Peter Thiel, the PayPal cofounder and venture capitalist who was an early investor in Facebook, made waves in April 2011 when he said higher education was in a bubble. At the time, Thiel argued that college was overpriced and was leading many students to unemployment after graduation, leaving them unable to repay student loans.
[Read how the higher education bubble will burst.]
As a follow-up, he launched the "20 Under 20" Thiel Fellowship in May 2011, choosing 24 entrepreneurs under the age of 20 (four more than originally planned) and giving them $100,000 each to build start-up businesses over the next two years. There was one stipulation, though: In order to accept the grant, students could not be enrolled at a university.
Nearly a year later, a new program challenges higher education by offering people the opportunity to enter start-up companies right out of high school. Known as E[nstitute], the program offers 15 young adults two-year apprenticeships working with some of New York's most well-known entrepreneurs, including Chartbeat's Tony Haile and bitly's Hilary Mason.
The founders of the program, Shaila Ittycheria and Kane Sarhan, say they are striving to create a new model for how to educate the next generation that relies less upon in-class instruction and more on work experiences.
"University was never meant to be for everyone," Sarhan, a graduate of New York's Pace University, says. "At some point, it became attached to the American Dream and everyone started going."
Sarhan says the goal of E[nstitute], which targets applicants between the ages of 18 and 24, is to give those who complete the program a competitive edge in being "employable and competitive in the global workforce."
"We want them to be able to hit the ground running on day one when they get hired into a company or when they start their own business," he notes. "Instead of [companies] having to worry about bringing in some entry level kid and training them, we can change that paradigm and say, 'These graduates are going to be extremely reliable and they're worth investing in.'"
[Discover how learning to code can improve job opportunities.]
Sarhan and Ittycheria acknowledge, though, that E[nstitute] is not a program meant to completely replace traditional university education.
"We're not saying college is wrong," Ittycheria says, who holds a finance degree from Arizona State University and an M.B.A. from Harvard Business School. "We're just challenging that by saying there is a richer opportunity to actually learn in an environment where you see the context of a business."
While college may not be for everyone, those who attend a university before joining a start-up benefit from the experience, notes Larry Chiagouris, a professor at Pace University and author of The Secret To Getting A Job After College.
"The problem is, as teenagers, they don't know what they don't know," Chiagouris says. "Most start-ups, quite frankly, aren't well managed by sophisticated, battle-tested business people. So the people managing the start-ups oftentimes aren't the best role models for young people."
Chiagouris says that students should use their time in college to learn how to distinguish good start-up businesses from poorly run organizations by interning or taking part-time jobs at start-ups while in school.
"I think the most important thing is to try to blend the start-up experience with learning and education that complements and is outside the start-up experience," he advises. "That's the best combination of all."
[See how start-ups offer risks and rewards for M.B.A. interns.]
Some current college students, though, believe a college education has not made an impact on their start-up pursuits. Chelsea Logan, a senior at George Mason University and CEO of the lifestyle brand Satissimi (her second start-up venture), says she has not benefitted from what she's learned at her university.
"You can't go to school to become an entrepreneur because it really comes from the experience," Logan says. "I find myself often frustrated in class because they're not teaching me anything new. You need to get out there and network, and I really feel like college hasn't given me that experience at all."
For Brian Kearney, a sophomore at Rowan University and the founder of Driving Force Public Relations, his motivation for attending college is the belief that a bachelor's degree will make him more competitive in the corporate world.
"I know that I won't be able to get another job someday [without a degree] if I want to get out of this [start-up]," Kearney says. "I know that I'll need this piece of paper."
The perception that a degree will always trump work experience is one E[nstitute] cofounders Ittycheria and Sarhan hope to change with their program.
"College does work for some people and some careers, but we think there needs to be another option for education," Sarhan says. "There has to be a way to create a new accredited model of learning around real-life experience on the job. There has to be another way for young people."
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