The Education of Billionaires
Or rather, the lack thereof. The recent movie about Facebook, “The Social Network”, claimed that those guys became billionaires by abandoning their schooling and being as jerk-ish as possible. Two of the four billionaires created by Facebook, Mark Zuckerberg and Dustin Moskovitz, have no degrees at all, while Eduardo Saverin (the main screwee) has a BA and Peter Thiel (probably the dark mastermind of the company) has a JD.
I’m not ordinarily into plutography, but this got me to wondering how common it is for tech billionaires to be dropouts. Steve Jobs and Bill Gates are, and they’re the most well-known corporate execs in the country. How about the rest of them? I went through the Forbes 400 list of the wealthiest Americans and found the education levels of the 52 of them who made their money in some kind of technology. Most of the rest were in finance, unsurprisingly. I could have looked at them too, but it’s just too maddening in these days of widespread financial crime. So here’s a list of the technologists sorted by number of years of college and then by wealth:
About 60% have graduate degrees and 20% have PhDs. That’s a high proportion compared to the general technology community, but not an overwhelming number. The best-known doctorates are the Google leader Eric Schmidt and the Intel founder Gordon Moore.
One contrast between the dropouts and the PhDs is in whether their firms succeeded because of network effects or because of a specialized advance. Microsoft is dominant because it’s only reasonable to write for one operating system. The more there is on that OS, the more valuable it becomes. Likewise Apple wins because of the synergy between the iPod and iTunes, and because of the iPhone app ecosystem. On the other hand, Google does the same searching as everyone else, but does it better. The PhDs at Google really figured out how to do search, while the dropouts at Microsoft and Apple realized how the whole system should work.
It should be noted that the dollar figures here are pretty soft. Most of this money is in the form of stock, which is volatile and not that liquid. If one of these guys did peel off a billion dollars to have his face added to Mount Rushmore, the value of the rest of his assets would plummet. People on the non-tech part of the Forbes list probably have more stable and diverse assets.
Where did they get their educations? Mainly at Stanford and Harvard, at 8 each, followed by UCLA (4) and USC (3). The other big tech schools – MIT, Caltech, CMU, and UC Berkeley- only get one each. Stanford is not surprising – it’s the spark plug for the engine of Silicon Valley. The Valley exists because of the efforts of Stanford’s great engineering dean, Frederick Terman, in the 50s and 60s, and because it has better weather than Massachusetts. Harvard is a little more surprising – it didn’t even have an engineering school until recently – but it is the world’s best university, much as it pains this MIT alum to say it.
This tech list includes only one woman, Meg Whitman of eBay. The Forbes 400 does have a few others, but most inherited their money. The self-made non-tech ones are Oprah Winfrey (TV), Doris Fisher (co-founder of The Gap), and Diane Hendricks (roofing supplies).
There are also no African-Americans and only one Hispanic, Eduardo Saverin of Facebook, who was born in Brazil. There are five born in East Asia (Min Kao, Patrick Soon-Shiong, James Kim, David Sun, and John Tu) and three Indians ( Bharat Desai, Vinod Khosla, and Romesh T. Wadhwani).
About 80% of them made their money in some flavor of information technology, whether it was computer hardware, software, Internet, or telecom. If you wonder why cars and planes and spacecraft look the same as they did 30 years ago, there’s one reason – IT has sucked the innovation out of every other field. It’s just too easy to make more money with it. There are no billionaire mechanical engineers here, although Sir James Dyson in the UK counts.
Anyway, one of the reasons cited for the growing inequality in America is the premium acquired by education. I don’t see that in this list. The people here are pretty educated, but not extraordinarily so. They’ve made their fortunes by the usual methods of luck, cunning, and determination rather than any special schooling.
Now, of course no one deserves to have a billion dollars. The people here are capable, but they are not thousands of times more capable than others. It’s a sign of how broken the incentive system is in US-style capitalism. A few take all the gains and the rest get out-sourced to Bangalore. There are fewer and fewer prospects for having a middle-class career in technology. No wonder students aren’t drawn to it, as I discussed here. This winner-take-all approach has become the subject of a lot of discussion, but it’s clearly something that has to be fixed.Uncategorized
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