We’ve all heard the story dozens of times: a brilliant kid drops out of college, turns their idea into a business and ends up becoming a multi-billionaire.
Bill Gates, for example, dropped out of Harvard after two years to pursue his business idea (Microsoft) with his partner Paul Allen. In a story with almost eerie similarities, Mark Zuckerberg dropped out of Harvard in 2004 to focus on building Facebook and became a billionaire within the decade.
But are these types of stories really as common as they seem?
The Real Statistics
A quick glance at the statistics is all it takes to discount this theory. According to a report by Switzerland bank UBS, there are 1,542 billionaires in the world. According to the National Center for Education Statistics, the graduation rate for full-time undergraduate students seeking a 4-year bachelor’s degree was 59 percent. There are 20.4 million students estimated to have attended college in 2017. There are some complicating factors here, including different dropout rates for different programs, differences among population segments and of course, the possibility of a dropout returning in the future. Still, we can count on at least a few million new college dropouts per year.
Data from the National Student Clearinghouse backs up this idea, estimating there to be more than 31 million adults who have attended some college, but left without receiving a degree or certificate. Even if we assume that all billionaires are college dropouts (hint: they aren’t), that still gives you a 0.005 percent chance of achieving that level of financial success after dropping out.
One study reported in The Conversation found that among Forbes billionaires, 44.8 percent went to and completed a program from an elite school. Another 44.3 percent had a college education, and 10.9 percent either had no college education, or had no data to report. The same study found similar proportions among other important job categories and high achievement levels; for example, among 30-millionaires, 33.8 percent went to an elite school, 46.1 percent had a college education, and 20.0 percent had no college or no data. Among Fortune 500 CEOs, 41.0 percent went to an elite school, 53.0 percent had a college education, and only 5.8 percent had no college education or no data.
Looking at the other side of the equation, college dropouts don’t typically have a bright future. According to a story in the Atlantic, college dropouts over the age of 25 are 71 percent more likely to be unemployed, and are 4 times more likely to default on their student loans. On average, they earn 32 percent less than their contemporaries with college degrees.
Why College Dropout Billionaires Seem More Common
So if college dropout successes are so rare, why does it seem like they’re so common, and that dropping out of college to pursue entrepreneurship is a genuinely good idea?
Part of the problem is survivorship bias. We hear all the stories of billionaires who started their journeys as college dropouts, but how often do we hear the stories of the millions of unemployed college dropouts? We blind ourselves to the bigger portion of the population, unintentionally, because they never accomplished something worth sensationalizing.
As Americans, we also can’t resist an underdog story. We like to believe that it’s possible for anyone, in any circumstance, to be successful, so when we hear about someone who broke the norm and worked hard to succeed on an unconventional path, we can’t help but amplify the message and cheer them on.
What We Miss About College Dropout Entrepreneurs
We’re also doing a disservice to the “full” stories of college dropout successes. These aren’t random people who dropped out with a decent idea and stumbled into a fortune. For starters, they worked very hard to get to their level of success. Bill Gates, for example, after dropping out to form Microsoft, allegedly worked 16-hour days for 5 years before finding success (according to this Infographic based on Walter Isaacson’s book The Innovators.
They may also have had more (or better) connections. Take, for example, the Peter Thiel Fellowship, which grants recipients $100,000 and two years out of college to pursue a compelling entrepreneurial idea. It’s a good system, and one that mitigates the risks of dropping out with nothing, but if you have access to this amount of capital and external validation, your college education may not matter as much as it would to someone with less money, fewer connections and less-developed skills.
The reality is, entrepreneurial dropouts aren’t really as common as we make them out to be. There are occasional stories of young geniuses bucking the norm to bring a revolutionary idea to market (and they truly are inspiring), but these stories are the rare exception to the overwhelming average experience.
Dropping out of college deprives most people of the skills, knowledge and resources they need to build a good life for themselves — regardless of what business ideas they have at the time. Accordingly, it’s almost universally better to complete your education first, and start your business later.