By Ed McLaughlin and Wyn Lydecker
Investors often claim that they invest in people – not ideas. They bet on the jockey, not the horse. But what makes a funder choose the jockey he or she wants to fund? Investors can look at track records, character, and/or credentials. When an entrepreneur can demonstrate a proven ability to execute, or that they are hungry or relentless or resourceful, an investor will bet on them. If that is the case, where do credentials come in?
Some incubators, accelerators, VCs and angels require a person to fulfill some eligibility criteria, most often a college degree. And for new graduates, the most important credentials are “college name, GPA, major and internship employer names,” according to Danny Crichton in his TechCrunch article: Silicon Valley’s Dilemma over Credentials.
Yet, as we all know, some of the most successful entrepreneurs, Steve Jobs, Bill Gates, Paul Allen, Mark Zuckerberg, and Larry Ellison never graduated from college. Neither did David Karp, the creator of Tumblr, now the 9th-most visited site in the United States. At the age of 16, Karp was a product manager at UrbanBaby, an internet forum for parents. He had dropped out of The Bronx High School of Science a year earlier in 2001 to be home schooled, and never obtained a high school diploma.
Why Should Entrepreneurs Get Degrees?
Given these success stories, should an entrepreneur get a college or even a master’s degree? College is expensive and can load students down with a heavy debt burden. Peter Thiel believes that there is a college bubble and in 2010 started the Thiel Fellowships – an annual $100,000 stipend for two years to selected students to drop out of college and start a company. So should you get a degree?
When asked about credentials, Matt Oguz, an investor and the founding partner at Palo Alto Venture Science responded to an aspiring entrepreneur in Quora, the question and answer site, this way: “Credentials, just like self-confidence, are gained after the fact. Now, if one has amazing credentials, they are certainly given access to valuable resources easier than others, but they are expected to perform better than others. If you don’t possess top credentials, it may be harder to gain access to the club, but you maintain more autonomy. So if it bothers you to not have top credentials, you can obtain more over time.”
In Kiplinger’s “The Next Sure Thing,” reporter Matt Popowsky said, “Given the internet’s potential to transform small businesses into big successes over-night, even some educators can’t fault students like Ian Wyatt
Entrepreneurs with Failed Startups Can Still Be Successful
Basically, there are many business people that say if a startup fails, the founder won’t be able to raise funding for future ventures, if his or her resume doesn’t have the right stuff. “They won’t have the credentials later on if their business fails,” said Leo Rogers, retired director, Rothman Institute at Fairleigh Dickinson University. Eventually most startups do fail. If entrepreneurs decide they want to work for someone else, not having a college degree can slam the door to a better job and a higher salary even in a hot job market.
In FastCompany, Guy Nirpaz, CEO of Totango, said that the entrepreneurs who have failed businesses have as much to offer because they aren’t afraid to take risks. They learn quickly and know how to talk to customers. At age 19, Pete Cashmore founded Mashable, which attracts more than 20 million unique users each month. He graduated high school two years late due to health problem and never even went to college. The truth of the matter is: Entrepreneurs can still be successful if they have little or poor credentials, and even if they have failed businesses.
Your Startup Success
You need a step-by-step process to guide you through the uncertainties of starting up, so we designed a business tool to get entrepreneurs on the right track from the get-go: The Startup Roadmap. For a limited time, you can get a complimentary eCopy of The Startup Roadmap: 21 Steps to Profitability by clicking this link. If you prefer the print edition, you can purchase it directly from Amazon for $9.99.
Once you have read The Startup Roadmap, please let us know what you think by emailing us at: Ed@ThePurposeIsProfit.com
Ed McLaughlin is currently co-writing the book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business, with Wyn Lydecker and Paul McLaughlin.
Copyright © 2015 by Ed McLaughlin All rights reserved.