In February, Dan Friedman was in a room with Peter Thiel at Founders Fund headquarters in San Francisco’s Presidio. The 21-year-old and his cofounder had reached out to Thiel asking for advice on their education startup Thinkful, and Thiel obliged. The hour-long meeting was wide ranging: How do we scale? How do we get the best talent to mentor our clients? After every question, Friedman would watch Thiel lean back and start, “Well, at PayPal, we did this…”
That was a Monday afternoon. Most people Friedman’s age would be in class. But Friedman is a part of the inaugural class of the Thiel Fellowship, where a cohort of 20 young people chooses to bypass college and instead gets $100,000 over two years to focus on building companies. [Disclosure: Thiel is a personal investor in PandoDaily.]
Weeks before, Thiel had invested in Thinkful, making Friedman the first in his experimental young brood that he would financially back. The company couples online educational videos and lessons in computer programming with mentorship from those in the industry. All told, the company raised $1 million from Thiel’s FF Angel, RRE Ventures and Quotidian Ventures.
In about a month, the first members of the 2011 class, Friedman included, will conclude their fellowships. The rest will be finished by August (fellows started at different times). And what have they done with the period of life that Americana has typically reserved for lectures, writing assignments, all night cram sessions, as well as showering in dorm bathrooms wearing flip flops, keggers, and drunken bad decisions that are really good decisions? (Although those bad/good decisions can be made anywhere.)
The fact that Friedman is one of Thiel’s fellows explains why he got the precious meeting with the boss, but when looking back on how those first 20 have fared thus far, scenes like that must be mentioned. Some have started companies, and some have sold companies. Others realized, after two years without schooling, that the next step for them is college, some as early as this fall. (None of those fellows would speak to me for this story, but many fellows have told me this is the plan for some of their colleagues.)
Thiel started the fellowship in line with his oft-cited manifesto that innovation is slowing down, partly because he thinks the school system is broken. “In some ways, the education system has become a substitute for thinking about the future,” Thiel said at one PandoMonthly. “You go to school, and what do you do after high school? Don’t know, I’ll go to college. What do you do after college? Don’t know, I’ll go to grad school. And tracking credentialing becomes a way of avoiding thinking about what you’re going to do with your life.”
Of course, graduating from college offers economic advantages. Though the hardship of student debt is something to seriously consider, those with a bachelor’s degree still make more than a million dollars more on average over a lifetime compared to high school graduates, according to the 2011 American Community Survey. And in January, the unemployment rate for college grads was 3.7 percent, as opposed to 8.1 percent for those with only high school diplomas.
Those are average numbers across the board, and perhaps the opportunities that come from a high-profile program like the Thiel Fellowship outweigh those for the average college student. But at least for now, the data shows college is the more lucrative path.
But for the 20 young people the fellowship chooses to forgo college — the program organizers just made selections for its third class last week — the foundation builds in a support system. The fellowship is loosely structured, with fellows checking in every month with the Thiel Foundation, which tracks their progress. Sprinkled in are various workshops, retreats and networking events.
Paul Gu is one fellow that’s been busy of late. He cofounded Upstart one year ago, which this week announced a $5.9 million Series A round. David Girouard, CEO and another cofounder, explains it as essentially a “Kickstarter for people,” in which accredited investors financially back young people with entrepreneurial potential. Sound familiar? Gu, who created the algorithm that the company uses to predict a young person’s future salary, calls it “a scalable version of the Thiel Fellowship.”
Gu was halfway done with his degree in economics and computer science from Yale when he dropped out. He and Friedman were classmates and both decided to apply. “My parents weren’t thrilled,” he says. “They didn’t know what I was getting into, not getting the Yale college degree.”
Of course one of the biggest prices to bypassing college is missing out on the social aspect of it. Friedman and Gu had already experienced two years of college, so the pangs of FOMO aren’t so bad.
But Nick Cammarata was 17 when he began the fellowship, and if there is such a thing as an archetypal Thiel fellow, he might be it. He started a Dropbox competitor while a high school sophomore in Boston. During the fellowship, he started a company that was recently acquired. (He wouldn’t talk about it.)
He says he has no qualms about missing college, and has no plans to attend. Cammarata cites the freedom that the business world gives him, mentioning that he’s traveled to Japan, Montreal and Moscow in the past two years. He also says the camaraderie between fellows was enough of a social bonding experience. He lived with other fellows next to Steve Jobs’ house in Palo Alto. The group started with five or six people, he says, but grew to eight or nine housemates as the program went on. “There was a 6’4” guy living in a closet,” he says.
Those friendships were enough to wash away any regret. And he thinks the intimate conversations about life and soul-searching he had with housemates are comparable to ones college students might have in a dorm. “Those 2 a.m. discussions happened a lot more because we didn’t have to get up the next morning,” Cammarata says.
It’s practically a Thiel Fellowship talking point. “We should be wary of letting nostalgia over college cloud our judgment,” Jonathan Cain, president of the Thiel Foundation and one of the program’s cofounders, says. “It’s a very expensive way to find yourself.”
That’s true, but there’s also an argument to be made for the value of learning that comes with college’s structured approach. It’s a place where students learn critical thinking, read literature, are taught how to write better and structure an argument. The fellows argue that they can do all that reading on their own, and that building a company goes far beyond college in teaching skills like critical thinking. And for some of the personalities that choose to apply for the fellowship in the first place, the structured approach may not work. “I have trouble studying when I’m told,” says Cammarata.
But some fellows continue to find the idea of college intriguing. Even Friedman, who, for all intents and purposes, had a very positive fellowship experience, reflects on the decision he made two years ago. “Even those of us who have found success definitely take time to question it,” he says. “We have given up a lot.” He says he doesn’t regret the decision, but would he go back and finish up his degree? “Looking out at the ten-year plan, I’d expect to finish college at some point at Yale, if it makes sense.”
And Cammarata says he might have liked to do one semester of college, just out of curiosity. Given the opportunity, he would have chosen Carnegie Mellon.
But having students attend school after the fellowship doesn’t constitute a failure for the program. Gu thinks the idea is to enable entrepreneurial young people to start building their ideas, and not wait. Cain says part of the goal was to open up young people to alternative routes. “And to the extent that fellows do go back to school, it will be with more clarity of purpose than their peers,” Cain says. “They’ll extract more value from it.”