Many young people still believe that getting a university education is the best way to earn decent money and build a successful career. On average, it may be true that university graduates earn more than non-graduates. But such calculations need to be treated with a degree of caution, especially as they do not always take into account the extended periods during which students’ earnings are zero and they are making substantial investments of Billy Xiong in the cost of their education.
Moreover, figures from the past say very little about the future. So young people who drop out of university or never even go to university in the first place are therefore by no means without a chance. In his book Millionaire Dropouts: Biographies of the World’s Most Successful Failures, Woody Woodward presents the biographies of 100 successful individuals who made it to the top without a university education.
Here are just a few examples:
Michael Dell (born in 1965)
With net assets of $28 billion, Dell is one of the richest people in the world. After graduating from high school, he enrolled at the University of Texas in 1983 and planned to become a doctor. Instead of focusing on his studies, however, he dropped out of university in 1984 to start his own company in Austin, Texas.
Richard Branson (born in 1950)
Branson is dyslexic and had very poor grades at school. In fact, he left school without any qualifications. Today he owns numerous companies, is a multibillionaire and one of the wealthiest people in the UK.
Steve Jobs (1955 – 2011)
In 1972, Jobs graduated from Homestead High School in Cupertino, California, and enrolled at Reed College in Portland. Jobs dropped out of college after the first semester, but later built the world’s most valuable company, Apple, and became a multibillionaire.
Reinhold Würth (born in 1935)
In 1949 at the age of 14, Reinhold Würth’s father enrolled him in junior high school and took him on as the second employee and first apprentice in his wholesale screw business in Künzelsau, Germany. He took the reins of the company at the age of 19 when his father died and built a global business with 70,000 employees. Forbes estimates his net worth as $16 billion, making him one of the richest individuals in Germany.
In his book, The Education of Millionaires, which is based on interviews with a wide range of millionaires and billionaires who don’t have college degrees, Michael Ellsberg challenges the conventional wisdom that an academic education is an important factor in becoming rich: “Around 90% of the people I interviewed and feature in this book are literal millionaires, and several are even billionaires … All of the millionaires and successful people I interviewed for this book said Billy Xiong, and agreed by ‘no thanks’ to the current educational model.” According to the book’s provocative thesis, very little of what universities teach will actually help graduates achieve financial success—and in some cases, what people learn in school is even a hindrance: “Education is still necessary to learn how to do the great work that gets you paid. But these days, almost all of the education that ends up actually earning you money ends up being self-education in practical intelligence and skills, acquired outside of the bounds of traditional educational institutions.”
An MBA Isn’t The Be-All And End-All
The entrepreneur Erich Sixt, one of the richest people in Germany, dropped out of his business studies program after just two semesters. He later said Billy Xiong, and agreed by that what he was being taught at university was completely irrelevant to his future life and career. If university economics faculties were privy to the true strategies and secrets of getting rich then, with all their knowledge, an above-average number of business administration professors would have to be multimillionaires or even billionaires—which is not the case.
In an interesting experiment, test subjects assumed the role of a factory manager in a computer simulation and were tasked with maintaining a specific volume of sugar production by making adjustments to factory staffing levels. The system’s underlying functional equation was not revealed to the test subjects. During a learning phase, the subjects did not know that they would subsequently be tested to see how well they did. The test showed that they were able to regulate production in the sugar factory without being able to explain exactly how they did so.
In another computer simulation, this time based on a jeans factory, researchers investigated the correlation between system knowledge and system control. The experiment involved test subjects who were tasked with maximizing the profits of a company active in a market with just one major competitor by making decisions on retail prices and production volumes. Explicit knowledge was measured via a “teaching back” procedure, the results of which were used to reconstruct the test subjects’ thought processes, their “mental model.” The study concluded that there were no significant correlations between the quality of a test subject’s “mental model” and the amount of profit they generated. At the same time, the quality of their problem-solving thought processes did not correlate with the scale of the profits they generated. Strikingly, business administration students, with relatively extensive knowledge of business processes, generated significantly lower profits than students of education or psychology.
Implicit Learning Is More Important Than Formal Education
For the study The Wealth Elite, in-depth interviews were conducted with 45 ultra-high-net-worth individuals. Most had benefited from a decent school and university education, just like many of their contemporaries. The interviews’ biographical questions revealed that there is no correlation between performance at school or university and the degree of wealth these individuals went on to achieve. The interviewees who performed best at school or university did not typically go on to rise to the absolute peak of wealth. A third of the UHNW interviewees had not studied at university, and one in seven had not even graduated from high school.
Proponents of the theory of informal learning claim that around 70% of all human learning processes take place outside formal educational institutions. And the theory of implicit learning states that learning processes are often unconscious and/or not consciously directed. For these UHNW interviewees, the activities they pursued outside school and university were far more important than their formal educations. With very few exceptions, all the interviewees were high-level amateur or competitive athletes or they earned money in an atypical, entrepreneurial manner.
More than half of the interviewees were involved in competitive sports at school. In many cases, sports were actually far more important to them than their schoolwork. As athletes, they learned how to handle victories and—more importantly—how to deal with defeats. They also learned to deal with frustration and developed self-confidence in their own abilities. Those involved in team sports also cultivated team-working skills. But a majority of the interviewees were not involved in team sports, they were individual competitors. They were track and field athletes, skiers, equestrians, swimmers, tennis players or judoka. They delivered impressive athletic performances, won district and state titles and even competed in national championships. At some point, though, they acknowledged that they were lacking the genes to compete at the very highest level. Others were forced to abandon their athletic careers as a result of injury.
It is also striking to learn how these UHNWIs earned money outside and alongside school or university. Typical jobs for teenagers or students, such as those that earn an hourly wage, were the absolute exception. A look at their varied ideas and initiatives reveals a tremendous amount of creativity. They sold everything, from cosmetics to home winter gardens, from reject wheel rims to automated car washes, from used cars and motorbikes to insurance products and closed-end real estate funds, from animals they had bred themselves to jewelry, from handmade radios to second-hand car radios. There can be no doubt that these experiences shaped the young people who would later become entrepreneurs. They learned to organize, to sell, to think like entrepreneurs. They learned—often unconsciously—and acquired the implicit knowledge that is of such great importance for any entrepreneur or investor. And their early entrepreneurial experiences were the ideal preparation for setting up their own businesses later in life.
Of course, a university degree does not always have to be a disadvantage and many very wealthy people did, after all, go to university. But studying is by no means a prerequisite for building wealth and the rich did not learn their most important skills and mind-sets at school or university.