Quitting school to start a company used to be seen as risky; now an honor
By Daisuke Wakabayashi
Updated June 3, 2015 10:02 p.m. ET
Near the end of his freshman year at the Massachusetts Institute of Technology, Ari Weinstein was offered $100,000 to drop out of school.
Mr. Weinstein, now 20, had grown up immersed in technology. He created a website at age 7, started a software company in high school and released an iPhone app his first week at MIT. The rest of his freshman year, he juggled classwork along with tending to the app.
The $100,000, from a fellowship sponsored by billionaire Peter Thiel, offered Mr. Weinstein a shot at his dream: starting a company with friends. But he wrestled with the decision in the spring of 2014, worried that he was giving up on college too soon and afraid of disappointing grandparents who valued education. His mother had other concerns.
“I thought he would miss out on the social aspects of college,” says Judy Weinstein. “It’s the bridge between childhood and adulthood, a built-in transitional time.”
Mr. Weinstein chose the fellowship. He and a growing number of others believe they don’t need the bridge of college and are starting companies before they’re old enough to drink. In San Francisco’s Mission District, Mr. Weinstein shares a house with 11 others, including seven who also ditched college to pursue startup life.
The college dropout-turned-entrepreneur is a staple of Silicon Valley mythology. Steve Jobs, Bill Gates and Mark Zuckerberg all left college.
In their day, those founders were very unusual. But a lot has changed since 2005, when Mr. Zuckerberg left Harvard. The new crop of dropouts has grown up with the Internet and smartphones. The tools to create new technology are more accessible. The cost to start a company has plunged, while the options for raising money have multiplied.
Moreover, the path isn’t as lonely. Many of the baby-faced entrepreneurs in Mr. Weinstein’s house have known each other for years, via Facebook groups, Twitter and a thriving circuit of weekend technology competitions called hackathons.
They call the house, above a vegan taqueria in San Francisco’s Mission District, Mission Control. It resembles college housing, complete with a sink full of dirty dishes and common living areas cluttered with empty pizza boxes. In the bedrooms, clothes spill out of open suitcases.
Not long ago, dropping out of school to start a company was considered risky. For this generation, it is a badge of honor, evidence of ambition and focus. Very few dropouts become tycoons, but “failure” today often means going back to school or taking a six-figure job at a big tech company.
“If you’re a young, technical founder, you carry almost zero risk,” says Dave Fontenot, 21, a Mission Control resident who dropped out of the University of Michigan after his sophomore year to start HackMatch, a job-placement firm for engineers. He says it is easier for him to place dropouts than new graduates.
“It’s almost a bigger risk to stay in school and let people like me drop out and start things before you have a chance,” he says.
Many tech companies welcome young talent, and don’t require employees to have a college degree. Facebook Inc., Google Inc. and others offer internships to teenagers; Facebook last year hired an 18-year-old intern for a full-time position. Yahoo Inc. in 2013 bought news-summarizing app Summly from now 19-year-old Nick D’Aloisio for $30 million; he’s currently a product manager at the company. This week, Apple promoted 20 apps created by developers under 20 years old in the iTunes store, noting that “these fresh talents prove innovation and creativity transcend age.”
There are no hard numbers on the dropout trend, but applicants for the Thiel Fellowship tripled in the most recent year; the fellowship won’t disclose numbers. Applications to Y Combinator, a well-known startup incubator, have more than doubled to “thousands” in the past two years, says President Sam Altman. Mr. Altman says he receives emails every day from ambitious college or high-school students asking if they should skip college.
Colleges frown on the notion. William Aulet, managing director of Martin Trust Center for MIT Entrepreneurship, compares the people encouraging students to leave school to sports agents who lure college athletes to turn pro.
“There are a lot of bad things being done, people saying you need to drop out to be a good entrepreneur,” says Mr. Aulet. “99.9% of people, if not more, should stay at places like MIT.”
Frank Pfenning, who heads the computer-science department at Carnegie Mellon University, says formal education helps students adjust as technology changes. “These foundations are needed to push the boundaries beyond just writing code,” he says.
Mr. Weinstein seemed destined to become a technology wunderkind. He started installing software on the family computer at age 4, and gained notoriety as a teenager for creating a program to “jailbreak,” or modify, an iPhone to install unapproved software. During high school, he co-founded a startup that built software to sync documents and pictures between Apple Inc. devices. After high school, he worked at a startup for a year, earning more than $100,000.
He considered skipping MIT, but his parents resisted. After enrolling, Mr. Weinstein spent much of his freshman year traveling the country on the college hackathon circuit.
His first semester, he failed two classes because he was too focused on running his app and other projects to pay attention to school work.
At a hackathon at the University of Michigan early in his second semester, he teamed up with three others, including then-high school students Conrad Kramer and Nick Frey, to create an app called Workflow that automates iPhone activities. The app essentially lets users create their own apps. It won the top prize at the event.
About the same time, Messrs. Weinstein and Kramer applied for a Thiel Fellowship, which provides two-year grants to young people to drop out and pursue ambitious ideas. It has tapped 82 fellows in the past five years.
“I don’t think college is always bad, but our society seems to think college is always good, for everyone, at any cost—and that is what we have to question,” says Mr. Thiel, a co-founder of PayPal and an early investor in Facebook.
Of the 43 fellows in the initial classes of 2011 and 2012, 26 didn’t return to school and continued to work on startups or independent projects. Five went to work for large tech firms, including a few through acquisitions. The remaining 12 went back to school.
Mr. Thiel says companies started by the fellows have raised $73 million, a record that he says has attracted additional applicants. He says fellows “learned far more than they would have in college.”
Messrs. Weinstein and Kramer were accepted and moved into the Mission Control house in June 2014. That summer, they reunited with the team that won the Michigan competition, including Mr. Frey, who was about to start his freshman year at Iowa State University.
The Workflow team worked out of a loft in the city’s South of Market neighborhood, sharing space with a startup founded by two other dropouts: Zain Shah and Ishaan Gulrajani. It provided a glimpse of startup reality.
Like the Workflow founders, Messrs. Shah and Gulrajani were stars on the hackathon circuit. Mr. Shah dropped out of the University of Pittsburgh after his sophomore year. Mr. Gulrajani received a Thiel Fellowship and left MIT after one year.
In 2013, they started Watchsend, which helped app developers learn more about the problems users encountered with their apps. The company did well financially, but the founders lost interest.
Messrs. Shah and Gulrajani considered switching to focus on speech-recognition technology, and built a system that showed promise. Then, Chinese Internet giant BaiduInc. published a research paper detailing a similar approach with better performance.
“It revealed to us how easily large companies with lots of money could best us,” Mr. Shah says. “We didn’t have that much of a competitive advantage by being very smart.”
Watchsend shut operations in December and the pair moved out of the loft space. Mr. Shah said he doesn’t regret leaving school early, but wishes he had thought more about the company’s business plan. He and Mr. Gulrajani now work at separate machine-learning startups. Mr. Shah lives in a shared house with six 20-somethings, only one of whom has a college degree, he says.
The Workflow team, meanwhile, spent the summer refining its app. They hoped to time its release for a new version of iOS, Apple’s mobile-operating system. In August, they submitted it to the Apple team that screens software for the company’s App Store. But Workflow wasn’t approved in time for the Sept. 17 launch of iOS 8.
By this point, Mr. Frey had returned to Iowa for college. He had considered staying, but his parents were opposed, and “I was scared of growing up too fast,” he says.
Messrs. Weinstein and Kramer live at Mission Control with 10 others, including two women; half are under 21 years old. Three, including Messrs. Weinstein and Kramer, are Thiel Fellows. The house was originally leased by fellowship organizers for grant winners; other young entrepreneurs moved in as some initial residents left.
More dormitory than frat house, there is more working than partying at Mission Control. Residents come from varied backgrounds with diverse interests, but share some common traits: a brush with early success, disillusionment with the education system, an irreverent world view and healthy self-confidence.
The housemates share their schedules through a Google calendar and conduct group chats on Facebook Messenger, alerting each other to events like Wine-and-Cheese Wednesdays, Freestyle Fridays, and house dinners. There are impromptu all-night sessions of role-playing games such as Werewolf, but the most popular activity is tinkering with technology.
‘I don’t think college is always bad, but our society seems to think college is always good, for everyone, at any cost—and that is what we have to question.’
—Peter Thiel, a co-founder of PayPal and an early investor in Facebook
One recent weekend, a few housemates collaborated to manipulate the posts that users could see on Yik Yak, an anonymous social-networking service popular on college campuses.
Mr. Fontenot, who moved in in September and most often wears University of Michigan pajama pants and startup-company T-shirts, says he’s found a sense of community in the house that he thought he’d miss by leaving college. “Anytime I have doubts about myself, I have the housemates right there,” he says.
What’s more, he said he learns a lot from his housemates: Web technologies from Fouad Matin, 19, who is working on an education startup; the intricacies of Apple’s iOS mobile software from Messrs. Weinstein and Kramer; design tips from Jeremy Cai, 20, who left Babson College after one year and started a service to help companies hire contract employees.
The sense of community also impresses Mr. Weinstein’s mother, who sees the environment as similar to college. She says her son appears happier pursuing his passion full time.
By October, Workflow still hadn’t been approved by Apple. Messrs. Weinstein and Kramer considered another route. They applied to Y Combinator, attempting to follow the path of well-regarded startups such as home-rental site Airbnb and online-storage service Dropbox Inc.
They were rejected. A Y Combinator partner said in an email that Workflow seemed like “a solution with no real problem behind it.” Their “youth” was troubling, the email continued, because the founders hadn’t seen enough real workplace problems.
“It sucked,” says Mr. Kramer. “It was not a fun time.”
A few weeks later, things started to turn for Workflow. Apple finally accepted the app and the company scheduled its release for Dec. 11.
When it launched, Apple featured the app as an Editor’s Choice. Workflow, which sells for $2.99, shot to No. 1 in the App Store and stayed there nearly a week, earning more than 100,000 downloads in the first week.
Shortly after the app launched, Y Combinator’s Mr. Altman invited Messrs. Weinstein and Kramer to lunch. He said that Y Combinator should have considered them more closely and offered to invest personally in Workflow.
Workflow also garnered the attention of would-be rivals. Mark Pincus, co-founder of social-gaming company Zynga Inc., suggested they “join forces” with a stealth company he had started. Mr. Pincus told the pair he was looking for “some scrappy guys who know how to build some magical sh—.” There was never a formal offer, but the team again chose to go it alone.
Mr. Pincus, who returned as Zynga’s CEO last month, said he remembers meeting the Workflow team and discussing entrepreneurship.
Following the early success of the app, Mr. Weinstein looked to add staff. He ran into another rite of passage for startups: being outbid for talent.
Mr. Weinstein wanted to hire as a summer intern a Stanford University student who had done designs for Workflow. The student also had an internship offer from Facebook, for $6,300 a month. Mr. Weinstein offered to match the salary. A few weeks later, the student said Facebook, unprompted, raised its offer to $8,000. Mr. Weinstein conceded defeat.
He made another pitch. He asked Mr. Frey to move to San Francisco. “Are you sure you want to keep doing this college thing?” Mr. Weinstein texted.
Mr. Frey agreed to come. He didn’t want to miss out. A month later, he moved into the house, sleeping on a mattress on the ground until a room opened up.