Gaurav Jain is a VC and a graduate of Harvard Business School. Joe Flaherty is a writer and a graduate of the Rhode Island School of Design. Both work at Founder Collective, an early stage VC firm based in Cambridge and NYC that has made investments in 150 companies, including Unicorns like Uber and Coupang. Follow them@gjain & @josephflaherty.
Last weekend a new class of Stanford graduates received their diplomas, and it’s a safe bet that some who just earned undergraduate degrees will soon be at the helm of startups with “Unicorn” valuations. Looking at the current list of the 20 most highly valued startups validates this belief. Among the 48 founders of these companies, seven have attended Stanford. But perhaps more surprising is the fact that eight of the founders have attended public colleges and universities.
In fact, founders of the world’s largest tech startups have CVs filled with schools better known for pigskin success than startups. Look at a company like Xiaomi, the Chinese consumer electronics company that tops the list with a $50 billion valuation. The founders earned degrees at prominent Chinese universities, as well as places like Georgia Tech and Purdue. Both are great schools but have had more success in the Big 10 and ACC than the NASDAQ.
Art schools > MIT
The most surprising finding in this list is that MIT has produced fewer mega-Unicorns than two tiny art schools — the Rhode Island School of Design and The Art Center College of Design.
Two of Xiaomi’s founders were design majors. RISD, an art school that isn’t even included in the U.S. News & World Reports rankings, educated two of Airbnb’s founders. If you want to start a world-changing company, forget computer science and consider industrial design — between Airbnb and Xiaomi, four potential billionaires studied the subject.
A pair of outliers do not a trend make, but it should make founders and investors consider whether we’re beginning to see a shift to what Scott Belsky calls the “Interface Layer” of technology. Going forward, will Unicorns be defined less by the core technical innovations that MIT produces in favor of companies that merge tech and liberal arts?
Asia on the rise, Europe in decline?
Since Aileen Lee first assembled her magisterial accounting of Unicorns, the startup world has changed dramatically. In 2013, there were 39 companies with billion dollar valuations, now there are more than 100. All of the top 20 startups in her original list were American. The top 20 today include seven companies whose base of operations are in Asia.
Eleven founders received degrees from schools in Asia. Only three founders, the creators of Spotify and a cofounder at Palantir, studied in Europe
That said, education it not a zero-sum proposition. The founder of Asian peer-to-peer lending giant Lufax is an American with a degree from Middlebury. Many of the founding team members at Xiaomi studied extensively in the U.S. Spotify was created by Swedes but is beloved by American teeny-boppers.
And in a welcome, if still slow, sign of progress, there is now a woman, Theranos founder Elizabeth Holmes, leading one of the top 20 Unicorns.
Whither the Ivy League?
Harvard and Stanford dominate this sample. Yale and Penn made the list. But Princeton didn’t make the cut, nor did Cornell, Columbia, Brown, or the other Ivies. World class institutions like Northwestern and CalTech are also absent from the tally, while less august regional schools like Baruch College and the University of Calgary made the cut.
The median U.S. News & World Report ranking among the nationally ranked schools on this list is 27.5, impressive, but not unattainable. Harvard and Stanford may admit fewer than 6 percent of applicants, but The University of Oregon admits 73.9 percent. The University of Illinois has a world class computer science program but admits 62.4 percent of applicants.
It’s also heartening to see Unicorns coming out of places with relatively affordable tuition like the University of Oregon ($9,918/year) or Georgia Tech ($11,394/year), which offer degrees for the price of a single year on campus at Stanford ($44,757/year).
One other thought: Is the need for a cofounder BS?
The conventional wisdom is that great tech companies are formed by a team of cofounders, ideally ones who met in school. Filo and Yang, Larry and Sergey, and so on. The study-buddies turned startup cofounders story holds true in the case of Airbnb and Snapchat, but this top-20 sample also calls that advice into question.
Six of the 20 most valuable companies in tech have just a single founder. Paul Graham put the lack of a cofounder on the top of his list of Mistakes that Kill Startups. Two of the teams have more than five cofounders, which is another practice thought leaders usually warn against. But the performance of companies at the mega-Unicorn scale make Mark Suster’s blog post The Cofounder Mythology required reading for anyone contemplating the creation of a new company.
Happy Unicorn hunting
While these numbers are interesting, remember, founding a startup, especially a Unicorn, isn’t a probability game. There are over 100 companies with valuations over $1 billion dollars. Choosing the top 20 isn’t a scientific sample, and there are bound to be oddities among outliers.
This sample is completely arbitrary in terms of timeframe. These companies are evaluated on highly subjective private market valuations that could change rapidly. Every acquisition or IPO shakes up the sample dramatically.
But one thing that’s unmistakable looking at this list is that the education required to launch a world-changing company is more accessible than you might think. Don’t assume that because you didn’t go to college in Palo Alto you’re doomed to small dreams. To crib a line from a great critic — “Not everyone can create a great startup, but a great startup can come from anywhere.”