When tech giant Adobe agreed a stunning $20 billion deal for San Francisco design startup Figma this month, its co-founder Dylan Field joined a long list of university dropouts-turned-billionaires.
Like Steve Jobs and Bill Gates, Field left school early to pursue his dream. But unlike those famed uni-leavers, Field was lured out by a force even more powerful than the urgency of his own ideas: a billionaire offering cash.
As a student at Brown University in 2012, Field applied for the Thiel Fellowship, an unusual programme that libertarian billionaire tech investor Peter Thiel started in 2010. Every year, the investor chooses 20 to 30 teenagers — they must be teens when they apply — “who want to build new things instead of sitting in a classroom”. He offers them $100,000 in cash over two years. The only condition: they leave university.
The Figma deal came at an interesting time. Weeks before it was announced, Joe Biden controversially unveiled his plan to forgive about $500 billion in student debt, sparking a global debate about the value of university education. Since 1980, the cost of higher education has nearly tripled in America, leaving many students with six-figure loans to pay off and degrees that will do little to help them do so. Before Biden’s aid package, student debt had hit $1.7 trillion, making it the largest source of household debt outside mortgages. Student debt in England has doubled to $182 billion in only five years.
It is perhaps little surprise that tuition fees have become a bitter front in the culture wars. The spectacle of another Thiel-funded founder turning into a billionaire proved too delicious for some to pass up. Keith Rabois, a prominent tech investor and former colleague of Thiel, tweeted: “Over the last dozen years, there have been approximately 250 to 300 Thiel Fellows. [They have] easily produced more value than all of NYU, Columbia, Penn, Brown, and Cornell grads combined.”
Beyond the grandstanding, however, a serious question arises. Surely there has to be a better way to go educate the next generations than loading them with debt and sending them on their way?
Silicon Valley has latched on to higher education as an industry ripe for disruption. Coding bootcamps have exploded in popularity. Start-ups such as Bloomtech offer intensive software programming courses for no upfront cost. When students land well-paid jobs, Bloomtech takes a cut under income-sharing deals, which founder Austen Allred said aligns the interests of his company with the students it teaches. If the training is no good, students will not get hired, and Bloomtech does not get paid. Meanwhile, a small but growing core of employers, such as Google, GM, Bank of America and Tesla, have dropped four-year degree requirements for most positions, focusing instead on demonstrated skill and experience.
It was a slow burn. In 2013, Larry Summers, former Harvard president and Treasury secretary, contemptuously dismissed the programme. “The single most misdirected bit of philanthropy in this decade is Peter Thiel’s special programme to bribe people to drop out of college.”
Yet today, some of its alums, such as Field, 30, who entered the programme years ago, have begun to see their labours bear fruit. The Figma deal set a record as the highest price ever paid for a private tech start-up, narrowly beating the $19 billion that Facebook paid for WhatsApp. Another Thiel fellow, Vitalik Buterin, 28, created ethereum, the $155 billion cryptocurrency and blockchain technology upon which most crypto projects are built. Last year he gifted $1 billion in Covid aid to India.
Each year, thousands of applicants vie for the 20 Thiel fellowship spots. After an initial screening, candidates are interviewed by past fellows. Typically, they must already be working on a project to make the cut, be it a non-profit, academic research or a start-up. Thiel has final say.
DAVID PAUL MORRIS/BLOOMBERG VIA GETTY IMAGES
Josh Browder, the London-born founder of DoNotPay, a robot lawyer start-up, dropped out of Stanford University in 2018, the year he won a spot with the programme. “The money was nice, but the biggest thing was just having a group of people who had the belief that as a 19-year-old, you can build a big business,” he said. He leaned heavily on mentors and other Thiel fellows via organised retreats, group chats and monthly dinners, to discuss such thorny issues as how to hire someone three times your age.
DoNotPay last year was valued at $210 million after raising money from Andreessen Horowitz and other venture firms. Browder, through his own investment firm, has invested in 23 companies founded by Thiel fellows, about 10 per cent of the companies created by people who have gone through the programme.
The success of the Thiel’s madcap scheme can be easily dismissed as a one-off experiment, a magnet for the truly special. Field, after all, learned algebra when he was six. Those who opt for Thiel’s offer would likely have been successful anyway, if not as soon or in the same manner.
Yet underlying it is a scepticism of the university route that is seeping deeper into boardrooms, and society at large, as tuitions rise and the cost-benefit analysis becomes more strained.
Gibson, who with Strachman operates the 1517 Fund, a venture capital firm that invests in dropouts and “mad scientists”, has compared diplomas to indulgences, the pieces of paper the Pre-Reformation church sold that supposedly absolved people of their sins.
“Universities today sell pieces of paper at great cost and tell young people that buying them is the only way we can save their souls,” Gibson writes in a forthcoming book. “Universities call this piece of paper a diploma, and they’re rolling in money selling them, building extravagant monuments to their glory and power.” He adds: “We don’t believe in indulgences.”
By Danny Fortson