Tuesday, June 28, 2011

A Late Epilogue to an Earlier Post on Greenbergs and Zuckerbergs

Last month, while reacting to a New York Times article, I wrote about the Greenbergs and Zuckerbers dropping out of college and following each other to entrepreneurship.

As I saw it, the story had two morals, not entirely unrelated. One was the corrput culture at Stanford – and, by extension, U.S. universities – which belittled education and encouraged students to drop out in pursuit of the money.

The other was the long-term effect of this phenomenon. I said imagine the kind of citizens the illiterate rich brats would make and the kind of society they would help build using their wealth.

Meanwhile, I had an exchange with a reader who questioned – or rather, wanted more elaboration on – my comments that finance capital shapes people’s conduct.

Here is the follow up to the story from this weekend’s Financial Times, under the heading Rising college drop-outs hope to learn a lesson from Zuckerberg and Gates:
Professors at MIT, Stanford and UC Berkeley, three universities with a strong tradition in as IT powerhouses, confirm an uptick in entrepreneurial dropouts as students seek to emulate the example of famously successful non-graduates such as Bill Gates at Microsoft, Steve Jobs at Apple and Mark Zuckerberg at Facebook.

About a dozen college dropouts interviewed by the Financial Times said that they knew others who had made a similar choice. All confirmed investor willingness to fund them. “They want to see you believe your story enough to risk everything for it,” said Julia Hu, who left MIT when she got funding to build her sleeping device company. “They don’t like to fund non-committed entrepreneurs.”
You want money? Then prove that you’re committed by dropping out of the school. That is the logical demand from an entity such as finance capital that at all times strives to protect itself. It even turns dropping out into a badge of honor, just like the way serving jail time is made into a badge of honor in the ghettos.
“The environment encourages students to leave,” said Andre Marquis, UC Berkeley’s director of the entrepreneurship center, who had three students drop out of his program last semester. “In Silicon Valley, it’s almost a badge of honour to have left school for your start-up,” Ms Hu said.
Then, in the the very same issue of the FT, on page 2, was this report:
Peter Thiel, a prominent Silicon Valley investor, said the emphasis in US society on having a college degree has created “a bubble in education,” in which the professional value doesn’t match the $200,000 price tag. He is countering that by giving $100,000 each to 24 people under 20, to pursue an entrepreneurial idea in Silicon Valley instead of going to college.”

“We need more innovation,” he said. “There’s a tremendous cost to have the most talented people in society take on enormous debt, then take well-paying but deal-end jobs to service those loans for the next 15 to 20 years of their lives.”
Look beyond Peter Thiel spreading $2,400,000 amongst 24 people in the expectation that one of them would strike gold; that is the standard venture capital model. Ignore his lie that he recruits “the most talented people in society” only to have them develop Facebook applications like Hug Me, Kiss Me and Pillow Fight.

The central point here is this: when a 4-year education costs $200,000, which you have to borrow and after which you’d have no guarantee or even a good prospect of landing a good job, then the appearance of Peter Thiels is natural, necessary and inevitable.

Martin Luther King often said that he knew people's [racist] behavior could not be legislated. But he pushed for anti-discriminatory laws because he wanted to control the conduct. Finance capital bridges that chasm. It shapes the law and the conduct in ways that those unaware of its dynamics could hardly notice or imagine.