General Education

How Startup Accelerators Are Disrupting the Workforce — And Higher Education

How Startup Accelerators Are Disrupting the Workforce — And Higher Education
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Charlie Taibi profile
Charlie Taibi February 4, 2016

With rising tuition and uncertain job prospects, college degrees are no longer insurance policies. High school grads are now leapfrogging straight to innovation — and reinventing the workforce and higher ed in the process.

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I’ll never forget a question my dad posed to me during my senior year of high school: “Charlie, do you really need to go to college?”

He reasoned: “You don’t particularly enjoy the academic side of school, and we know plenty of people who are successful without a degree. I just think … ” I cut him off. I was in the process of asking him to sign a check for a $1,000 SAT bootcamp. “Dad, this is my future we are talking about, and we need to invest in it.”

One SAT bootcamp and $160,000 four-year college degree later, I realized that I had gone through school on autopilot. I had wanted to coast through college, walk away with an entry-level job, work my way up the corporate ladder, live in Manhattan, have a house out in the Hamptons, and retire early. Yes, I was an obnoxious, ambitious, and tenacious teenager.

The entrepreneur Peter Thiel aptly describes what college once served as: an insurance policy. Admittedly, I think most college degree (and graduate degree) hopefuls and holders still subscribe to that thought. Pay the price, do your time, lead a comfortable life.

The challenge with this line of thought is that we are no longer living in the 1980s, when a high school graduate could attend a community college or university for around $6,000 a year within a few years.

Instead, graduates today are contending with rising college tuition rates and then entering the workforce with an insurmountable amount of debt (a little more than $35,000, if we want to be exact). If this is the case, why do we continue to enter the system knowing the outcome? Are we hoping for a job that will allow us to live comfortably? Are we looking to be enlightened? Are we looking for a community of people who will encourage and inspire us to grow?

If you desire a four-year path and can afford it, that path is still possible, although it is arguably becoming obsolete. If you desire a path that is customizable, then the world is your oyster. All it takes is a little bit of research — and, in my case, maybe letting dad finish his thought.

Disaggregating your education is all the rage these days. And organizations like UnCollege are helping students see all of their (increasingly numerous) options. Alternatives to college postsecondary programs include everything from microdegrees to niche bootcamps. For many considering forgoing college, startup accelerators offer an especially promising next step. While the jury is still out on the benefits of various programs, one fact is clear: These different paths are disrupting higher ed — and what entering the traditional workplace entails.

Startup Accelerators Gaining Momentum

So you had an idea in the shower this morning, and you want to bring it to life. A startup accelerator might be your answer. These fixed-term programs include mentorship as well as educational components that foster rapid growth in companies. The penultimate of these programs is usually a pitch day, a time when investors are invited to evaluate a startup’s product and decide whether they want to set up a follow-up meeting or invest.

To get into one of the more than 416 accelerators in the world, first decide what you want to build, and then decide if a particular accelerator will benefit you. While some of these programs are agnostic, like Y Combinator and 500, others have a special focus, like Highway1 for hardware and Rock Health for healthcare. Acceptance into these accelerators usually requires you to have a strong team, referrals from past participants, sometimes a business plan, and definitely an interview with leadership at the accelerator to see if they think you’re a good fit.

While the applications among accelerators are more or less the same, the offerings are different. For example, while YC and AngelPad both take seven percent in equity, they invest $120K and $100K, respectively. An accelerator like TechStars will take six percent for $100K, but it will also hook you up with a living stipend and provide an equity-back guarantee.

Don’t forget about the pedigree of the alums who come out of these accelerators, either. They and their networks are sometimes worth more than the money you receive.

A Simple Formula

At this point you may be asking yourself if applying for an accelerator is right for you. Paul Graham, founder of YC, has a simple formula that he breaks down in an article: “You should give up n% of your company if what you trade it for improves your average outcome enough that the (100 – n)% you have left is worth more than the whole company was before.” Do the math for the term sheet that you receive, and decide if the cash you receive will increase the value of the company overall — and then make your decision on which offer to take.

It’s worth noting that going through an accelerator is not a concrete path to success (only one out of ten really makes it). Becoming successful will require hustle and work but could land you in the ranks of companies like Dropbox, Airbnb, and Uber — all billion-dollar enterprises that have created tens of thousands of jobs.

Considering building your own startup is worth the thought. Mark Zuckerberg, Elizabeth Holmes, and Aaron Levie all dropped out of college and created products that are known throughout the world. Instagram, Quora, and Netflix were all started by college graduates looking to solve a problem that they had personally. And Warby Parker, Chef’d Up, and Webvan were all launched by MBAs who potentially gave up six-figure salaries at top consulting firms to add value to the world.

Regardless of your education, you could wind up joining the unicorn club and changing the world for the (ideally) better. And hey, who wouldn’t want to be your own boss? Just be prepared for challenges, because as Elon Musk warns, “Starting a company is like eating glass and staring into the abyss.”

Changes to the Workforce

Despite the challenges, many successful companies have emerged from startup accelerators. After graduating from MIT, Drew Houston developed Dropbox, a cloud-based storage system that enables users to upload their files and access them across devices. He was accepted into Y Combinator’s accelerator, and at the time was given $20K in exchange for five percent of Dropbox. The fusion of Houston’s ingenuity and Y Combinator’s network enabled the Dropbox creator to find a co-founder and led to successful future funding rounds. His is a quintessential success story — now the founder of a billion-dollar company that has ushered in an era of cloud technology. And the success isn’t his alone; both Houston and Y Combinator have profited enormously from Dropbox’s success. Y Combinator has gained significant brand recognition as a successful accelerator program, and it now also has more leeway to make high-risk bets on potentially transformative ideas — ones that may become the next Dropbox or Airbnb.

Shining examples notwithstanding, the dim reality is that most startups fail. Even though their founders have access to funding, broad networks, and mentors, close to 90 percent of startups do not succeed. The most common reasons include failure to execute distribution channels, lack of sufficient money, bad timing, and poor team synergy. Given these realities, the hallmark qualities of many entrepreneurs are resilience and the art of reinventing. After recovering from a failure, most entrepreneurs will put their setbacks behind them and find new opportunities — and successes.

Even given the failure rate of startups, the influx of new business ventures has created widespread value in the workforce. In 2015 alone, startups created 2,400 jobs and contributed to nearly half of the GDP and almost all U.S. exports. The effects can be seen at the individual level, as well: College dropouts and graduates are entering the startup world and taking more bets on themselves instead of filling corporate roles. While they understand that the risk is higher, they also (on balance) tend to be happier when starting their own ventures or joining small teams. Startup accelerators give these trailblazers an injection of confidence to hack on something that has never been created before — and a way to forgo paths to higher education that may not align with their personal and professional goals.

Impact on Higher Ed

For many, these goals include finding fulfilling work and making a living. The recent outrage over high tuition rates and student debt has led to an upheaval in higher education. While graduation rates have inched up in recent years, the four-year rate at four-year schools remains low, with just above 39 percent of students earning a degree in that time period. This means that the majority of college students are reckoning with the tuition and opportunity costs of four-plus years in school — and, for more than 40 percent of students, the sunk costs of time and money spent with no degree earned after six years.

These costs are not inconsiderable. Public and private universities have increased their tuition rates almost 30 percent in the past five years alone, and American student debt now totals more than an astonishing $1 trillion. Though university degrees have traditionally been viewed as worthwhile investments, recent studies have shown that higher-ed courses do not guarantee employment, and that even given favorable job prospects, it takes a significant amount of time to earn good money (and thus offset the cost of the degree itself). While money may not have been the intended purpose of pursuing a degree 30 years ago, higher education is now regarded as a vehicle for finding a job and drawing a salary — that is, when it indeed functions as one.

Amid rising college costs, alternative educational options have proliferated, a reality that further threatens the traditional higher-ed model. Open access learning resources (like Khan Academy), credentialing programs (like Galvanize), and bootcamps (like Dev Bootcamp) have multiplied — and students are taking matters (and credentialing) into their own hands. No longer is a degree from a top-tier university needed to find success in the workplace. Startup accelerators are helping prove that there are appealing (and lucrative) options that don’t involve an increasingly outdated and ineffective model of achieving financial stability.

Looking Ahead

The next generation of workers will need to embrace flexible, lifelong learning because jobs will become increasingly multidisciplinary. The current collegiate model of majors and minors, however, is not. Students today are dropping out and choosing to forgo higher-education options with increasing frequency because for many, the benefits of college no longer outweigh its costs.


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