Student Debt is Killing Tech Entrepreneurship

Bill Gates co-founded Microsoft after dropping out of Harvard.  In his youth, personal computers were coming of age. He was given a small window of opportunity to participate in bringing PCs to users homes by creating an operating system.  Today Microsoft is one of the largest software producers in the world, employees thousands of people, and helps businesses on a daily basis.  Bill Gates was able to capitalize on this window because, at the time, he was not married, did not have children, and entered the market at the right time.

Will high tuition make tech entrepreneurship possible?

Will high tuition make tech entrepreneurship possible?

Mark Zuckerberg also dropped out of Harvard to build Facebook. Zuckerberg was born in 1984 and was in his twenties when social media became popular.  It was the perfect time to start Facebook, as there was limited competition in this field.  Zuckerberg acted quickly on his window of opportunity, and today Facebook connects millions of people around the world and is a great tool for businesses to communicate with their customers.

David Karp formed a social blogging site called Tumblr. In May of 2013 Tumblr was acquired by Yahoo! for 1.1 billion dollars.  David is not married and does not have children.

Besides being successful tech entrepreneur Gates, Zuckerburg, and Karp had something else in common —

No Student Debt!!

Gates and Zuckerburg both dropped out of Harvard and Karp dropped out of school when he was 15. Imagine if Mark Zuckerburg stayed in school and finished his degree.  Would he have started Facebook or would the burden of student debt have forced him to get a programming job after university? David Karp had dreams of going to MIT.  Luckily he didn’t as the average cost of an undergraduate degree would have cost $42,500 per year. Odds are if he graduated with 4 years of debt he would not have gone on to co-found Tumblr or any other start-up.

For every generation, there seems exists a window of opportunity that they can act on.  This window closes quickly, due to competition. In terms of the individual, the window can also close quickly when the pressures of a mortgage, family life, and children come into play. If we continue to increase the cost of tuition, how will the next generation of entrepreneurs be able to flourish?  Today with the rising cost of tuition new graduates will be less likely to take a risk and start a business.  More likely, they will take a less creative job in order to focus on paying off their student debt and wondering how will they obtain their first mortgage.

Now think of the impact if we reduce student debt.  Today, Microsoft and Facebook employ thousands.  Bill Gates now spends his time with the Bill and Melinda Gates Foundation and has donated millions to in fighting poverty. Odds are if we lower student tuition the next generation of entrepreneurs will be more likely to start a business and increase productivity.  The successful tech entrepreneurs will then reduce unemployment as they will hire others as their company grows.

You can argue the next generation should simply not go to college at all but I advise against this, as competition in the start-up world is intense.  For example, the window of opportunity today is most likely in mobile. Unfortunately, competition in this market is intense as the market is already saturated; Apple recently reported their 50th billionth download, with Google Play not far behind.  Even if users download your iPhone app, app retention is a huge problem with  3/4 of your customers removing the app within 3 months.

You could counter with the argument that if I don’t drop out of college now, I will miss my window of opportunity.  The reality is there will always be a window of opportunity in the tech world. Today it’s all about mobile apps and cloud computing, but tomorrow it could be Google Glass?

On the other hand, technology professionals are in huge demand.  Take for example the recent acquisitions made by Yahoo! If you remove Tumblr from the equation, the majority of these acquisitions are done strictly to acquire the talent and the company acquired is shut down.

If you want to kill entrepreneurship, increase student debt.  If you want a good paying job in the tech field, stay in school; and if you are worried about the window of opportunity closing, don’t. A new one will open soon!

See Also

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.