Katie Jacobs Stanton, the founder and general partner of Moxxie Ventures, has observed a significant shift in the startup ecosystem. Another report announced that Moxxie Ventures closed on their new $95 million third fund. This accomplishment is an indication of a larger movement of founders who focus on creativity over conventional education. Even more alarming anecdotes from academia serve to underscore this trend. For example, one faculty member at an elite university told us that a student relinquished their degree in the last semester due to intimidation.
The trend of college dropouts turning into popular startup founders is not unprecedented. Iconic innovators like Steve Jobs, Bill Gates, and Mark Zuckerberg arguably paved their paths to victory by dropping out of college to focus on their entrepreneurial endeavors. Research shows that most resilient startups continue to be led by degree-holding grads, with the percentage of degree-holding founders increasing for graduate-level education. This contrast makes one wonder what the value of formal education is, or should be, as we continue to shift towards an increasingly rapid startup world.
Marina Temkin, a venture capital and startups reporter at TechCrunch, has written about the increasingly popular narrative of dropout founders. Kulveer Taggar, the founder of Phosphor Capital, compares his investment focus to YC-backed companies. He didn’t pull any punches in talking about his struggle within himself between education and entrepreneurship.
“I can finish my degree, or I can just start building.” – Kulveer Taggar
This sentiment is illustrative of a much larger urgency found in young entrepreneurs. One story that Taggar shared emphasized the urgency and fear of missing out that so many feel. This pressure has contributed to them dropping out of their studies in order to pursue startup activity full time.
Wesley Chan, co-founder of FPV Ventures, added that investing in startup founders requires a lot of wisdom. What he discovers is that the most successful entrepreneurs possess traits that go far beyond test scores.
Stanton put it well in his own way as he explained, being a dropout has mutated into a sort of special badge within the venture ecosystem.
“Being a dropout is a kind of credential in itself, reflecting a deep conviction and commitment to building. I think it’s perceived as something quite positive in the venture ecosystem.” – Katie Jacobs Stanton
Yuri Sagalov is the head of General Catalyst’s seed strategy. Dropouts might end up doing just fine, he concedes, but the intellectual and social networks formed at universities remain an important currency. His remarks focused on the importance of these networks to give the resources and opportunities that are much more challenging to duplicate without.
“You get a lot of the social value… because you can put the fact that you participated,” – Yuri Sagalov
The fact is that the landscape is changing extremely quickly. Michael Truell, CEO of Cursor and MIT graduate, illustrates the entrepreneurial educational pedigree by the example of Cursor CEO Michael Truell. In much the same way, Scott Wu, co-founder of Cognition and Harvard graduate himself, backs up this notion. They are a living and breathing affirmation of creativity and craftsmanship that draws the best investors and partners in the world.
Stanton’s warning is a major concern for a rapidly emerging group of founders. These days they’re better known for wearing their dropout badge when promoting their start-ups.
“I don’t believe YC formally tracks dropout status but, anecdotally, in recent batches, I was struck by how many founders highlight being a dropout from college, grad school, and even high school.” – Katie Jacobs Stanton
As this new narrative continues to develop, it poses some fundamental questions for the future of education and entrepreneurship. From the way young innovators today are abandoning the classroom and jumping right into their inventions. This shift will profoundly impact the startup landscape as well as educational institutions in the coming years.