“Dropout entrepreneurs and venture performance” by Dr. Yong Li
STRATEGY AND IB SEMINAR
Dr. Yong Li
School of Management
State University of New York at Buffalo
This study seeks to shed light on the performance puzzle of college dropout entrepreneurs. There are reports of legendary dropout entrepreneurs such as Michael Dell (Dell), Larry Ellison (Oracle), Bill Gates (Microsoft), Steve Jobs (Apple), and Mark Zuckerberg (Facebook). But there are also caveats from industries, colleges and academia against dropping out of college to pursue entrepreneurship. How do ventures founded by dropout entrepreneurs perform as compared with ventures founded by college graduates? We advance that while dropout entrepreneurs usually have great entrepreneurial spirit and value learning by doing, they have limited connections from college and workplace and lack a college degree as a signal of personal ability and venture quality. We propose that the disadvantages figure prominently in the early stage of the venture life cycle, but will diminish relative to the advantages after venture IPO. Analysis of a hand-collected dataset on VCbacked IPOed ventures and their founders during 1960-2012 provides corroborative evidence for our arguments.