifies as promising. Nothing from it has had a substantial impact on existing value chains of products and services. It's like the bustling economy of a techno-futurist hermit kingdom, but one which doesn't produce things anyone needs to survive (including its own subjects).
If that were the case, wouldn't we be able to point to some kind of evidence of that being the case? Nobody seems to know what these worthwhile outcomes are.
It has even failed demonstrate the most popular college claim: That its graduates will make more money. In reality, incomes have held stagnant through the rise of college. Furthermore, if we compare the USA, where ~40% of its population is a college graduate, with its nearest neighbour Canada, where ~70% of its population is a college graduate, the median American without a college degree makes ~50% more than the median Canadian with a college degree.
It seems the actual job of college is to act as the arbiter into certain supply managed careers (doctors, lawyers, etc.), ensuring that only the "top 10%" of students are permitted into those professions.
At each stage in the chain, the schools blame the lower schools for failing to prepare students properly, and use that as an excuse to dilute standards further, which then causes more problems for the next stage in the chain. This has reached something close to its end point now. They can only reduce standards so much more now until all students are illiterates grunting prompts into chatbots.
As to the first role, for example, the Byzantines in their universities focused on reproducing some combination of Christian orthodoxy and the Greco-Roman heritage of philosophy and history. They just taught the same curriculum over and over and over again without much modification (albeit with a lot of lurching back and forth between iconoclasm and anti-iconoclasm) for roughly a millennium. Since the 60s, the permanent cultural revolution makes it so that every micro generation of professors has a new revolutionary program that it imposes, which is then followed by a new revolutionary program against the old revolution and so on and so forth. Universities are fundamentally conservative (with a small c), which has generated a very funny situation in which they have become totally dedicated to conserving the institution of permanent cultural revolution without any content. They have become dedicated to the procedure of cultural revolution, but no one can agree on the substance and content of that revolution.
This is super wrong. The Thiel Fellowship stopped betting on underdogs long, long ago. I invite anyone reading this comment section to select a random recipient from the last few years go and look at two things:
1. What stage was their company at when they received the fellowship?
2. What is their parents' career?
Every person who receives the Fellowship has already raised millions of dollars, sometimes even tens of millions of dollars. Raising millions of dollars as a teenager isn't something you generally do without exceptional fortune or parents in the finance industry. Usually it's the latter.
I once met a TF recipient who ran a successful property lending company. What was his father's job? Multimillionaire owner of a large and successful property investment firm. Not hating on the guy, he was pretty cool and nice and his business went on to be successful (and he was for sure a hard worker, intelligent and ambitious), but the Fellowship slapping their name on his back didn't really change how the cards were stacked. At the very least, it wasn't the thing that moved the needle to him dropping out. I would be greatly surprised if, in the last 5 years, the Fellowship was the tipping point for even a single person dropping out of college.
Full disclosure on the conflict of interest though, I am a mediocre college dropout who was rejected post interview. I wouldn't have and still wouldn't turn down the $100k if it was offered. Money is great.
https://www.businesswire.com/news/home/20230208005685/en/Thi...
All of these are real tech companies. What's less real about the hustle is the fact I picked a random entry off the list and checked his instagram, and sure enough there's a photo of him taking flying lessons as a teenager. Check the company stage and sure enough he's already raised just under $7M after being backed by Y Combinator 2 years prior. Cool guy, smart guy, clearly worked hard and built something valuable. I don't hold it against him in the slightest. I don't hold it against YC or the program managers for the TF either - they clearly picked the guy most likely to build a billion dollar company.
But did the Fellowship make him a winner? Absolutely not.
Thiel himself was the beneficiary of his college network - he met the PayPal team through his Stanford roommate. It’s inauthentic for him to discount the power of these networks.
College is broken in many ways. But a positive college experience adds more depth and richness to life in the long-term than a check from Thiel.
It’s not comparing Thiel to orphans. It’s comparing Thiel to various other elite institutions and their formulas for making great people.
Its scales because humans.
It’s always funny and surprising when people say “It’s a dog eat dog world!” and sets up a dog eat dog world and then get surprised when a dog eats another dog.
Thiel is bashing college, some of these kids have prestige academics to begin with. Luminar‘S founder attended one of the top California schools (a private school in Newport Beach), was mentored in high school by a laser entrepreneur, and attended the UC Irvije Laser institute, while in high school.
And elite private school education probably gets you to junior year of a state university academically and he was essentially in “college” at Irvine while a high school student. Coupled with wealthy real estate developer parents, sure skipping college to start a business is a viable path.
What’s interesting to me is how many people end up in careers unrelated to their college major — yet basically Thiels path more or less doubles down on their career choice at 18 and locks them in.
Also, what happened to the other 260 kids? I bet they would prefer that Harvard degree now
Equally, I'd love to see a story about those that were offered YC and turned it down. This should happen, I assume more often since YC are taking 7% of your business while PT appears to be offering a triple gift (cash, status and time).
There is a huge difference between those that make it without YC/PT and those that were offered the help and said, "Non".
Peter Thiel investing in you is an even better signal for the specific task of trying to build a unicorn. Not only is he a billionaire, but all the other people who invest in startups know who he is. But getting a thiel fellowship is out of reach for most young people.
The type of deep knowledge to do things and not just form startups requires an actual education.
I still wouldn’t skip my college years for anything though, it was the best time of my life.
No, it’s not awkward for colleges because any educated person should be able to comprehend that college is not a factory and outliers always exist. The fact that we’ve had successful people way before formal education existed should be enough to render the point moot.
The only one affected is the general public which will instinctively undervalue education and use this piece of information to skip college and live a worse life on average
Diversity of choice and outcome is good. Not awkward.
I first tried to pay as I wanted to support. But it just let to more ads and more upsell and more bother. It was a more pleasant experience to not pay and see the basic ads than paying and getting bombarded with “dear prepend, buy a longer subscription/gift a subscription/change your password/do you love us/etc”
Once the algorithms learned that the most likely buyer is a previous buyer and how to increase incremental revenue it started sucking more.
That's why no subscription model will work in favour of the paying customer for newspapers, dating apps and so on. It was never a distribution problem as much as that once the money rolls in, the next question will always be the same: How do we increase revenue?
But that’s pretty rare and hard to know as there’s also lots of single owner 4hourworkweekers trying to wring extra money out of subscribers and selling $3 shirts for $50 or whatever.