Who Needs the Ivies?

Graduating from an elite university may not ensure entrepreneurial success. In fact, such schools may foster risk aversion

by Vivek Wadhwa

I must confess to being disappointed five years ago when my son, Vineet, told me he had no interest in applying to any of the schools I consider elite. He said he would fit in better at a public state university and he didn't believe that choice would lessen his chances of career success.

Perhaps it was the bias that my company's venture capitalists showed toward management teams from top-tier colleges that skewed my thinking. Whatever the cause, I have since concluded I shouldn't have been upset in the least. An education from one of the world's top schools may not give that much of an edge after all. And in some cases it may actually lessen the chances you will become a successful entrepreneur (see BusinessWeek.com, 4/18/07, "Throw the Book at College Rankings").

Founders from Across the Educational Spectrum

I should have known better. I didn't graduate from an elite university—and by elite, I mean schools such as Ivy League universities, Massachusetts Institute of Technology, Stanford University, and top-tier academic institutions globally. Yet I founded two successful technology companies.

My new mindset isn't solely based on my experience either. After joining Duke University and researching this topic, I've learned that the majority of the immigrants who founded tech companies over the last decade didn't graduate from universities that are the highest ranked or considered elite, based on selective admissions criteria. Schools like MIT and Stanford don't graduate more founders than Stevens Institute of Technology or Arizona State University. Even the famed Indian Institutes of Technology (IITs) only graduated 15% of the India-born founders of Silicon Valley companies.

Our findings were based on interviews with 317 engineering and technology companies that opened from 1995 to 2005 with a foreign-born founder. One of the biggest surprises was that there was no dominant university in the U.S. or abroad that graduated these company founders; they studied in various schools of all tiers across the U.S. and in their home countries.

Foreign-Born Entrepreneurs Flourish

Our research had focused on company founders who were foreign-born. It could be that American-born entrepreneurs have a different educational profile than immigrants. So, more research is needed before we draw final conclusions.

But this immigrant group does constitute a sizable percentage of all tech startups. In an earlier research project, we discovered that a quarter of the engineering and technology companies founded nationwide, and half of those founded in Silicon Valley from 1995 to 2005, had a foreign-born chief executive or lead technologist as a founder. These companies accounted for $52 billion in sales and 450,000 jobs in 2005 (see BusinessWeek.com, 3/1/07, "Open Doors Wider for Skilled Immigrants").

Could it be that elite education is overrated in the tech world? I asked several friends, most of whom are tech executives, for input. I expected those from top-tier schools to get defensive. Yet I was surprised that every one of the dozens who responded agreed. Most elite university graduates say it was the contacts they made and networks they formed in school, rather than the education itself, that provided the real advantage.

Entrepreneurial vs. Corporate Thinking

Jim Duggan, a senior technology industry analyst who holds a bachelor's in engineering from MIT and a master's in science and engineering from Princeton, goes further. He writes that he wasn't surprised by our findings. In fact, he would contend that attendance at top-tier schools might even be inversely correlated with entrepreneurial success. These schools often focus on producing the next generation of research scientists and academics—not entrepreneurs. He believes that the elitism and confidence these schools nurture may work well in large corporations, but not in tech startups.